Rejection of books of account requires more than a low selling rate; suspicion alone cannot justify turnover estimation.

A low disclosed selling rate, without further inquiry from purchasers or other material discrediting the cash memos, does not by itself justify rejection of the books of account. Suspicion arising from the rate alone was insufficient to find any defect in the accounts, so the assessing authority could not reject the book version or proceed to estimate the average selling rate per truck. The High Court therefore held the rejection of the books unwarranted and the turnover estimate unjustified, in favour of the assessee.

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Issues: Whether the books of account could be rejected and the average selling rate per truck could be estimated merely because the disclosed selling rate appeared low.

Analysis: The accepted finding was that no adverse inference could be drawn from the material relied upon by the assessing authority. A low selling rate, by itself, was held not to constitute a defect in the books of account, though it may give rise to suspicion. In the absence of inquiry from the purchasers or other material discrediting the cash memos, the disclosed rate could not be doubted. Once the books of account were not liable to rejection, estimation of the average selling rate did not arise.

Conclusion: The rejection of the book version was unwarranted and the estimate of the average selling rate per truck was unjustified, in favour of the assessee.

Final Conclusion: The revision was allowed and the Tribunal's order was set aside.

Ratio Decidendi: A disclosed low selling rate, without further enquiry or other material showing falsity of the account books, does not justify rejection of the books of account or estimation of turnover.

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