Best judgment assessment on suppressed turnover upheld where inspection materials and rational estimation supported the addition.

In a best judgment assessment based on shop inspections, mahazars and rejection of the assessee's explanation for shortage of imported raw cashewnuts, the Kerala HC noted that some guesswork is permissible if the estimate rests on a rational basis and is not perverse, arbitrary or vindictive. The assessee's bare claim that the goods were processed, roasted and sold was unsupported by documentary evidence, and the appellate authorities had already reduced the estimate on their own appraisal of the facts. Revision interference was therefore unwarranted, and the estimation of suppressed turnover was upheld.

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Issues: Whether the estimation of suppressed turnover in a best judgment assessment based on shop inspection materials and the consequent enhancement sustained by the appellate authorities were liable to be interfered with in revision.

Analysis: The assessment was founded on shop inspections, mahazars and the rejection of the assessee's explanation regarding shortage of imported raw cashewnuts. In a best judgment assessment, some element of guesswork is permissible, provided the conclusion rests on a rational basis and is not vindictive, capricious, perverse or arbitrary. The assessee's bare assertion that the goods were processed, roasted and sold was not supported by documentary evidence, and the authorities below reduced the estimation on appeal on their own assessment of the facts. Interference in revision was not warranted because the estimations were supported by a rational foundation and did not disclose perversity or arbitrariness.

Conclusion: The revision was not maintainable on the merits and the estimation of suppressed turnover was upheld against the assessee.

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