Best judgment assessment upheld where defective books and unexplained delivery notes supported unaccounted sales treatment.

Rejection of the dealer's accounts was supported by substantial stock discrepancies, defective purchase bills, non-serially machine-numbered sale invoices with corrections, and records indicating unaccounted transactions. The cancelled delivery notes for the disputed rubber were unexplained, and the duplicate copies were not produced for verification. On that factual basis, best judgment assessment was treated as justified. The further addition for 24,000 kgs. of crepe rubber as unaccounted sales was sustained because the alleged loss of delivery notes was not promptly reported, no police complaint was filed, the duplicates were not produced, and the later explanation was found unconvincing.

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Issues: (i) Whether the rejection of the dealer's accounts and the resulting best judgment assessment were justified on the facts; (ii) whether 24,000 kgs. of crepe rubber covered by three delivery notes could be treated as unaccounted sales and brought to tax under section 5A of the Kerala General Sales Tax Act, 1963.

Issue (i): Whether the rejection of the dealer's accounts and the resulting best judgment assessment were justified on the facts

Analysis: The accounts were found unreliable because of substantial stock discrepancies during surprise inspections, defective purchase bills, non-serially machine-numbered sale invoices with corrections, and records showing unaccounted transactions. The delivery notes used for transporting the disputed rubber were found cancelled without explanation, and the duplicate copies were not produced for verification. These circumstances supported rejection of the books and acceptance of a best judgment assessment.

Conclusion: The rejection of accounts and the best judgment assessment were upheld, against the assessee.

Issue (ii): Whether 24,000 kgs. of crepe rubber covered by three delivery notes could be treated as unaccounted sales and brought to tax under section 5A of the Kerala General Sales Tax Act, 1963

Analysis: The plea that the delivery notes were lost was not accepted because the loss was not promptly reported, no police complaint was lodged, the duplicate copies were not produced, and the explanation based on a statement from the lorry broker was delayed and unconvincing. On these facts, the tribunal's view that the dealer had failed to establish the bona fides of its explanation was held to be a factual finding without legal error.

Conclusion: The addition treating the disputed quantity of rubber as unaccounted sales was sustained, against the assessee.

Final Conclusion: The revision failed as the factual findings supporting rejection of accounts and the impugned addition were held to be justified and free from error of law.

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