Books of account rejection requires credible material; unsupported best judgment assessment and consequential entry tax assessment cannot stand.

Books of account under the U.P. Value Added Tax Act, 2008 cannot be rejected unless the assessing authority forms a positive view, on material, that the disclosed turnover is not worthy of credence. A minor survey discrepancy, without evidence of suppression, concealment, or withheld records, is insufficient to justify best judgment assessment. Where the explanation for the discrepancy is not disproved and the turnover estimate lacks empirical, contemporaneous, or otherwise fair and intelligible support, the assessment becomes arbitrary. On these facts, rejection of the books and the best judgment assessment were unsustainable, and the consequential entry tax assessment also failed.

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Issues: Whether the rejection of the assessee's books of account and the consequent best judgment assessment were justified on the basis of the survey discrepancies, and whether the consequential entry tax assessment could stand.

Analysis: Under Section 28 of the U.P. Value Added Tax Act, 2008, books of account can be rejected only when the assessing authority forms a positive view that the dealer's disclosed turnover is not worthy of credence. Such a conclusion cannot rest on a singular or insignificant discrepancy unless it is of such gravity that it indicates suppression or deliberate concealment. Here, the discrepancy in raw material was minuscule, and the explanation regarding the finished goods was neither dislodged by the Revenue nor found to be implausible by the authorities below. The record did not show that any books or documents were withheld from the survey team. The estimate of escaped turnover was also unsupported by any empirical or contemporaneous material and was not shown to have been derived from a fair, informed or intelligible basis.

Conclusion: The rejection of the books of account and the best judgment assessment were unsustainable, and the consequential entry tax assessment also failed.

Ratio Decidendi: Books of account cannot be rejected, and a best judgment assessment cannot be sustained, unless the authority has material showing that the accounts are not worthy of credence and the turnover estimate is founded on a fair, cogent and non-arbitrary basis.

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