Best judgment assessment must disclose comparable material to the assessee, though multiple comparables are not always required.

In a best judgment assessment, any comparable case used to estimate turnover, yield, or income must be disclosed to the assessee, and an opportunity must be given to rebut it; reliance on undisclosed comparable material breaches natural justice and can vitiate the estimate. The discussion also states that there is no inflexible rule requiring more than one comparable case: the sufficiency of comparable material depends on the facts and the reasonableness of the estimate, so a single comparable is not automatically impermissible.

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Issues: (i) Whether a best judgment assessment could be sustained on the basis of a comparable case not disclosed to the assessee and without giving an opportunity to rebut it; (ii) Whether, in making a best judgment assessment on comparable instances, more than one comparable case was invariably required.

Issue (i): Whether a best judgment assessment could be sustained on the basis of a comparable case not disclosed to the assessee and without giving an opportunity to rebut it.

Analysis: A comparable instance used for estimating turnover or yield in a best judgment assessment must be put to the assessee so that the assessee may explain or rebut it. Reliance on undisclosed material and denial of an opportunity to answer it offends the principles of natural justice and vitiates the estimate when the assessment is founded on that material.

Conclusion: The answer was in the negative and in favour of the assessee; the Tribunal was not justified in relying on the comparable case without giving the assessee an opportunity to rebut it.

Issue (ii): Whether, in making a best judgment assessment on comparable instances, more than one comparable case was invariably required.

Analysis: There is no absolute legal rule that best judgment assessment based on comparable material must always rest on more than one comparable case. The sufficiency of the material depends on the facts and the reasonableness of the estimate, and a single comparable case is not per se impermissible.

Conclusion: The answer was in the affirmative and against the assessee.

Final Conclusion: The reference was answered partly for the assessee and partly for the revenue, with the principal objection to the estimate succeeding on the ground of denial of opportunity to rebut the comparable material.

Ratio Decidendi: In a best judgment assessment, any comparable case relied upon for estimating income or yield must be disclosed to the assessee and the assessee must be afforded an opportunity to meet it; there is no inflexible requirement that multiple comparable cases be used.

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