TMI Blog1972 (3) TMI 71X X X X Extracts X X X X X X X X Extracts X X X X ..... he name and style of Messrs. Standard Mercantile Company. The business consists of sale of iron and pig iron, hardware pipes, sand and china clay and G.I. sheets. While the assessments for the years 1961-62 and 1962-63 were still pending, on the 16th September, 1963, the Superintendent of Commercial Taxes, Intelligence Branch, made a surprise inspection of the petitioner's business premises and seized in all twelve books of account. It is not necessary to mention all the books of account, which had been seized, except items Nos. 6 to 11 of the seizure list, which were the accounts maintained in respect of some clandestine business and which accounts were not intended to be produced for the purpose of assessment before the sales tax authorities. These six items were: (1) One cash book from 17th September, 1962, to 7th May, 1963. (2) One cash book from 8th May, 1963, to 5th July, 1963. (3) One cash book from 5th April, 1963, to 15th September, 1963. (4) One cash book from 1st July, 1963, to 16th September, 1963. (5) One ledger for 1962-63. (6) One cash book from 12th December, 1961, to 4th April, 1962. I may mention that the period 1961-62 for which assessment had been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for possible omission was concerned, that was based on no material and consequently, those additions could not be sustained. Referring to some of the case laws, which I will presently deal with, he submitted that even for the purpose of making a best judgment assessment the determination of the income must be based on some material and not on mere guesswork without having any means between the material and the turnover determined. Referring to the facts of the instant case, he submitted that the sales tax authorities had already made additions on the basis of the seized accounts and that, therefore, further addition by way of possible omission had no material whatsoever for its support. According to Mr. Prasad, therefore, the two amounts for the two respective periods as possible omissions were not sustainable in law. 4.. Mr. Shreenath Singh appearing for the department submitted that no doubt even for the purpose of making a best judgment assessment the department should have materials before it to which estimate of the turnover could be related but, in the instant case, such material was not wanting. Books of account had been seized which indicated that the dealer had extra tur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the department, having found that the dealer was suppressing a part of his turnover and for which purpose he was maintaining a separate set of accounts, would be entitled in law to make an assessment by the best judgment method. But even for that purpose the determination of the gross turnover has got to have some relation with the materials on the record. If the determination of the turnover is without any material, it would be an erroneous determination of the turnover in law and notwithstanding the fact that it was only a determination of the quantum of turnover which was normally a question of fact, it would still be open to attack as erroneous in law, being not supported by any evidence or being not related to any material. The manner in which best judgment assessments are required to be made has been the subject-matter of several decisions, one of the earliest being a decision of the Privy Council in the case of Commissioner of Income-tax, Central and United Provinces v. Laxminarain Badridas[1937] 5 I.T.R. 170 (P.C.); A.I.R. 1937 P.C. 133. One of the passages, which can be usefully read, is as under: "The officer is to make an assessment to the best of his judgment against a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1957 S.C. 810, (3) [1966] 17 S.T.C. 465 (S.C.). the dealer to the best of his judgment. The limits of the power are implicit in the expression 'best of his judgment'. judgment is a faculty to decide matters with wisdom truly and legally. judgment does not depend , upon the arbitrary caprice of a judge, but on settled and invariable principles of justice. Though there is an element of guess-work in a 'best judgment assessment', it shall not be a wild one, but shall have a reasonable nexus to the available material and the circumstances of each case. Though sub-section (2) of section 12 of the Act provides for a summary method because of the default of the assessee, it does not enable the assessing authority to function capriciously without regard for the available material." 6.. On the basis of the case laws, which I have referred to above, the principle, which seems to have been laid down is that even for the purpose of making best judgment assessment the determination of the turnover for assessing sales tax must be on the basis of some material. It must have relation to the material available and not be a mere wild guess. The sales tax authorities even while making best judgmen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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