Best judgment assessment requires a fair chance to rebut third-party accounts, including cross-examination when needed.

A taxing authority exercising best judgment assessment under section 17(3) of the Kerala General Sales Tax Act and rule 15 must give a real and effective opportunity to the assessee to prove the correctness or completeness of the return. That safeguard incorporates audi alteram partem. Where the assessment is based on third-party accounts, the assessee may need to test that material by summoning and cross-examining the third-party witnesses. Rule 15 reinforces the requirement that the assessee be called upon to establish the return before provisional assessment is made.

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Issues: Whether, in a best judgment assessment under section 17(3) of the Kerala General Sales Tax Act, 1963 and rule 15, the assessee was entitled to a reasonable opportunity to prove the correctness or completeness of the return by cross-examining third-party witnesses whose accounts were relied upon to reject the return.

Analysis: Section 17(3) empowers best judgment assessment where the return is absent or appears incorrect or incomplete, but the proviso requires a reasonable opportunity of being heard and, where a return has been submitted, an opportunity to prove its correctness or completeness. The Court held that this statutory safeguard incorporates the audi alteram partem rule. Where the assessing authority relies on the accounts of third parties to conclude that the assessee's return is incorrect or incomplete, the assessee can effectively disprove that material only by challenging the credibility of those accounts. In such circumstances, the opportunity to prove the return includes the right to summon and cross-examine the third parties whose accounts form the basis of the assessment. Rule 15 reinforces the same requirement by directing the assessee to be called upon to prove the correctness or completeness of the return before provisional assessment is made.

Conclusion: The assessee was entitled to cross-examine the third-party dealers in the facts of these cases, and refusal of that opportunity vitiated the assessments.

Final Conclusion: The statutory hearing safeguard in a best judgment assessment must be real and effective, and where third-party accounts are used against the assessee, cross-examination may be necessary to satisfy the requirement of a fair opportunity.

Ratio Decidendi: Where a taxing statute requires a reasonable opportunity to prove the correctness or completeness of a return, and the assessment is founded on third-party accounts, the assessee must be allowed to cross-examine those witnesses if that is necessary for an effective rebuttal.

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