Best judgment assessment requires reliable adverse material and fair opportunity; untested third-party cash memo cannot justify book rejection.

Account books under the U.P. Trade Tax Act can be rejected and best judgment assessment made only when the dealer's return or accounts are found incorrect or incomplete, and the dealer is given a reasonable opportunity to meet adverse material. Where rejection rests solely on a cash memo allegedly recovered from a third party, the document must be confronted to the dealer and the third party produced for cross-examination if reliance is placed on it. Suspicion from an untested document is insufficient by itself to justify rejection of the books or enhancement; on that basis, the assessment could not be sustained.

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Issues: Whether the account books of the dealer could be rejected and the assessment made on best judgment basis solely on the strength of a cash memo allegedly recovered from a third party, without producing that person for cross-examination and without confronting the document to the dealer.

Analysis: Section 7 of the U.P. Trade Tax Act requires a dealer to maintain true and correct accounts and permits best judgment assessment only when the return is found to be incorrect or incomplete. The proviso to Section 7(3) contemplates a reasonable opportunity to prove correctness and completeness, which includes the opportunity of cross-examination where reliance is placed on material adverse to the dealer. The only basis for rejecting the books was a cash memo not recovered from the dealer and not supported by any defect in the maintained accounts. Since the Department did not produce the third party for cross-examination, the document could not be treated as reliable material against the dealer. At most it created suspicion, and suspicion alone could not justify rejection of the books or the consequent enhancement.

Conclusion: The rejection of the account books and the restoration of the assessment order were unsustainable. The issue is decided in favour of the assessee.

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