Best judgment assessment and revised returns: later correction after detection does not erase earlier concealment or penalty liability.

Where original returns are found to be incorrect or incomplete, an assessment based on the assessee's books and surrounding material remains a best judgment assessment if it reasonably determines true turnover; penalty under section 14(2) is therefore attracted. A later filing of revised monthly returns after detection of suppressed turnover does not erase the earlier concealment or nullify liability already incurred, because there is no statutory basis for treating the revised returns as wiping out the original false returns. The retained concealment supports penalty on the suppressed turnover shown in the original returns.

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Issues: (i) Whether an assessment made on the basis of the assessee's books of account, after finding the original returns to be incorrect or incomplete, is a best judgment assessment for the purpose of penalty under section 14(2) of the Andhra Pradesh General Sales Tax Act. (ii) Whether the filing of revised monthly returns after detection of suppressed turnover wipes out the original concealment so as to exclude penalty under section 14(2) of the Andhra Pradesh General Sales Tax Act.

Issue (i): Whether an assessment made on the basis of the assessee's books of account, after finding the original returns to be incorrect or incomplete, is a best judgment assessment for the purpose of penalty under section 14(2) of the Andhra Pradesh General Sales Tax Act.

Analysis: Section 14(1) authorises best judgment assessment where the return appears incorrect or incomplete, and section 14(2) permits penalty when such an assessment is made. The governing principle is that best judgment does not mean arbitrary guesswork; it requires a reasonable nexus with the available material and circumstances. The assessee's own books, along with the surrounding facts, constituted relevant material for determining the true turnover. An assessment does not cease to be one made to the best of judgment merely because the assessing authority accepts the correct turnover found in the assessee's books.

Conclusion: Yes. The assessment was a best judgment assessment and the penalty provision was attracted.

Issue (ii): Whether the filing of revised monthly returns after detection of suppressed turnover wipes out the original concealment so as to exclude penalty under section 14(2) of the Andhra Pradesh General Sales Tax Act.

Analysis: The Act and Rules contemplated only the filing of the monthly return prescribed under the statutory scheme, and there was no statutory basis for treating the later revised returns as obliterating the original false returns. A subsequent correction after detection does not condone the earlier concealment or nullify the offence already committed. The original returns remained relevant for the purpose of penalty, particularly where the revised returns were filed only after the account books were found by the authorities.

Conclusion: No. The revised returns did not wipe out the earlier concealment, and penalty was maintainable on the suppressed turnover shown in the original returns.

Final Conclusion: The revision failed, and the penalty sustained by the appellate authorities was upheld on the basis that the assessee had filed incorrect returns and the subsequent revised returns did not erase the earlier concealment.

Ratio Decidendi: Where original returns are found to be incorrect or incomplete, the assessing authority may determine turnover to the best of its judgment on the basis of available material, and a later revised return filed after detection does not extinguish liability to penalty for the earlier concealment.

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