JUDGMENT The judgment of the Court was delivered by V. V. KAMAT, J. - The petitioner-assessee in both these revision cases is a Government of India undertaking, known as Messrs. Cement Corporation of India Limited, a wholly Government owned company. The petitioner is engaged in the manufacture and marketing of cement and its manufacturing units are spread over the country, one such being in function in the State of Kerala. 2. The clearance of stock is managed through the agents of the Britishers commonly known as dump agents. This clearance is done with regard to the stocks by the railways and other modes of delivery. Amongst the agents known as dumping agents one is Messrs. Venad Agencies. 3. The two proceedings relate to assessment years 1985-86 (T.R.C. No. 61 of 1994) in the context of the stock of 1168.70 m.tons with the dumping agent Messrs. Venad Agencies in regard to which the Deputy Commissioner, Agricultural Income-tax and Sales Tax, Ernakulam under section 35 of the Kerala General Sales Tax Act, 1963 reopened the assessment on the ground that the said quantity had been omitted to be assessed in the final assessment for the year 1985-86. Thus the subject-matter is the exercise of powers under section 35 of the Act and the order (annexure II) thereto as confirmed by the Kerala Sales Tax Appellate Tribunal, Additional Bench, Ernakulam (annexure III therein). However with regard to the assessment year 1986-87 (subject-matter of T.R.C. No. 21 of 1994), after the assessee filing form No. 8 with regard to the year ending on March 31, 1987 declaring a total and taxable turnover of Rs. 9,32,13,732.11 deals with the situation as a result of rejection of the return and the accounts, proceeding with the estimate in regard thereto. In this context the items concerned with the process of estimation, curiously the first one being of Calicut dump with regard to 1175.20 m.tons in connection with the dumping agent Messrs. Venad Agencies. There is no dispute that with regard to the same item for the assessment year 1985-86 the proceedings have been reopened. It is obvious that as far as the two assessment years, for 1985-86 the situation is of reopening under section 35 and with regard to the subsequent year 1986-87 the situation is of considering the same item on estimation basis for addition to the completed assessment. It is obvious that as far as the two assessment years, for 1985-86 the situation is of reopening under section 35 and with regard to the subsequent year 1986-87 the situation is of considering the same item on estimation basis for addition to the completed assessment. The second item is of 160.35 m.tons due to shortages and damages during the transit. The third item is Cannanore dump also connected with damage and shortage as a result of movement of cement in transit. The last aspect is relating to the delivery notes and stock register in regard thereto. 4. The proceedings for the year 1986-87 were initiated with the notice dated January 9, 1992. This was on the basis of rejection of the return and the accounts and with regard to the aspects referred to hereinbefore. 5. From the assessee's reply dated March 31, 1992 the case of the assessee could be appreciated. 6. With reference to the first item - Calicut dump it is averred in the reply that cement to the tune of 1335.55 m.tons is found less and in regard thereto 1165.20 MTons was the quantity found to be misappropriated by Messrs. Venad Agencies. It is urged that the amount could not be recovered in spite of the court judgment decreed in favour of the Corporation. It is also urged that although this quantity was received from the manufacturing unit and that too in the assessment year 1985-86 it could not be shown in the closing stock of the said assessment year 1985-86, because of the situation with regard to the stock as a result of misappropriation and also because of the situation that there was no physical stock shown in balance with regard to the said quantity. 7. With regard to the second item - 160.35 m.tons cement resulting as the shortage and damage during transit in the transport activity concerned with the railways it was submitted that the claim certificates for shortages and damages obtained by the Corporation were lodged with the railways. With regard to the Cannanore dump relating to shortage notice of 28.94 m.tons it was also replied that on the basis of the certificates claims are lodged with the railways. 8. With regard to the Cannanore dump relating to shortage notice of 28.94 m.tons it was also replied that on the basis of the certificates claims are lodged with the railways. 8. Then lastly with regard to the delivery notes as per form No. 26 issued for transport of cement and the connected stock register in form 19B it is replied that they were lost from the organisation unfortunately. In this connection it is also stated that the loss has been reported and published in the newspapers and was also intimated to the Sales Tax Department. 