Best judgment assessment upheld where unaccounted purchases, stock shortages and suppressed records defeated the second-sale claim.

Best judgment assessment under the Kerala General Sales Tax Act was sustained where inspection reports disclosed unaccounted purchases, stock shortages and secret records indicating suppression. The assessee's claim of second-sale status failed because it did not discharge the burden under section 12 to show that the disputed transactions were not taxable. An earlier decision was distinguished as involving only shortage, whereas the present record showed both unaccounted purchases and sales. The Tribunal's finding that the accounts were unreliable and that the turnover additions were reasonable was supported by the material on record.

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Issues: Whether the Tribunal was justified in sustaining the additions made to the taxable turnover and in rejecting the assessee's challenge based on alleged second-sale status and shortage in stock of arrack.

Analysis: The assessment was made on the basis of best judgment under section 17(3) of the Kerala General Sales Tax Act, 1963, after inspection reports revealed unaccounted purchases, shortages, and secret records showing suppression. The assessee, claiming to be only a second seller, failed to discharge the burden under section 12 of the Act to prove that the disputed transactions were not liable to tax. The Court distinguished the earlier decision relied on by the assessee because that case involved only shortage, whereas the present case involved established unaccounted purchases and sales. The Tribunal's findings that the accounts were unreliable and that the additions for both assessment years were reasonable were supported by the material on record.

Conclusion: The additions were validly sustained, the rejection of accounts was justified, and the assessee's challenge failed.

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