Survey material showed unrecorded transactions, justifying rejection of books and a best-judgment turnover estimate.

Survey material for the relevant assessment year disclosed loose papers showing unrecorded transactions and suppression of turnover, so the books of account were rightly rejected. Each assessment year is independent, and material relating to the year in dispute justified the rejection despite any reliance on similar documents for another year. The turnover was then estimated on the basis of the seized papers, the period covered by the transactions, and the surrounding circumstances, so the estimate was not excessive or arbitrary. The assessment as upheld by the Tribunal remained undisturbed.

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Issues: (i) whether the assessee's books of account were liable to be rejected for the assessment year in question; (ii) whether the estimate of taxable turnover at Rs. 80,000 was excessive or arbitrary.

Issue (i): whether the assessee's books of account were liable to be rejected for the assessment year in question.

Analysis: The assessment was based on survey material showing loose papers seized during the relevant year, which disclosed transactions not recorded in the books and indicated suppression of turnover. The fact that similar material may have been relied upon for a different assessment year did not affect the present year, because each assessment year is independent and the relevant question is whether the books for the year in dispute were maintained in the ordinary course of business. The undisclosed transactions found in the loose papers related to the year under assessment and justified rejection of the accounts.

Conclusion: The books of account were rightly rejected.

Issue (ii): whether the estimate of taxable turnover at Rs. 80,000 was excessive or arbitrary.

Analysis: The returned turnover was much lower than the turnover ultimately assessed. The estimate was supported by the loose papers showing suppression, the period covered by the transactions, and other circumstances noticed by the assessing authority. The appellate and revisional findings also took into account the material on record, and the estimate could not be said to be without basis or unjustified.

Conclusion: The turnover estimate was not excessive or arbitrary.

Final Conclusion: The revision failed on both substantive grounds, and the assessment as upheld by the Tribunal remained undisturbed.

Ratio Decidendi: Where survey material for the relevant assessment year shows unrecorded transactions and suppression of turnover, the books of account may be rejected and the turnover may be determined by best judgment on the basis of the totality of circumstances.

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