9. It is also urged that there is a civil litigation between the assessee-Corporation and Messrs. Venad Agencies, both having filed suits a well-organised vigilance wing at the head office, all leading to the discrepancies in the concerned matters has proceeded to observe yet at the time of verification of the accounts for the year 1985-86. The transactions were not brought to the notice, revealing the closing stock at Calicut dump at 1175.20 m.tons. 10. In regard to this Calicut dump of 1175.20 m.tons and also with regard to 160.35 m.tons of cement as shortage and damage in transit the explanations have been brushed aside because the assessing authority sought for support by way of corroboratory evidence to prove their claims. The assessing authority keeping in mind and recording so to that effect with so many internal checks and balances assuring the attitude of responsibility with reference to the explanations cannot be understood to look for support by way of corroboration. Reading the reasoning of the assessing authority placing on record in one breath the internal checks and balances and seeking support and that too in the matter of estimation is a situation relating to the inference from the factual matrix. Reading the discussion we are unable to see any unfairness and these aspects could not justifiably considered as the basis for estimation. 11. Bare perusal of the judgment of the Principal Subordinate Judge, Ernakulam, deciding the two suits by the judgment dated July 31, 1990 would show that the plaintiffs in both the suits who are rival parties in regard to the transaction covered by Calicut dump have diametrically opposite claims. These claims relate to the transactions which are in dispute. 11. Bare perusal of the judgment of the Principal Subordinate Judge, Ernakulam, deciding the two suits by the judgment dated July 31, 1990 would show that the plaintiffs in both the suits who are rival parties in regard to the transaction covered by Calicut dump have diametrically opposite claims. These claims relate to the transactions which are in dispute. Without disturbing ourselves and concentrating on the real essentials for the purpose of these revision cases all that can be said is that the transaction is a disputed one in regard to which proceedings are taken up in the appropriate civil court. We understand that against judgment of the Principal Subordinate Judge, Ernakulam, situation is not of a finality in the process. 12. With regard to Cannanore dump the approach is not different. The assessee-Corporation as stated above have contended that the damage is due to short receipt that occurred when the cement was in transit. This relates to 28.94 m.tons and it is contended that the railway claims are lodged and steps are being taken. The assessing authority has bodily followed the reasoning that is given and discussed above in regard to Calicut dump, to reject the said reasoning. What we find difficult and consequently unacceptable is the approach. What is required to be considered is on the basis of probabilities. The assessing authority has already recorded itself to have kept in mind certain broad features of the activities of the assessee-Corporation and it is in this background if the Corporation contends that railway claims are lodged and pending, with all the understandable canons of appreciation and consequent approach such a statement needed no unceremonious rejection. 13. We have the record before us and the judgment of the civil court along with it. The transaction with Messrs. Venad Agencies are also dealt with by the assessing authority in the following manner : "The assessees have further contended that during the year 1986-87 there was misappropriation of stock by M/s. Venad Agencies (as per the available records and information given. No such incidents during 1986-87. Presumably this may be a reference during 1985-86) and the assessees could not execute the decree though ordered in their favour : As a result it is concluded in regard thereto that the incident during 1985-86 would have no relevance to the incident of the year 1986-87. No such incidents during 1986-87. Presumably this may be a reference during 1985-86) and the assessees could not execute the decree though ordered in their favour : As a result it is concluded in regard thereto that the incident during 1985-86 would have no relevance to the incident of the year 1986-87. We are not left without a feeling that this is a result of the convenient confusion to deal with the situation and in this connection what has been contended by the assessee in reply to the notice has been totally ignored. 14. Same is the situation with regard to the delivery notes in form No. 26 issued for transport of cement and the corresponding stock register in form No. 19B that were lost by the Corporation. In the reply it is found that this loss has been published in the newspaper and it was also intimated to the Sales Tax Department. Even this is rejected and it is observed that the copy of such advertisement is not placed on record. 15. It is well-established that inferences are very important in such matters. Although facts speak for themselves, in the process of estimation the basis edifice requires to be neatly understood and appreciated. In the context the attitude is expected to be really after keeping in mind what has been already recorded by the assessing authority. The assessing authority having observed that the assessee being a Government Corporation with normal internal audit as well as audit by several other agencies like Controller General, etc., with well-equipped vigilance wing at the head office, would be inevitably expected to take off the cluster of seeing every situation with suspicion expecting corroboration and support for normal course of conduct of affairs in gigantic institutions in the nature of present Corporation. 