Best judgment assessment requires an incorrect or incomplete return; missing ancillary records alone cannot justify rejection of accounts.

Best judgment assessment under section 7(3) of the U.P. Sales Tax Act is permissible only when no return is filed on time or the return is reasonably found to be incorrect or incomplete. Books of account cannot be rejected merely because the department cannot verify every entry, or because ancillary records such as purchase vouchers, buyer or seller details, challans, or a stock register are not maintained, unless the material before the authority shows the primary accounts are unreliable. The text states that the assessee's accounts were not validly rejected on these facts and that a stock register omission alone was insufficient.

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Issues: Whether the assessing authority could reject the assessee's books of account and make a best judgment assessment under section 7(3) of the U.P. Sales Tax Act on the facts found.

Analysis: Section 7(3) permits best judgment assessment only where no return is filed within time or where the return submitted appears to be incorrect or incomplete. The rejection of accounts cannot rest merely on the inability of the department to verify every entry or on the absence of incidental records unless the material before the authority reasonably indicates that the return itself is incorrect or incomplete. The statutory duty under section 12 of the U.P. Sales Tax Act and rule 72 of the U.P. Sales Tax Rules required true and correct accounts of purchases, sales and stocks, but did not expressly require purchase vouchers, addresses of buyers or sellers, or the preservation of challans in the manner assumed by the authorities. The omission to maintain a stock register, by itself, was also not sufficient to reject accounts where the primary accounts were otherwise reliable.

Conclusion: The rejection of the assessee's books and the best judgment assessment were not justified under section 7(3) of the U.P. Sales Tax Act and could not be sustained.

Final Conclusion: The revision was allowed, the assessment orders were quashed, and the matter was sent back for fresh assessment in accordance with law.

Ratio Decidendi: Best judgment assessment can be made only when the return itself appears incorrect or incomplete, and books of account cannot be rejected merely because ancillary records are absent or the authority is unable to verify the accounts in full.

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