Court sets aside assessment order solely based on electricity consumption, emphasizing natural justice and proper verification. Remanded for fresh consideration.

The Court set aside the revised assessment order for the assessment year 2004-05, which was solely based on electricity consumption without proper verification of the petitioner's books of accounts. Emphasizing the importance of natural justice and proper verification before passing revised orders, the Court remanded the matter back to the respondent for fresh consideration. The petitioner was granted the opportunity to file objections afresh with necessary documents, and the respondent was directed to pass appropriate orders within four weeks after affording a personal hearing to the petitioner. The writ petition was allowed without costs, concluding the case.

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Issues:
Challenging a revised assessment order for the assessment year 2004-05 based on electricity consumption as the sole basis for rejecting income tax returns and estimating taxable turnover, violation of principles of natural justice, and the need for providing a reasonable opportunity to produce books of accounts.

Analysis:
1. The petitioner, a manufacturer of sago and starch, challenged a revised assessment order for the assessment year 2004-05, claiming exemption on a reported turnover of Rs. 76,07,110. The respondent alleged suppression of sales turnover based on electricity consumption, leading to a revised assessment order without due notice or opportunity for the petitioner to produce relevant documents.

2. The respondent contended that the revised assessment was based on the best judgment due to the petitioner's failure to produce books of accounts for verification. The petitioner argued against using electricity consumption as the sole basis for assessment, citing legal precedents like Kalyani Oil Mills v. State of Madras, emphasizing the need for proper verification and consideration of objections before passing revised orders.

3. The Court noted that the revised assessment solely based on electricity consumption without verifying the petitioner's books of accounts was arbitrary and against the principles of natural justice. Referring to legal principles from Kalyani Oil Mills and Madurai Soft Drinks (Private) Limited v. State of Tamil Nadu, the Court emphasized the importance of material doubt in account entries, actual test checks, and comparable data for estimation, highlighting the arbitrariness of using arbitrary figures for best judgment assessments.

4. Considering the legal position and admitted facts, the Court set aside the impugned revised order and remanded the matter back to the respondent for fresh consideration. The petitioner was given the opportunity to file objections afresh along with necessary documents within two weeks, with the respondent directed to pass appropriate orders within four weeks after affording a personal hearing to the petitioner.

5. The writ petition was allowed, no costs were imposed, and the connected miscellaneous petition was closed, concluding the judgment regarding the challenges to the revised assessment order for the assessment year 2004-05 based on electricity consumption and the violation of principles of natural justice.

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