Best judgment assessment requires a rational nexus to detected facts; unsupported assumptions of continuous suppression cannot sustain turnover estimates.

Inspection materials showing excess stock and suppression can justify reopening a completed assessment and rejection of accounts, particularly where a later stock register is disbelieved. However, a best judgment estimate of escaped turnover must rest on relevant material and bear a reasonable nexus to the facts actually discovered. An estimate built on unsupported assumptions of continuous suppression is unsustainable, so the turnover figure must be rationally re-estimated and recomputed on a proper basis.

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Issues: (i) Whether the assessment could be reopened on the basis of materials unearthed in the inspection and the accounts could be rejected; (ii) Whether the estimate of escaped turnover made by the appellate authority was sustainable.

Issue (i): Whether the assessment could be reopened on the basis of materials unearthed in the inspection and the accounts could be rejected.

Analysis: The inspection disclosed excess stock and other circumstances pointing to suppression, and the subsequently produced stock register was rightly disbelieved. The materials were sufficient to reject the accounts and justify reopening of the completed assessment, though some of the items relied upon by the appellate authority were found to be unsupported or irrelevant.

Conclusion: The reopening of the assessment and rejection of the accounts were upheld.

Issue (ii): Whether the estimate of escaped turnover made by the appellate authority was sustainable.

Analysis: A best judgment estimate must rest on relevant material and have a reasonable nexus with the facts discovered. The Court found that the appellate authority had proceeded on an excessive and unsupported basis by treating the detected excess stock as reflecting a much larger continuous suppression, while several incriminating items were not material. The escaped turnover was therefore required to be re-estimated on a more rational basis.

Conclusion: The estimate made by the appellate authority was set aside and the escaped turnover was reduced to a lower figure for recomputation.

Final Conclusion: The appeal succeeded in part, with the enhanced turnover estimate reduced and the matter directed to be recomputed accordingly.

Ratio Decidendi: In a best judgment assessment, the estimate of escaped turnover must be founded on relevant material and bear a reasonable nexus to the facts discovered; a figure based on an excessive or unsupported assumption of continuous suppression cannot be sustained.

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