Books of account cannot be rejected for temporary record absence or an explained cash discrepancy without material defects in accounts.

Books of account cannot be rejected merely because account registers were temporarily unavailable during survey or because a cash shortage is later explained. The court treated the non-production of the Rokar and Khata as insufficient, since a plausible explanation was given that the part-time munim had taken them for posting entries. It also accepted the explanation for the alleged cash shortage, namely that the amount had been kept at home from the earlier closing balance. As no other material defect in the accounts was established, rejection of the books was held unjustified and relief was granted to the assessee.

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Issues: Whether the assessee's books of account and book version could be rejected on the basis of the survey findings and the alleged cash shortage.

Analysis: The only defects relied upon were the temporary non-availability of the Rokar and Khata at the shop during the first survey and an alleged shortage of cash during the second survey. The non-production of the Rokar and Khata, by itself, was not treated as sufficient to reject the books, especially where a plausible explanation was offered that the part-time munim had taken the registers for posting entries. As regards the cash shortage, the explanation that the amount had been left at home from the earlier closing balance was found to be acceptable. No other serious defect in the accounts was established.

Conclusion: The rejection of the books of account was unjustified and the issue was decided in favour of the assessee.

Final Conclusion: The revision succeeded and the assessee obtained relief.

Ratio Decidendi: Books of account cannot be rejected merely for temporary non-production of account records or an explained cash discrepancy unless a material defect in the accounts is otherwise shown.

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