Estimate based on evidence: tax assessments must rest on material, not mere guesswork, and require reasonable supporting facts.

Whether an assessing authority under section 10(2)(b) of the Bihar Sales Tax Act may adopt gross turnover by pure guess: the Court held that clause (b) requires the Commissioner to base an assessment on evidence or material and not on mere conjecture; estimates must relate to available materials (returns, prior records, local knowledge, enquiries subject to fair disclosure) and be more than suspicion. The Court found the contested assessments relied on unsupported turnover figures after rejecting books, amounting to impermissible guesswork, and directed that such estimates be grounded in material or evidence.

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Issues: (i) Whether an assessing authority acting under section 10(2)(b) of the Bihar Sales Tax Act, 1944 may adopt a figure of gross turnover by pure guess without referring to any material or evidence to justify that figure.

Analysis: The Court examined clause (b) of sub-section (2) of section 10 against the statutory scheme and analogous provisions in the Indian Income-tax law. Clause (b) requires the Commissioner to assess the amount of tax after hearing such evidence as the dealer may produce and such other evidence as the Commissioner may require on specified points. Authorities cited (including Dhakeswari Cotton Mills Ltd.) establish that while the assessing officer is not confined by technical rules of evidence and may act on material not admissible in a court, he is not entitled to make a pure guess; an estimate must be grounded on some material or evidence and be more than bare suspicion. Comparative decisions (including Privy Council and High Court authorities) were considered and interpreted to require that an estimate be related to materials available to the assessing authority, allowing use of local knowledge, previous returns, private inquiries (subject to fair disclosure principles), and other relevant matters that reasonably support the estimate. Applying these principles to the assessment orders in the statement of case, the Court found that the assessing authorities had rejected returns and books of account but then adopted turnover figures without reference to any supporting material, amounting to pure guesswork contrary to clause (b) of sub-section (2) of section 10.

Conclusion: The assessing authority is not entitled under section 10(2)(b) of the Bihar Sales Tax Act, 1944 to adopt a figure of gross turnover by pure guess without reference to any material or evidence; an assessment under that provision must be based on some material or evidence and cannot be a mere arbitrary estimate. The High Court's affirmative answer to the referred question is set aside and the appeal is allowed in favour of the assessee.

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