Third-party diary entries cannot prove suppressed turnover unless linked to the assessee by admissible evidence.

A third-party broker's diary entry could not be treated as proof of the assessee's suppressed turnover unless the Department first connected the entry to the assessee by admissible evidence, such as producing the broker or the alleged purchasers. Correlation of oil-manufacturing turnover with electricity consumption was an accepted method in best judgment assessment, but it did not relieve the Department of its burden to prove suppression. In the absence of such proof, no adverse inference could be drawn merely because the broker was not examined, and the assessee's disclosed turnover could not be enhanced on that basis.

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Issues: Whether entries in the diary of a third party broker, not proved by producing the broker or the purchasers, could be treated as evidence of the assessee's suppressed turnover so as to justify enhancement of turnover in a best judgment assessment based on electricity consumption.

Analysis: Determination of oil-manufacturing turnover by correlating electricity consumption was accepted as a proper method, but that principle could not displace the need for the Department to prove suppression where it relied on a third-party diary entry. A bare entry in another person's diary did not, by itself, establish that the turnover recorded therein belonged to the assessee. The Department had the burden to connect the entry with the assessee by producing the broker or at least the persons in whose favour the sales were said to have been made, so that the entry could be tested. In taxation proceedings the burden lies on the Department, and no adverse inference could be drawn against the assessee merely because the broker was not produced, in the absence of material linking the entry to the assessee.

Conclusion: The diary entry was not proved to be the assessee's suppressed turnover, and the turnover disclosed by the assessee could not be enhanced on that basis.

Ratio Decidendi: In taxation matters, a third-party entry can be used to support an allegation of suppressed turnover only when the Department proves by admissible evidence that the entry relates to the assessee; otherwise the burden is not discharged and no adverse inference can be drawn.

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