Best judgment assessment allows rational estimation of escaped turnover from suppressed sales, if the estimate is not arbitrary.

In a best judgment sales tax assessment, suppressed sales entries in the books can provide a rational basis for estimating escaped turnover. Exact proof of the full suppressed turnover is not required; the assessing authority may make a bona fide estimate if it has a reasonable nexus with the detected material and is not arbitrary, vindictive, or capricious. On that basis, an addition to gross turnover exceeding the amount of suppressed sales detected was upheld as valid.

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Issues: Whether, in a best judgment sales tax assessment, an addition to gross turnover of Rs. 20,000 could validly be sustained on the basis of detected suppressed sales of Rs. 6,200.

Analysis: The suppressed sales entries found in the books furnished a relevant objective basis for estimating escaped turnover. In a best judgment assessment, exact proof of the suppressed turnover is not required. The assessing authority is entitled to make a bona fide estimate on a rational basis, and such estimate cannot be interfered with merely because it exceeds the exact amount detected, so long as it has a reasonable nexus with the material discovered and is not arbitrary, vindictive, or capricious.

Conclusion: The addition of Rs. 20,000 was valid and the question was answered in the affirmative, in favour of the Revenue and against the assessee.

Ratio Decidendi: In a best judgment assessment, once suppression is established, the authority may estimate escaped turnover on a rational basis drawn from the material discovered, and the estimate will not be disturbed if it is not arbitrary and has a reasonable nexus with the facts found.

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