1984 (2) TMI 307 - HC - VAT and Sales Tax

Summary

Issues:
Challenge to best judgment assessment under Madhya Pradesh General Sales Tax Act, 1958 for assessment year 1976-77.

Analysis:
The petitioner, engaged in the business of manufacturing and selling paints and varnish, filed a return for the assessment year 1976-77, disclosing a taxable turnover of Rs. 76,559. However, the assessing authority rejected the books of account and made a best judgment assessment, estimating the taxable turnover at Rs. 1,05,000. The petitioner contended that the best judgment assessment was arbitrary and based on pure guesswork, lacking any disclosed basis for arriving at the estimated turnover.

Upon hearing the parties, the Court found merit in the petitioner's contention. Citing previous legal precedents, the Court emphasized that while making a best judgment assessment, the assessing officer must base the estimate on some evidence or material, more than mere suspicion. In this case, the assessing authority failed to provide any material or evidence to support the estimated turnover of Rs. 1,05,000, indicating a clear error in the assessment process.

Consequently, the Court allowed the petition, quashing the orders of the assessing authority and the revision petition. The Court directed the assessing authority to conduct a fresh best judgment assessment in accordance with the law, ensuring that the petitioner is heard in the process. The parties were ordered to bear their own costs, and any outstanding security deposit was to be refunded to the petitioner.