Court overturns assessment orders, favors assessee for multiple years, citing lack of evidence; emphasizes rational assessment.

The High Court set aside the assessment orders in favor of the assessee, allowing the revisions for assessment years 2007-08, 2009-10, 2010-11, 2011-12, and 2013-14. The Court found the Assessing Officer's estimation of gross profit and turnover to be arbitrary, lacking a rational basis and factual evidence. Emphasizing the need for a rational and unbiased best judgment assessment, the Court held that the assessments were made on mere surmises and conjectures. Each party was ordered to bear their respective costs.

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Issues:
Assessment of gross profit, Best judgment assessment, Rejection of books of accounts, Estimation of turnover, Rational basis for estimation.

Assessment of Gross Profit:
The revisions by the assessee concern assessment years 2007-08, 2009-10, 2010-11, 2011-12, and 2013-14. The Assessing Officer adopted varying gross profit percentages in comparison to the books of accounts of the assessee. For instance, in the assessment year 2013-14, a gross profit of 160% was adopted against the recorded 138.45%. In other years, gross profit percentages ranged from 143% to 184%. The contention was that these assessments were made without valid reasons and contrary to the principles of best judgment assessment.

Best Judgment Assessment and Rejection of Books of Accounts:
The counsel for the assessee argued that the Assessing Officer's actions, upheld by appellate authorities, were against the principles of best judgment assessment. The assessment was based on assumptions and presumptions rather than concrete evidence from the books of accounts. The estimation of gross profit was primarily based on the sales of two brands of foreign liquor in different premises without substantial material to support the estimation, leading to the rejection of books of accounts.

Estimation of Turnover and Rational Basis:
The Government Pleader contended that there were no legal issues in the Tribunal's order, citing previous court decisions. However, the High Court found the cited cases to be irrelevant to the current matter. The assessment order revealed that the estimation of turnover was made without a rational basis. The Assessing Officer compared purchase and sales values of different liquor brands without considering the unique sales strategies of the assessee in different premises. The estimation lacked a reasonable nexus with the actual business transactions, leading to the rejection of books of accounts.

Legal Principles and Conclusion:
The High Court referred to legal principles from Commissioner of Sales Tax v. H.M.Esufali, emphasizing that a best judgment assessment should be rational and unbiased, with a reasonable nexus to available facts. In this case, the estimation was deemed arbitrary and not based on factual evidence. The Court concluded that the estimation was made on mere surmises and conjectures, lacking a rational basis. Consequently, the orders of the authorities below were set aside in favor of the assessee, and the revisions were allowed, with each party bearing their respective costs.

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