Rejection of books of account cannot rest on survey non-cooperation, stock shortage, or refusal to open a cash box without unreliability being shown.

Rejection of books of account was held unsustainable where the assessment was based only on non-cooperation during survey, alleged stock shortage, and refusal to open the cash box for counting. The Court found that these circumstances, whether taken separately or together, did not by themselves establish that the accounts were unreliable or incorrect. Best judgment assessment could not be upheld on such grounds alone, and the revision succeeded in favour of the assessee.

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Issues: Whether the rejection of the assessee's books of account and the consequent best judgment assessment were justified on the grounds of non-opening of the godown at the time of survey, alleged shortage in stock, and refusal to open the cash box for counting.

Analysis: The assessment authority and the Tribunal had treated the assessee's non-cooperation during survey, the alleged stock shortage, and the failure to open the cash box as circumstances warranting rejection of the books. The Court held that mere non-cooperation at the time of survey, by itself, could not justify rejection of the books of account. The alleged shortage in stock was also not a legally sufficient ground for discarding the accounts, and the same applied to the refusal to open the cash box for counting. None of these factors, either individually or collectively, furnished a valid basis for sustaining the rejection of the books.

Conclusion: The rejection of the books of account was unsustainable and the revision succeeded in favour of the assessee.

Ratio Decidendi: Rejection of books of account cannot be sustained merely on the basis of survey non-cooperation, alleged stock shortage, or refusal to open the cash box, unless those circumstances show that the accounts are unreliable or incorrect.

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