Later-year survey material cannot justify rejection of earlier-year books without nexus to the assessment year in issue.

A survey conducted in a later assessment year cannot, by itself, justify rejection of the assessee's books for an earlier year unless the material found has a clear nexus with that year. The text applies the principle that each assessment year is a self-contained unit and that book rejection must rest on relevant evidence for the year under assessment, not on mere suspicion from later-year transactions. On that reasoning, the survey report furnished no basis to reject the earlier-year accounts, and the rejection was said to be improper and illegal.

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Issues: Whether a survey made in a later assessment year could form the sole basis for rejecting the assessee's books of account for the previous assessment year.

Analysis: The material discovered in the survey related only to despatches made in the later year and did not disclose any suppression or evasion in the earlier year. The date of the survey was not ; what mattered was whether the evidence emerging from it had nexus with the assessment year in question. Each assessment year is a self-contained unit, and rejection of accounts must rest on material relevant to that year. A mere suspicion arising from later-year transactions could not justify rejection of the books for the earlier year.

Conclusion: The survey report furnished no material for rejecting the books of account for the earlier assessment year, so the rejection was improper and illegal, in favour of the assessee.

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