Best judgment assessment does not bar later reassessment where fresh material shows systematic suppression and under-totalling.

A prior best judgment assessment does not prevent reopening under section 16 where later material shows systematic under-totalling and suppression in purchases and sales, making the earlier estimate inadequate. The Tribunal accepted jurisdiction to make a further assessment, but confined the escaped turnover addition to an overall fair estimate of 10 per cent of disclosed sales and excluded overlap with additions already sustained in appeal. Penalty was also considered justified because the defects indicated wilful understatement rather than a mere accounting error, but it had to be calculated only on the tax attributable to the sustained additional turnover, resulting in substantial reduction.

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Issues: (i) Whether the assessing authority could invoke section 16 to make a further addition after the original best judgment assessment had already been affirmed in appeal; (ii) whether the further addition for escaped turnover was justified and, if so, to what extent; (iii) whether penalty was leviable and on what basis.

Issue (i): Whether the assessing authority could invoke section 16 to make a further addition after the original best judgment assessment had already been affirmed in appeal.

Analysis: The earlier appellate proceedings did not decide the question of under-totalling on merits. The later material showed a pattern of under-totalling in purchases of exempt goods and similar understatement in later years, which justified reopening the matter under section 16. The fact that the original assessment was made on best judgment did not confer immunity from a further assessment when later facts disclosed that the earlier estimate was inadequate.

Conclusion: The invocation of section 16 was valid and within jurisdiction.

Issue (ii): Whether the further addition for escaped turnover was justified and, if so, to what extent.

Analysis: The records disclosed consistent under-totalling in exempt purchases, a recurring modus operandi, and other defects indicating that the disclosed sales were understated. At the same time, the fresh addition overlapped with the additions already made in the original assessments. An overall estimate of 10 per cent of disclosed sales was held to be fair and reasonable, and only the incremental amount over the addition already sustained in appeal could be retained.

Conclusion: The further additions were justified only to the limited extent worked out by the Tribunal, and the balance was deleted.

Issue (iii): Whether penalty was leviable and on what basis.

Analysis: Systematic under-totalling and the surrounding defects showed wilful understatement rather than mere error in accounting, so penalty was warranted. However, penalty had to be computed only with reference to the tax attributable to the sustained additional turnover, not on the entire addition originally made.

Conclusion: Penalty was upheld in principle but substantially reduced.

Final Conclusion: The appeals succeeded only in part, with the further turnover additions curtailed and the penalties reduced accordingly.

Ratio Decidendi: A prior best judgment assessment does not bar action under section 16 when later-discovered material shows systematic suppression or under-totalling rendering the earlier assessment inadequate, but any further addition and penalty must be confined to the extent reasonably supported by the evidence and free from overlap with earlier additions.

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