Best judgment assessment notice and turnover estimate upheld where prior notice and past figures supported the assessment.

A notice under section 11(2) stating that non-compliance would lead to best judgment assessment was treated as an effective step initiating proceedings under section 11(4), so the assessment was not time-barred. The turnover estimate was upheld because some estimation is inherent in best judgment assessment, the figure was supported by the preceding year's turnover and the assessee had prior notice but produced no books or objection at that stage. On those facts, the estimate was not found arbitrary, and the assessment was sustained.

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Issues: (i) Whether the best judgment assessment under section 11(4) of the Punjab General Sales Tax Act, 1948 was barred by limitation; (ii) whether the estimate of gross turnover at Rs. 60 lakhs was arbitrary and unsupported by material.

Issue (i): Whether the best judgment assessment under section 11(4) of the Punjab General Sales Tax Act, 1948 was barred by limitation.

Analysis: A notice in the prescribed form under section 11(2) stating that, on failure to comply, the Assessing Authority would proceed to assess to the best of his judgment without further reference to the assessee was treated as an effective step for initiating best judgment proceedings. The notice was issued within five years from the end of the relevant assessment period, and the limitation objection was answered by following the earlier Division Bench view that such notice indicates the authority's decision to proceed under section 11(4).

Conclusion: The assessment was not barred by limitation and this issue was decided against the petitioner.

Issue (ii): Whether the estimate of gross turnover at Rs. 60 lakhs was arbitrary and unsupported by material.

Analysis: In a best judgment assessment, some estimate is unavoidable. The assessed figure was only marginally above the returned turnover as clarified in the pleadings, and the preceding year's turnover was also close to the estimate. The assessee was specifically put to notice that failure to produce books and evidence would result in finalisation at Rs. 60 lakhs, yet no books were produced and no objection was raised to the estimate at that stage. On those facts, the estimate was treated as based on relevant material and not excessive.

Conclusion: The estimate of turnover was upheld and this issue was decided against the petitioner.

Final Conclusion: The challenge to the best judgment assessment failed on both limitation and quantum, and the assessment order was sustained.

Ratio Decidendi: A notice under section 11(2) that clearly states that best judgment assessment will follow non-compliance constitutes an effective step under section 11(4), and a turnover estimate founded on the preceding year's figures and prior notice will not be struck down as arbitrary merely because it involves an element of estimation.

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