Best judgment assessment must be supported by material, and relied-on audit records cannot be withheld without lawful confidentiality protection.

Best judgment assessment under the Tamil Nadu Value Added Tax Act must rest on a reasonable, evidence-based estimate, not a broad inference or unsupported enhancement of gross profit; on the stated facts, the rejection of accounts and further addition were held unsustainable. The text also states that a dealer is entitled to the desk audit report and related relied-upon material unless the records are lawfully protected as confidential under section 85; a mere confidentiality claim was insufficient where the material included a show cause notice and an order-in-original from another authority. The assessment order was set aside and the denial of the report was rejected.

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Issues: (i) Whether the assessment based on rejection of accounts and adoption of gross profit at 54.91% with further addition of 15% could be sustained as a best judgment assessment under the Tamil Nadu Value Added Tax Act, 2006. (ii) Whether the petitioner was entitled to the desk audit report and the related material despite the claim of confidentiality under section 85 of the Tamil Nadu Value Added Tax Act, 2006.

Issue (i): Whether the assessment based on rejection of accounts and adoption of gross profit at 54.91% with further addition of 15% could be sustained as a best judgment assessment under the Tamil Nadu Value Added Tax Act, 2006.

Analysis: The assessment was found to rest on a broad inference rather than on concrete material showing escapement of turnover or suppression of sales. The adoption of an enhanced gross profit rate was held to be unsupported by evidence and not based on a rational or justifiable estimate. The Court applied the settled principle that best judgment assessment cannot be a wild guess and must be founded on some material, and found that the reasons recorded did not justify rejection of accounts or the resulting addition.

Conclusion: The assessment on this issue was held unsustainable and was quashed, in favour of the assessee.

Issue (ii): Whether the petitioner was entitled to the desk audit report and the related material despite the claim of confidentiality under section 85 of the Tamil Nadu Value Added Tax Act, 2006.

Analysis: The report was examined and found to rely upon a show cause notice and an order-in-original passed by another tax authority, which were not treated as confidential records merely by reference to section 85. Since the material relied on was not shown to be a protected secret document, the refusal to furnish it could not be sustained.

Conclusion: The confidentiality claim was rejected and the denial of the report was held unsustainable, in favour of the assessee.

Final Conclusion: The impugned assessment order was set aside and the writ petitions were allowed, with no order as to costs.

Ratio Decidendi: A best judgment assessment must rest on a reasonable and justifiable estimate supported by material, and material relied upon for assessment cannot be withheld as confidential unless it is lawfully protected by the statute.

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