Best judgment assessment follows rejection of books where manufacturing accounts are not maintained and disclosed turnover is not automatically accepted.

Non-maintenance of the manufacturing account under section 12(2) of the U.P. Sales Tax Act is a material defect, because it prevents effective verification of production and turnover and justifies rejection of the books of account. Once the books are rejected, the disclosed turnover is not automatically binding on the assessing authority. The authority must then make a best judgment assessment on the basis of relevant facts, surrounding circumstances and objective appraisal of the available material, rather than accept the return as correct merely because no separate adverse evidence is found.

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Issues: Whether, after rejection of the books of account for non-maintenance of the manufacturing account under section 12(2) of the U.P. Sales Tax Act, the disclosed turnover must invariably be accepted or whether the assessing authority may make a best judgment assessment on the basis of relevant facts and circumstances.

Analysis: Section 12(2) requires a manufacturer to maintain manufacturing accounts as a mandatory safeguard to corroborate the regular books and to enable verification of production and turnover. Non-maintenance of such account is not a mere technical lapse, because it seriously impairs the evidentiary value of the books and justifies rejection of the accounts. Once the books are rejected, the process does not end there; the assessing authority must proceed to make a best judgment assessment on an objective appraisal of the material and surrounding circumstances. The disclosed turnover cannot be treated as automatically correct merely because no separate adverse material is found.

Conclusion: The disclosed turnover need not be accepted as a matter of course after rejection of the books of account, and the assessing authority is entitled to determine turnover by best judgment on relevant material and circumstances.

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