Best judgment assessment based only on eye estimation of stock was held unsustainable for want of credible material.

Rejection of books of account and best judgment assessment based solely on survey findings and eye estimation of stock was held unsustainable. The court noted that, under the U.P. Value Added Tax Act, assessment must rest on credible material, and visual approximation of stock without actual weighment does not satisfy that standard. Because the books were disbelieved only on the basis of such estimation, the assessment orders were contrary to the settled legal position. The revision was accordingly allowed.

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Issues: Whether the rejection of the account books and the best judgment assessment based on survey findings and eye estimation of stock were legally sustainable.

Analysis: The assessment was founded on a survey in which stock was valued by eye estimation without actual weighment. Such estimation was treated as the sole basis for disbelieving the books of account and for making the assessment. Under Section 28(5) of the U.P. Value Added Tax Act, assessment power must rest on credible material, as contemplated by Section 28(2)(ii). Mere eye estimation of goods does not amount to credible material for sustaining best judgment assessment. The impugned orders were therefore contrary to the settled legal position that stock valuation cannot be made only on visual approximation.

Conclusion: The rejection of the books and the assessment based on eye estimation were not justified, and the revision was allowed.

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