Defective accounts and best judgment turnover addition sustained where stock records, sales data, and separate tax-rate accounts were unreliable.

Rejection of accounts was upheld where the books were defective not only for absence of a stock register, but also because the assessee failed to produce opening and closing stock lists, gave an unsatisfactory explanation for falling purchases and sales, and did not maintain separate accounts for goods taxable at different rates. The principle applied was that absence of a stock register alone is not always decisive, but it becomes material when the overall records do not permit reliable deduction of turnover or profit. The best judgment addition to turnover was therefore sustained.

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Issues: Whether the rejection of the assessee's accounts and the best judgment addition to turnover were sustainable in view of the absence of a stock register, other defects in the books, and the requirement of maintaining separate accounts for goods carrying different rates of tax.

Analysis: The accounts were found defective not merely because a stock register was absent, but because several surrounding circumstances showed unreliability, including absence of opening and closing stock lists, low reported turnover, unsatisfactory explanation for the fall in purchases and sales, and failure to maintain separate accounts for goods taxable at different rates. The reasoning was supported by the principle that absence of a stock register alone is not always decisive, but it becomes material where the overall materials do not permit a proper deduction of turnover or profits. The statutory rule requiring separate maintenance of turnover for goods attracting different tax rates was also violated.

Conclusion: The rejection of accounts and the addition made by the assessing authority were held to be valid, and the assessee's challenge failed.

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