16. The situation of the proceedings travelling before the first appellate authority-Deputy Commissioner (Appeals), Agricultural Income-tax and Sales Tax, Ernakulam, resulting in the order dated September 30, 1992 also bears the approach of rubber stamping the situation. The first appellate authority was also, it will have to be said was alive to the peculiarities of the situation. It is observed as follows : "The learned advocate has explained that the appellant-company is a public sector undertaking and under the supervision and control of the Central Government and there is grave error in holding that the accounts are not correct and complete. It is observed as follows : "The learned advocate has explained that the appellant-company is a public sector undertaking and under the supervision and control of the Central Government and there is grave error in holding that the accounts are not correct and complete. I also share the sentiments expressed by the learned representative. But the facts in this case are quite different. The appellant has failed to maintain correct and complete accounts as provided in the Kerala General Sales Tax Act and therefore the assessing authority is perfectly justified in rejecting the accounts." Had the first appellate authority approached with the required seriousness these aspects would not have been described as sentiments but as relevant factors to be kept as an approach not to expect support and corroboration at every situation. 17. In fact the first appellate authority had chosen to depend more on the assessing authority to term its order as elaborate reasons, rushing forward to record inability not to accept the arguments to be forwarded by the appellant. 18. The assessee had the continuance of the misfortune even before the second appellate authority, Kerala Sales Tax Appellate Tribunal, Additional Bench, Ernakulam. The approach of the Tribunal is cursory. It has observed that the shortages of cement and explanation of the assessee in regard thereto is not prima facie acceptable. The Tribunal accepted the quantity of such misappropriation as reflecting in the memorandum accounts of the company. We have already seen that the situation has been placed on record and this is in the light of the situation that with regard to the same amount and transaction relating to Calicut dump for one year 1985-86, it is sought to be opened under section 35 of the Act and with regard to the subsequent year it is sought to be added on estimation as discussed hereinbefore. 19. We have carefully seen the entire material on record apart from the three orders. In our judgment the approach based on the inferences and that too relating to the process of estimation would have to be termed as erroneous in law. The material on record does not reveal any aspect of rejection of accounts unless we also continue to see the situation with suspicion as has been done by the authorities below. The assessee-Corporation has submitted the returns well within time. They have been represented and all material is placed on record. The material on record does not reveal any aspect of rejection of accounts unless we also continue to see the situation with suspicion as has been done by the authorities below. The assessee-Corporation has submitted the returns well within time. They have been represented and all material is placed on record. Apart therefrom on the basis of the above factors leading to the initiation of the proceedings for the two years as stated above it is not possible to justify them, both with regard to the reopening as well as with regard to the rejection of accounts and proceeding to have resort to the best judgment. In our judgment the authorities have not drawn correct inferences with reference to all the aspects and have as a consequence proceeded, firstly to reopen under section 35 of the Act and also secondly with regard to rejection of accounts and stock register and consequently to have resort to best judgment assessment on estimation. Before closing we would like to emphasize that even the Tribunal in paragraph 7 of its judgment has been alive to the situation that the only defect warranting the addition is the shortage in cement. The shortage is disclosed from the particulars available in the accounts of the company itself. There was no inspection or any other unaccounted transaction. There is no case of incriminating records. The Tribunal has also proceeded to observe that in the absence of any other defects or corroborative or circumstantial evidence it is very hard to presume that the appellant had indulged in any clandestine transactions. There is no case of any pattern of suppression. Although the Tribunal has observed all these in the matter of reducing the estimated addition, in our judgment all the above features directly penetrate for the purpose of consideration of the merits. For all the above reasons both the revisions succeed. The orders passed by the authorities are quashed and set aside. The result is that the reopening which is the subject-matter of T.R.C. No. 61 of 1994 gets quashed and set aside and orders as a result of resort to estimation and best judgment, the subject-matter of T.R.C. No. 21 of 1994 also get quashed and set aside and the assessing authority is directed to proceed with the assessment on the basis of form 8 return filed by the assessee declaring a total and taxable turnover of Rs. 9,32,13,732.11 and finalise the assessment on the above basis. Petitions allowed.