TMI Blog2023 (7) TMI 1233X X X X Extracts X X X X X X X X Extracts X X X X ..... of best judgment assessment . In Annexure-C orders for the year 2017-18 and 2018-19, the first appellate authority modified Annexure-A assessment orders by adopting a gross profit of 70% of the cost of the goods sold for those assessment years, considering the fact that the assessee is conducting business at a distance of 8 kilometres from the town. It is an admitted fact that, for the years 2015-16 and 2016-17, the assessing authority adopted a gross profit of 65% of the cost of the goods sold, while completing the assessment of the assessee for those years on the basis of best judgment assessment , in the assessment orders dated 11.03.2020 and 16.03.2020. In best judgment assessment there is always a certain degree of guesswork and it is the assessee himself who is to blame, as he did not submit proper accounts. In the facts and circumstances of the case on hand, it cannot be said that the estimation of gross profit by the assessing authority at 70% of the cost of the goods sold for those assessment years is not bona fide or without a rational basis. There are no reason to interfere with the orders of the authorities below, which are impugned in these S.T. Revisions - Rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before this Court in this S.T. Revision, invoking the provisions under Section 41(1) of the Kerala General Sales Tax Act, 1963. 3. S.T. Rev.No.10 of 2023:- The books of accounts and trading accounts of the petitioner-assessee in respect of the sale of beer, wine and liquor, for the assessment year 2017-18, were called for by the assessing authority and a notice was issued. The assessee failed to produce the books of accounts. Hence, a preassessment notice dated 20.10.2021 was issued. The assessee failed to file any objection against the pre-assessment notice. In such circumstances, the assessing authority fixed gross profit at the rate of 80%, during the 3-star period, to complete the assessment for the year 2017-18 on the basis of best judgment assessment , as stated in Annexure-A assessment order dated 24.01.2022. 3.1. Challenging the order of assessment, the assessee filed an appeal before the Joint Commissioner (Appeals), Thrissur as S.T.A. No. 130 of 2022. According to the assessee, the documents contained in Annexure-B list were produced before the first appellate authority. By Annexure-C order dated 16.05.2022, the first appellate authority disposed of S.T.A. No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner-assessee, in respect of the sale of beer, wine and liquor. The assessee failed to produce the records. Hence, assessment notices were issued in respect of those assessment years. The assessee failed to file any objection against those assessment notices. In such circumstances, the assessing authority fixed the gross profit at the rate of 80% of the cost of the goods sold for the assessment years 2017-18 and 2018-19 to complete the assessment for the said years on the basis of best judgment assessment. The assessee challenged those assessment orders by filing appeals before the Joint Commissioner (Appeals), Thrissur. The first appellate authority, by the orders dated 16.05.2022 disposed of those appeals, modifying the order of assessment by adopting a gross profit of 70% of the cost of the goods sold for the assessment years 2017-18 and 2018-19, instead of a gross profit of 80%. Such a modification was made by the first appellate authority considering the fact that the assessee is conducting business at a distance of 8 KM from the town. 8. The first appellate authority noticed that, in utter disregard to the statutory notice, the assessee has not produced the books of account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pricious. If the estimate made by the assessing authority is a bona fide estimate and is based on a rational basis, the fact that there is no good proof in support of that estimate is immaterial. Prima facie, the assessing authority is the best judge of the situation. It is his best judgment and not anyone else's. The High Court cannot substitute its best judgment for that of the assessing authority. In the case of best judgment assessments, the courts will have to first see whether the accounts maintained by the assesses were rightly rejected as unreliable. If the courts come to the conclusion that they were rightly rejected the next question that arises for consideration is whether the basis adopted in estimating the turnover has a reasonable nexus with the estimate made. If the basis adopted is held to be a relevant basis, even though the courts may think that it is not the most appropriate basis, the estimate made by the assessing authority cannot be disturbed. 11. In Kachwala Gems, Jaipur v. Joint Commissioner of Income Tax, Jaipur [(2007) 12 SCC 761] the Apex Court held that in best judgment assessment there is always a certain degree of guesswork. No doubt the aut ..... X X X X Extracts X X X X X X X X Extracts X X X X
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