Reasonable estimation of suppressed turnover upheld where anti-evasion addition was neither perverse nor irrational.

Where suppressed turnover is detected, an authority may reasonably estimate that the same pattern continued until detection and make a consequential addition on that basis. The Karnataka High Court accepted estimation at twice the detected suppression as a rational anti-evasion measure, holding that interference is justified only where the estimate is perverse, vindictive, abnormally harsh, or otherwise irrational. As none of those defects was shown, the estimation and addition were upheld and the assessment order sustained.

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Issues: Whether the addition made by estimating the suppressed turnover at twice the detected amount was arbitrary, excessive, or rational basis so as to call for interference.

Analysis: The suppression detected during the relevant assessment period was treated as a basis for inferring continuation of the same pattern until detection. The authority's approach was accepted as a reasonable method of estimation and as a measure intended to operate as a deterrent in cases of tax evasion. Interference was held to be warranted only where the estimation is vindictive, abnormally harsh, or perverse, and none of those features was found.

Conclusion: The estimation and consequential addition were upheld and no interference was called for.

Final Conclusion: The appeal failed and the assessment order was sustained.

Ratio Decidendi: Where suppression is detected, an authority may make a reasonable estimate on the footing that the same pattern would have continued until detection, and interference is justified only if the estimate is perverse, vindictive, or irrational.

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