Best judgment assessment fails when reasonable opportunity to produce records is denied, leading to violation of natural justice.

Best judgment assessment cannot stand where the assessee is denied reasonable opportunity to produce books of account and allied records, especially after repeated requests for time and adjournment. The court treated the failure to wait for the relevant head office records and to consider the material already indicated as available as a breach of natural justice and fair hearing. The assessment orders were therefore unsustainable and were set aside, with the matter remitted for fresh consideration on merits after affording the assessee an opportunity to place the necessary records.

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Issues: Whether the assessment orders based on best judgment were sustainable when the assessee was not given reasonable opportunity to produce records; whether the orders were vitiated for violation of principles of natural justice and required to be set aside and remitted for fresh consideration.

Analysis: The assessee sought time on several occasions to produce books of account and allied records kept at the head office, explaining that the Chennai branch transactions had to be segregated from the accounts of other regional offices. The record showed repeated requests for adjournment, continued appearance of the authorised representative, and a final request made before closure of the assessment period. The assessment was nevertheless completed on best judgment without waiting for the records or considering the material already indicated to be available. In these circumstances, the denial of adequate time and opportunity to place relevant documents before the authority amounted to denial of fair hearing. The assessment also proceeded without proper consideration of the relevant factors bearing on the Chennai branch turnover.

Conclusion: The assessment orders were unsustainable for violation of principles of natural justice and were liable to be set aside.

Final Conclusion: The matter was sent back to the assessing authority for reconsideration on merits after affording the assessee an opportunity to produce the necessary records.

Ratio Decidendi: An assessment made on best judgment cannot be sustained where the assessee is not granted reasonable opportunity to produce relevant records and explain the turnover, since such denial violates natural justice and warrants remand.

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