Best judgment assessment must still be fair and reasoned after account books are rejected.

Rejection of the account books was justified because the manufacturer failed to maintain the stock and production records required under the sales tax law, and that mandatory non-compliance was undisputed. After rejection of the books, electricity consumption could be considered in best judgment assessment, but the resulting turnover estimate still had to be fair, reasoned and based on relevant production factors. A mechanical estimate drawn from prior consumption data, without adequate scrutiny of oil yield and related variables, was unsustainable, and the consequential addition to oil-seed turnover also fell. The turnover additions were set aside and remitted for fresh consideration.

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Issues: (i) whether the rejection of the assessee's account books was justified for -compliance with the account-maintenance requirements under the sales tax law; (ii) whether the additions made to the disclosed turnover of oil and oil-seeds on the basis of electricity consumption and the related estimate could be sustained.

Issue (i): whether the rejection of the assessee's account books was justified for non-compliance with the account-maintenance requirements under the sales tax law.

Analysis: The assessee was a manufacturer and was therefore required to maintain, apart from the general accounts, stock books in respect of raw materials and production at every stage. The findings of the tax authorities recorded that such accounts were not maintained in the manner required by law, and this factual position was not disputed. The requirement under the account-maintenance provision was treated as mandatory, and non-compliance justified rejection of the books.

Conclusion: The rejection of the account books was justified and was upheld.

Issue (ii): whether the additions made to the disclosed turnover of oil and oil-seeds on the basis of electricity consumption and the related estimate could be sustained.

Analysis: Once the books were rejected, electricity consumption could be taken into account in a best judgment assessment, but the estimate still had to be a reasoned and fair one. The additions were found to be mechanically made by adopting a formula from prior consumption without adequate consideration of relevant factors affecting oil yield and production. The estimate of turnover was not supported by sufficient reasoning, and the addition made to the purchase turnover of oil-seeds was consequential to the defective oil turnover estimate. The assessment therefore could not be sustained as made.

Conclusion: The additions to the turnover of oil and oil-seeds were not sustained and the matter was remitted for fresh consideration.

Final Conclusion: The rejection of accounts stood, but the turnover estimates were set aside and sent back for fresh decision in accordance with law.

Ratio Decidendi: After rejection of accounts, electricity consumption may be used in best judgment assessment, but the estimate must still be fair, reasoned, and based on relevant production factors; a mechanical formula without such scrutiny is unsustainable.

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