Best judgment assessment limitation turns on a timely effective step showing intention to proceed under the tax law.

Best judgment assessment under the Punjab General Sales Tax Act is initiated when the Assessing Authority's notice and subsequent steps clearly show an intention to proceed under section 11(2), including repeated notices and opportunities to comply. For limitation under section 11(4), the decisive requirement is an effective step commencing the assessment process within the prescribed five-year period after the relevant period expires. A composite notice issued and served within time satisfied that requirement, even though final assessment could follow later. The legal position stated is that timely commencement, not finalisation, governs limitation for best judgment proceedings.

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Issues: (i) Whether the notice issued by the Assessing Authority showed an intention to proceed with best judgment assessment under the Punjab General Sales Tax Act, 1948. (ii) Whether the assessment proceedings were initiated within the period of limitation prescribed for best judgment assessment.

Issue (i): Whether the notice issued by the Assessing Authority showed an intention to proceed with best judgment assessment under the Punjab General Sales Tax Act, 1948.

Analysis: A notice under section 11(2) may, on its terms, indicate that failure to comply will lead to assessment to the best of judgment. Where the notice and subsequent steps clearly convey that the Assessing Authority has turned its mind to proceeding under section 11, the statutory requirement of initiating best judgment proceedings is satisfied. The presence of repeated notices and opportunities to the assessee supported that the authority had formed and communicated the requisite intention.

Conclusion: The intention to proceed with best judgment assessment was clearly indicated.

Issue (ii): Whether the assessment proceedings were initiated within the period of limitation prescribed for best judgment assessment.

Analysis: Under section 11(4), the Assessing Authority must proceed to assess to the best of its judgment within five years after the expiry of the relevant period where the dealer fails to comply with notice under section 11(2). The decisive requirement is some effective step showing commencement of the process within time. The composite notice issued and served in March 1977 constituted such a step, and therefore the proceedings were taken within the statutory period. The reference was answered consistently with the principle that a timely effective step is enough even if final assessment follows later.

Conclusion: The proceedings were initiated within limitation.

Final Conclusion: The reference was answered in favour of the department, and the assessment proceedings were upheld as validly commenced within time.

Ratio Decidendi: For best judgment assessment under section 11(4), it is sufficient if the Assessing Authority takes an effective step within the prescribed period that clearly indicates an intention to proceed with such assessment; finalisation of the assessment may occur later.

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