Minor stock variation cannot by itself justify rejection of books of account or disregard of disclosed turnover.

Rejection of books of account may stand where the authorities' concurrent findings support turnover fixation, and such findings were upheld for assessment year 1976-77 under the U.P. Sales Tax Act. For assessment year 1977-78, however, a minor survey discrepancy and small stock variation, including the absence of a cash memo for one truckload of match boxes, were held insufficient by themselves to justify rejection of the books or disregard of the disclosed turnover. The assessee's accounts were accepted for that year, and the revision succeeded only in part.

---

---

Issues: (i) Whether the rejection of the books of account and the fixation of turnover for assessment year 1976-77 was justified; (ii) Whether the rejection of the books of account and the disclosed turnover for assessment year 1977-78 could be sustained on the basis of the survey discrepancy and stock variation.

Issue (i): Whether the rejection of the books of account and the fixation of turnover for assessment year 1976-77 was justified.

Analysis: The revisions arose under section 11(1) of the U.P. Sales Tax Act. For the assessment year 1976-77, the challenge to the Tribunal's findings on rejection of books of account and fixation of turnover could not be successfully assailed. No infirmity was found in the concurrent findings of the authorities below.

Conclusion: The rejection of the books of account and the turnover fixation for assessment year 1976-77 was upheld and the revision for that year failed.

Issue (ii): Whether the rejection of the books of account and the disclosed turnover for assessment year 1977-78 could be sustained on the basis of the survey discrepancy and stock variation.

Analysis: For assessment year 1977-78, the only discrepancy relied upon was the absence of a cash memo for one truckload of match boxes purchased during a survey and a small difference between the stock disclosed on survey and the stock recorded in the books. The Court treated the variation as minor and held that such technical discrepancy was insufficient to justify rejection of the books and disregard of the disclosed turnover.

Conclusion: The rejection of the books of account and the disclosed turnover for assessment year 1977-78 was set aside and the disclosed turnover was accepted in favour of the assessee.

Final Conclusion: The common order was sustained for assessment year 1976-77 but overturned for assessment year 1977-78, resulting in a partial allowance of the revisions and acceptance of the assessee's disclosed turnover for the latter year.

Ratio Decidendi: A minor survey discrepancy or small stock variation, by itself, does not justify rejection of books of account and disregard of disclosed turnover unless it materially undermines the reliability of the accounts.

---