Incomplete and unreliable accounts justify rejection of books and best judgment assessment, with no referable question of law.

Where an assessee's books are materially incomplete, irregular and unreliable, the revenue may disregard them and complete the assessment on estimate. The accounts here omitted material entries on interest, advances, realisations and transactions, and no proper capital account or investment list was maintained; unsupported explanations for the omissions reinforced the defect in the record. On those facts, the taxing authority had sufficient material to reject the books, proceed by best judgment assessment, and no referable question of law arose. The refusal to state a case was therefore upheld and the petition dismissed.

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Issues: Whether the Income-tax Department was entitled to reject the assessee's books as incomplete and unreliable and to make an assessment by estimate under Section 66(3) of the Indian Income-tax Act, 1922, and whether any referable question of law arose.

Analysis: The accounts were found to be irregular, incomplete, and unreliable. Material entries relating to interest, advances, realisations, and transactions were not properly brought into the books, no capital account or investment list was maintained, and several explanations offered for omissions were unsupported by the record. The absence of proper recording of pro-notes and bond transactions further showed that the books did not reflect the true state of affairs. On these facts, the Department had sufficient material to disregard the books and proceed on estimate, and no question of law arose requiring a statement of case.

Conclusion: The refusal to state a case was in principle, and the petition was dismissed.

Final Conclusion: The decision affirms that where accounts are materially defective and unreliable, the revenue authorities may reject them and assess income by estimate, leaving no referable question of law.

Ratio Decidendi: When the assessee's books are shown to be materially incomplete and unreliable, the taxing authority may reject them and make a best judgment assessment, and no reference lies in the absence of a genuine question of law.

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