Assessment based on irrelevant survey material fails, but contemporaneous evidence can justify rejecting books and estimating turnover.

An assessment based only on surveys not relatable to the relevant assessment year, and without a finding of actual manufacture or sale during that year, cannot stand on presumption alone and was set aside for 1980-81. By contrast, where contemporaneous survey material showed a functional kiln, coal, manufactured bricks, and ongoing work, rejection of account books and estimation of turnover were supported by material and disclosed no jurisdictional error for 1981-82. The stated principle is that conjecture cannot sustain an assessment, but survey evidence of undisclosed manufacturing activity can justify rejection of books and turnover estimation.

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Issues: (i) Whether the assessment for the assessment year 1980-81 could be sustained on the basis of surveys not relatable to that year and without any finding of actual manufacture or sale during the relevant period. (ii) Whether, for the assessment year 1981-82, rejection of the account books and the estimate of turnover based on the survey material and surrounding circumstances called for interference in revision.

Issue (i): Whether the assessment for the assessment year 1980-81 could be sustained on the basis of surveys not relatable to that year and without any finding of actual manufacture or sale during the relevant period.

Analysis: The assessment for 1980-81 rested on surveys made in 1980 and 1981, neither of which directly related to the relevant year. The finding of manufacture during the assessment year was inferred only on assumption that firing must have taken place, and no material finding of sale during the year was recorded. An assessment cannot be supported on presumption alone when the supporting surveys are not relevant to the year under assessment.

Conclusion: The assessment for 1980-81 was unsustainable and was set aside in favour of the assessee.

Issue (ii): Whether, for the assessment year 1981-82, rejection of the account books and the estimate of turnover based on the survey material and surrounding circumstances called for interference in revision.

Analysis: For 1981-82, the kiln was found functional during the relevant survey, the asserted closure was treated as bogus, and the survey disclosed coal, manufactured bricks, and work of pathai and bharai in progress. On those facts, rejection of the account books and the resulting estimate of turnover were founded on material and did not disclose any jurisdictional error.

Conclusion: The assessment for 1981-82 was upheld and the revision failed against the assessee.

Final Conclusion: The revisions were disposed of with relief only in relation to the assessment year 1980-81, while the assessment for 1981-82 was sustained.

Ratio Decidendi: An assessment based purely on conjecture and on surveys not relevant to the assessment year cannot stand, but rejection of account books and turnover estimation are sustainable where contemporaneous survey material supports the finding of undisclosed manufacturing activity.

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