Books of account cannot be rejected for non-production at survey without a finding of deliberate withholding to evade tax.

Books of account under the U.P. Sales Tax Act cannot be rejected merely because they were not produced at the time of survey. The Allahabad HC held that such rejection requires a reasoned finding that the assessee was present, deliberately withheld the books, or acted with an ulterior motive to evade tax. As the Tribunal recorded no such factual basis and did not examine the issue on that footing, the rejection could not be sustained. The revision was allowed in part, the matter was remitted for fresh decision, and the books of account were to be treated as correct.

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Issues: Whether rejection of the assessee's books of account solely on the ground of non-production at the time of survey was legally justified.

Analysis: The revision arose from assessment proceedings under the U.P. Sales Tax Act. The books of account had been rejected because they were not produced during survey. The Court held that mere non-production at survey, without a finding that the assessee was present and deliberately withheld the books or that the omission was with an ulterior motive to evade tax, was insufficient. The Tribunal's order showed no such findings and did not examine the issue on the necessary factual basis.

Conclusion: The rejection of the books of account could not be sustained; the revision succeeded in part and the matter was sent back for fresh decision with the books of account to be treated as correct.

Ratio Decidendi: Books of account cannot be rejected merely for non-production at survey unless the authority records a reasoned finding of deliberate withholding with an intention to evade tax.

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