M.C. Desai, C.J.
1. This is a case stated by the Judge (Revisions), Sales Tax, U.P., under Section 11(1) of the U.P. Sales Tax Act. The question that we have to answer is :-
Whether in the circumstances and facts of the case, the taxable turnover determined at Rs. 4,00,000 was just and proper.
2. The facts are as follows : The assessee carries on business in cloth and is liable to pay sales tax on the turnover of sale of imported cloth. For the assessment year 1956-57 it submitted a return disclosing the turnover of imported cloth of Rs. 2,44,000 and odd. The Sales Tax Officer found that it had concealed the importing of thirteen bales of cloth and rejected the return and the accounts. He then fixed the turnover at Rs. 4,00,000 according to the best of his judgment and assessed it accordingly. It filed an appeal, which was partly allowed by the Judge (Appeals). The Judge (Appeals) held that the turnover of the suppressed bales was at the most Rs. 15,000, accepted the returned turnover as the correct turnover of the disclosed sale and adding the two amounts determined the amount of the taxable turnover at Rs. 2,60,000. The Sales Tax Commissioner and the assessee both applied to the Judge (Revisions) to revise the order of the Judge (Appeals). The Judge (Revisions) who dismissed the revision application of the assessee and allowed that of the Sales Tax Commissioner, held that the approach of the Judge (Appeals) was erroneous because it could not be said that suppression of the sale of thirteen bales was the only suppression practised by the petitioner, saw no reason to hold that the estimate of the Sales Tax Officer was not the best according to his judgment and restored his order. Then at the assessee's instance he submitted this statement.
3. In the associated references the Judge (Revisions) has submitted similar statements of cases at the instance of the assessees and the question referred in each is exactly the same as in Sales Tax Reference No. 271. The assessees in both the associated references are businessmen in cloth and the question is for the assessment year 1956-57. In both there were suppressions of bales of cloth, the returns and the accounts of the assessees were rejected by the Sales Tax Officer and he estimated their turnovers according to the best of his judgment. Both the assessees filed appeals before the Judge (Appeals), who allowed them in the same way as he allowed the appeal in Reference No. 271. In both he fixed the amounts of the turnovers by adding to the returned turnovers the estimated turnovers of the suppressed bales. In both there were revision applications by the assessees and the Sales Tax Commissioner ; the applications of the assessees were rejected by the Judge (Revisions) and the Sales Tax Commissioner's applications were allowed. In both the Judge (Revisions) restored the orders of the Sales Tax Officer adopting the reasons as in Reference No. 271.
4. We shall deal with Reference No. 271 of 1963 and whatever we say applies with equal force to the associated references.
5. The question framed by the Judge (Revisions) is not proper ; it is not a question of law or exclusively of law. What is correct or legal depends upon the law applicable to the facts but what is just and proper depends upon the judgment or discretion of the authority and not upon law, and certainly not exclusively upon law. Everything that is legal is not necessarily just and proper. Anything that involves discretion or judgment is a question of fact and not of law. The turnover has been assessed under Section 7(3) according to the best of the judgment of the Sales Tax Officer ; what is the turnover according to the best of his judgment is a question of fact. By the law he was required to assess it according to the best of his judgment and what he thought was the turnover according to the best of his judgment was the turnover which could be assessed by him under the law. It was, therefore, undisputedly the turnover as estimated by him according to the law. By the very premise that it was the turnover according to the best of his judgment it meant that it was also just and proper. That he had to estimate the turnover according to the best of his judgment was a matter of law ; what the turnover was according to the best of his judgment was a matter of fact. The question that has been framed is whether the turnover estimated by him was according to the best of his judgment or not and it was essentially a question of fact.
6. A Sales Tax Officer estimating a turnover under Section 7(3) has to estimate the turnover of the particular assessee before him ; evidently the turnover of one assessee differs from that of another. The turnover of an assessee depends upon the business carried on by him during the assessment year. Even if two assessees carry on businesses in the same goods and close to each other, their businesses are different because they deal with different customers and goods and, therefore, their turnovers must be different. In estimating the turnover of an assessee the Sales Tax Officer must take into consideration the business carried on by him ; he cannot estimate it at any figure that he likes without considering any relevant circumstance concerning his business. He must take some circumstance into consideration before estimating his turnover ; he cannot possibly estimate it without considering a single circumstance. In Dhakeswari Cotton Mills Ltd. v. Commissioner of Income-tax, West Bengal  26 I.T.R. 775, Mahajan, C.J., observed at page 949 :-
The Income-tax Officer is not fettered by technical rules of evidence and pleadings, and...he is entitled to act on material which may not be accepted as evidence in a court of law...it is equally clear that in making the assessment under Sub-section (3) of Section 23 of the (Income-tax) Act, the Income-tax Officer is not entitled to make a pure guess and make an assessment without reference to any evidence or any material at all. There must be something more than bare suspicion to support the assessment under Section 23(3).
