Best judgment assessment: estimate of suppressed turnover upheld where it had a rational nexus to seized material.

In a best judgment assessment, an estimate of suppressed turnover is sustainable where it rests on discovered material, surrounding circumstances, and reasonable inferences, and it will not be disturbed merely because another estimate is possible. The court treated the accounts as unreliable because brokerage vouchers and unrecorded transactions were not reflected in the books, and the explanation of later contract cancellations was not accepted. Since the estimate had a rational nexus with the material on record and was not a mere guess, no question of law arose on the facts found and the challenge to the reference failed.

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Issues: Whether the estimate of suppressed turnover adopted in the best judgment assessment was arbitrary or without rational basis, so as to give rise to a question of law warranting reference.

Analysis: The assessee's accounts were found unreliable because vouchers showing brokerage payments and unrecorded transactions were not reflected in the books, and the explanation that the contracts had later been cancelled was not accepted by the statutory authorities. In a best judgment assessment, the assessing authority is entitled to make an estimate on the basis of material discovered, surrounding circumstances, and relevant inferences, and the estimate cannot be interfered with merely because another view is possible. The burden lay on the assessee to show that the later period did not disclose suppressed dealings of the kind indicated by the seized material. Applying these principles, the estimate was treated as founded on relevant material and not as an arbitrary guess.

Conclusion: No question of law arose on the facts found, and the challenge to the estimate failed.

Final Conclusion: The application for reference was rejected because the best judgment addition was upheld as a factual inference based on relevant material rather than a legally arbitrary estimate.

Ratio Decidendi: In a best judgment assessment, an estimate of suppressed turnover will not be disturbed if it has a rational nexus with material discovered and surrounding circumstances, even if it is not the most appropriate estimate possible.

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