1970 (1) TMI 77 - HC - VAT and Sales Tax

Summary

Issues:
1. Best judgment assessment based on suppression of turnover during surprise inspections in the assessment year 1962-63.
2. Legitimacy of best judgment assessment and penalty imposition for suppression.
3. Explanation and conduct of the assessee in response to the discovered suppressions.
4. Tribunal's decision on the best judgment assessment for the year 1962-63.
5. Best judgment assessment for the year 1963-64 based on suppression and estimation of turnover.
6. Comparison of revenue's and Tribunal's estimation methods for the year 1963-64.
7. Justification of the Tribunal's decision and absence of legal questions.

In the first case concerning the assessment year 1962-63, the assessee's turnover was found to have heavy suppressions during surprise inspections, leading to a best judgment assessment by the revenue. Despite the assessee's arguments, the Tribunal upheld the assessment and penalty for suppression. The judgment emphasized that best judgment assessment requires a legitimate guess based on objective factors, including the assessee's conduct. The Tribunal concluded that the suppressions discovered on multiple occasions reflected the assessee's lack of honest intention in business and taxation, justifying the revenue's estimation of turnover. The Tribunal found the assessee's explanations unsatisfactory, especially regarding a pocket notebook containing suppressions. Ultimately, the court rejected the tax case for the year 1962-63.

In the second case for the assessment year 1963-64, the same assessee faced another best judgment assessment due to suppressions, with the revenue estimating turnover by adding 50% to the book turnover. The Tribunal, however, reduced this estimation by adding only 25%, resulting in a lower assessable turnover. The judgment highlighted the rejection of account books due to significant suppression on a single day during inspections, justifying the revenue's best judgment assessment. The Tribunal's decision to lower the estimation was deemed justified, with no legal questions arising. Consequently, the tax case for the year 1963-64 was dismissed.

In both cases, the judgments focused on the necessity of best judgment assessments in response to suppressions, emphasizing the objective factors and the assessee's conduct. The court upheld the Tribunal's decisions, highlighting the justification for revenue's estimations and penalties based on the discovered suppressions. The absence of legal questions and the factual basis of the Tribunal's findings led to the dismissal of the tax cases for both assessment years.