Turnover enhancement must be supported by recorded reasons; unexplained best judgment quantification was held arbitrary.

In a reference from a best judgment assessment, turnover enhancement must rest on recorded reasons and a discernible basis in the assessment order. Quantification of turnover is ordinarily a question of fact, but where the assessing authority and appellate authorities fail to explain the figure adopted, the enhancement may be treated as arbitrary. The Tribunal was required to examine the record and make a clear finding to support the reduced enhanced turnover. On that basis, the gross turnover enhancement was held unjustified and the issue was answered in favour of the assessee.

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Issues: Whether the enhancement of the gross turnover was justified.

Analysis: In a reference arising from a best judgment assessment, quantification of turnover is ordinarily a question of fact, but the assessment order must disclose the basis for the figure adopted. Where neither the assessing authority nor the appellate authorities record reasons supporting the enhancement, the quantification is liable to be treated as arbitrary. The Tribunal was required to examine the record and record a clear finding to justify the reduced enhanced turnover.

Conclusion: The enhancement of the gross turnover was not justified and the question was answered in favour of the assessee.

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