Electricity consumption as a valid basis for best judgment estimation upheld where books of account were rejected.

Where books of account are rejected and no reliable contrary evidence is produced, electricity consumption of an oil mill may provide a valid basis for best judgment estimation of production and turnover. The Karnataka High Court upheld the Tribunal's reliance on power usage to estimate groundnut oil and oil-cake output, holding that energy consumption can bear a direct correlation to production and that the assessee had not shown the method to be arbitrary or unsound. The cited contrary decision was held inapplicable on the facts because the case did not involve comparative testing of other mills. The assessment based on electricity consumption was therefore sustained.

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Issues: Whether the Tribunal was justified in upholding estimation of turnover of groundnut oil and groundnut oil-cake on the basis of electricity consumption after rejection of the assessee's books of account.

Analysis: The books of account and supporting documents were rejected by the assessing authority, which then resorted to a best judgment assessment. In the absence of reliable evidence from the assessee, the consumption of electrical energy by the oil crusher was treated as a reasonable basis for estimating production and turnover, since energy consumption normally bears a direct correlation to output. The assessee failed to establish that this basis was arbitrary or unsound. The cited decision of another High Court was held inapplicable on the facts, because the present case did not involve comparative testing of other mills.

Conclusion: The Tribunal was justified in relying upon electricity consumption for estimating turnover, and the assessee's challenge failed.

Final Conclusion: The revision petition was without merit and the assessment based on electricity consumption was sustained.

Ratio Decidendi: Where books of account are rejected and no satisfactory contrary evidence is produced, electricity consumption of a mill can form a valid basis for best judgment estimation of production and turnover.

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