Best judgment assessment needs material support; accepted belated returns cannot be ignored and suppressed turnover cannot rest on conjecture.

Accepted belated returns, once taken on record after payment of composition fee, could not be ignored for the purpose of best judgment assessment. The HC held that the Assessing Officer needed material support before estimating suppressed purchases and sales, and could not proceed on conjecture or treat the returns as unfiled merely because they were submitted after inspection. Applying the principle that only excess sales not covered by purchases may be brought to tax where suppression is alleged, the Court found the assessment unsustainable, set aside the orders, and remitted the matters for fresh consideration in accordance with law.

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Issues: Whether, after belated returns were accepted on payment of composition fee, the Assessing Officer could still invoke best judgment assessment and estimate suppressed purchases and sales without adequate material.

Analysis: The accepted belated returns were to be treated as the returns for the relevant assessment years for practical purposes. Once such returns had been accepted, the authority could not proceed on the footing that they remained unfiled or ignore them merely because they were filed after inspection. Best judgment assessment requires material support, and the cited principle was that where purchases and sales are alleged to be suppressed, only the excess sales not covered by purchases can be brought to tax. On the facts, the impugned assessment proceeded without such material support.

Conclusion: The best judgment assessments were not sustainable, and the assessment orders were liable to be interfered with.

Final Conclusion: The writ petitions succeeded, the assessment orders were set aside, and the matters were remitted for fresh consideration in accordance with law.

Ratio Decidendi: Accepted belated returns cannot be disregarded for best judgment assessment, and any estimate of suppressed turnover must rest on material supporting the addition rather than on conjecture.

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