Rejection of account books requires valid material; minor discrepancies and suspicion alone cannot support best judgment assessment.

A small cash discrepancy, delayed entry of newly arrived stock and higher electricity consumption were held insufficient, on the facts stated, to justify rejection of account books. The cash difference was substantially explained and in any event was too minor to support discarding the accounts. Mere delay in posting stock entries, especially when the accountant was absent, did not show that the books were not regularly maintained. Higher electricity consumption could at most create suspicion and call for closer scrutiny, but without additional defects or corroborative material it could not sustain a best judgment assessment. The assessee therefore succeeded on the validity of the account-book rejection.

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Issues: Whether there was valid material to sustain rejection of the assessee's account books and the consequent best judgment assessment.

Analysis: The account books were rejected on three grounds: a small cash discrepancy, non-entry of stock immediately on arrival, and higher electricity consumption. The cash difference stood substantially explained on the material on record and, in any event, was too small to justify rejection of the accounts. Mere delay in making entries for recently arrived stock, particularly when the accountant was absent, did not establish that the books were not regularly maintained. Likewise, disproportionate electricity consumption could only raise suspicion and call for closer scrutiny, but could not, without further defects or supporting material, justify rejection of the books.

Conclusion: There was no valid material to reject the account books, and the assessee succeeded on this issue.

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