7. An assessment under Section 23(3) is what is known as 'best judgment assessment' similar to that under Section 7(3) of the U.P. Sales Tax Act. As it is illegal for a Sales Tax Officer to estimate a turnover under Section 7(3) without taking any relevant circumstance into consideration or by disregarding all relevant circumstances a question of law may arise whether an estimate of a turnover by him is based on certain circumstances or, if he has taken certain circumstances into consideration, whether they can support the estimate ; but that is not the question framed before us. Here the Sales Tax Officer has not professed to have estimated the turnover without considering any circumstance ; he has mentioned certain circumstances on the basis of which he fixed the amount at Rs. 4,00,000. The only question of law, therefore, that can arise in the case is :-
Whether the circumstances relied upon by the Sales Tax Officer could support the determination of the turnover of the assessee under Section 7(3) at the figure of Rs. 4,00,000
8. We reframe it accordingly.
9. The circumstances mentioned by the Sales Tax Officer in support of his estimate are as follows : The returned turnover is Rs. 2,44,000 and odd and the actual turnover must be more. The assessee did not maintain its accounts properly, did not file two quarterly returns of its turnover and did not submit quarterly statements of imports in the prescribed form. It made an attempt to conceal the magnitude of its business. It concealed importation of thirteen bales of cloth, some of which were imported by it in the name of a fictitious person. The non-filing of quarterly returns and the non-submission of statements of import were offences under the Sales Tax Act and the Sales Tax Officer had power to impose a penalty upon it for concealment of sales and evasion of sales tax. The assessee would not have undertaken the risk of criminal prosecution and of being saddled with a penalty for only a small gain ; to justify its incurring the risk the stakes must have been quite high. For the earlier assessment year it had returned a turnover of Rs. 45,000 whereas it was estimated under Section 7(3) at Rs. 2,50,000, though the figure was reduced on appeal to Rs. 2,00,000. The assessee has a certain reputation in the market. On these circumstances he estimated its turnover at Rs. 4,00,000. A best judgment assessment is made when either no return is submitted by the dealer or the return submitted by him appears to be incorrect or incomplete. The return on being found to be incorrect or incomplete, if filed, is rejected and the rejection of the return means rejection of the accounts on which it is based. When a best judgment assessment is made without accounts it is impossible to look for an arithmetical justification for the determination of the turnover. Whatever is the amount determined is only an inference and no figures can be found to support it. It has to be based on circumstances but some circumstances have no quantitative value and other circumstances which have quantitative value are not the direct evidence of the correct turnover. The correct turnover has to be inferred from the circumstances having quantitative value ; the connection between the circumstances having quantitative value and the amount to be determined is logical and not arithmetical. Determination of a turnover under Section 7(3) is, therefore, in its very nature an estimate and not a calculation ; it cannot be explained arithmetically. The circumstances mentioned by the Sales Tax Officer are circumstances from which he could infer that the assessee's turnover was Rs. 4,00,000. All that has to be seen is whether his determination is out of all proportion or not, whether it is an entirely wild guess or whether it is of a shocking amount. We cannot say that the determination in the instant case can be described as a wild guess, having no relation to the circumstances or is a shocking determination. It is' supportable by the circumstances stated by the Sales Tax Officer. The question, therefore, is answered in the affirmative.
10. We direct that copies of this judgment shall be sent under the seal of the Court and the signature of the Registrar to the Judge (Revisions), Sales Tax, U.P., and the Commissioner of Sales Tax, U.P., as required by Section 11(6) of the U.P. Sales Tax Act.
11. The Sales Tax Commissioner shall get his costs of the reference, which we assess at Rs. 50.
12. Counsel's fee is also assessed at Rs. 50.