2015 (7) TMI 425 - HC - VAT and Sales Tax

Best Judgement - scope of estimation - Finding no cooperation from him as the petitioner did not care to respond to the notices, best of judgment assessments were completed - Held that - While best of judgment assessment may involve an element of guess work, but at the same time, it is settled law that it must be made bona fide and it cannot be whimsical or arbitrary. Therefore, as far as the CTR No. 67 of 2011 is concerned, we would grant relief by holding that there was an element of perversity in the turnover arrived at in regard to readymade garments, instead of remanding the matter as we think that no purpose will be served by remanding the matter as the petitioner did not avail of the opportunities, which were given by the statutory Authorities to respond to the notices, which were issued and we cannot give an opportunity again. Therefore, we would, instead, fix the turnover at ₹ 12 lacs in relation to readymade garments and the revision will stand allowed to that extent only and his assessment will stand modified as above on the said basis. - Decided partly in favor of assessee.

Summary

Issues:
1. Assessment of turnover for the assessment years 1999-2000 and 2001-02 based on seized material.
2. Validity of best judgment assessments conducted by the Assessing Officer.
3. Petitioner's failure to respond to notices and avail opportunities provided by statutory authorities.

Analysis:
1. The petitioner started a textile business in 1999-2000 and was unregistered with the Tax Department. Following a raid in 2003 and subsequent non-cooperation from the petitioner, best judgment assessments were made for the years 1999-2000 and 2001-02. The Tribunal upheld the assessments due to lack of response from the petitioner.

2. The petitioner contested the assessments, arguing that the figures arrived at were excessive and not reflective of the actual turnover. In the case of 1999-2000, the Assessing Officer assessed a turnover of Rs. 20,00,000 based on seized material of Rs. 46,000, which the petitioner deemed unreasonable. The court found the assessment to be unjustified and reduced the turnover to Rs. 12,00,000, acknowledging the element of guesswork in best judgment assessments but emphasizing that they must be made bona fide.

3. For the assessment year 2001-02, the petitioner raised similar concerns regarding the turnover assessment for readymade garments. Despite the petitioner's arguments and claims of higher turnover, the court found no reason to interfere with the assessment, noting the petitioner's inconsistent reporting of turnover figures and the lack of substantial evidence to support the revised figures.

4. The court acknowledged the petitioner's failure to respond to notices and participate in the assessment process, leading to the decision not to remand the matter back for further review. The judgment concluded by modifying the turnover for 1999-2000 to Rs. 12,00,000 and dismissing the petitioner's appeal for 2001-02.