Best-judgment assessment needs record-based support; rejected accounts may stand, but unsupported turnover estimates can be remanded.

Account books may be rejected where statutory maintenance requirements are not met and the records contain material defects, such as missing production registers, absent vouchers and unexplained return discrepancies; the rejection of the books was upheld. A best-judgment turnover estimate, however, must still rest on material on record and cannot be a pure guess. Because the record did not support the finding that the brick kiln operated during the disputed second seasons, and the turnover for those periods had not been separately worked out, the turnover determination was set aside and the matter remanded for fresh decision.

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Issues: (i) whether the assessee's account books were liable to be rejected for non-compliance with the statutory requirement of maintaining accounts under Section 12(2); (ii) whether the best-judgment estimate of turnover was sustainable in the absence of material supporting the finding that the brick kiln had been operated during the disputed second seasons.

Issue (i): whether the assessee's account books were liable to be rejected for non-compliance with the statutory requirement of maintaining accounts under Section 12(2)

Analysis: The account books were found unreliable on several defects, including absence of a separate register for pathai, non-maintenance of vouchers for coal and firewood, unexplained discrepancies in quarterly returns, and failure to keep accounts in the manner required at every stage of production. In view of the statutory obligation and the defects recorded, the rejection of the books was upheld.

Conclusion: The rejection of the account books was sustained and this issue was decided against the assessee.

Issue (ii): whether the best-judgment estimate of turnover was sustainable in the absence of material supporting the finding that the brick kiln had been operated during the disputed second seasons.

Analysis: Rejection of accounts and best-judgment assessment are distinct stages. Although some guesswork is permissible in a best-judgment assessment, the estimate must rest on material on record and cannot be a pure guess. The record did not show any relevant material establishing that the assessee actually operated the brick kiln in the second seasons, and the explanation based on shortage of coal was not properly examined. The finding that the kiln had been operated during the disputed periods was therefore unsupported by evidence. As the turnover for the two seasons had not been separately worked out, the matter required fresh determination by the Tribunal.

Conclusion: The turnover estimate was set aside and the matter was remanded for fresh decision, in favour of the assessee on this issue.

Final Conclusion: The challenge succeeded only to the extent of the turnover determination, while the rejection of accounts was maintained, and the matter was sent back for reconsideration in accordance with law.

Ratio Decidendi: A best-judgment assessment must be founded on some material on record and cannot rest on a pure guess, even where the assessee's accounts have been rejected for statutory non-compliance.

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