Best judgment assessment must rest on material or a reasonable basis; arbitrary turnover fixation after rejecting books is unsustainable.

Rejection of account books does not permit a taxing authority to fix taxable turnover on an arbitrary or unsupported basis; even in best judgment assessment, the figure must rest on material on record or a reasonable estimating principle drawn from purchases, sales, or other reliable records. A turnover fixed without disclosed basis was held unsustainable, and the assessment had to be recomputed with corresponding reduction of theka money and related components. The revision was therefore allowed in favour of the assessee, and the arbitrary turnover determination was set aside to that extent.

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Issues: Whether the taxable turnover fixed by the Tribunal could be sustained when the account books were rejected and the figure was arrived at without any disclosed basis.

Analysis: Rejection of account books does not authorise the taxing authority to fix an arbitrary turnover. The assessment must rest on material available on record or on some reasonable principle, and the turnover has to be determined from purchases, sales, or other reliable records. A random figure unsupported by any basis cannot be treated as a valid best judgment assessment. Where the theka money was excluded, the consequential components relatable to it also had to be reduced.

Conclusion: The turnover fixed by the Tribunal was unsustainable and the revision was allowed in favour of the assessee.

Final Conclusion: The assessment was set aside to the extent of the arbitrary turnover determination, and the matter was required to be recomputed with corresponding reduction of theka money and related components.

Ratio Decidendi: Even after rejection of account books, a taxing authority cannot determine taxable turnover arbitrarily and must base it on material on record or a reasonable estimating principle.

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