Addition without rejecting books of account upheld where material on record supported the adverse inference and findings were not perverse.

Addition on a specific trading entry can be sustained without first rejecting the books of account, because rejection of books for a best judgment assessment is distinct from disallowing or taxing a particular item in the accounts. The Assessing Officer may rely on material on record and draw a permissible presumption; direct evidence is not required in every case, and the assessee must rebut the adverse inference. Concurrent findings of fact by the first appellate authority and the Tribunal will not be disturbed unless shown to be perverse, and no substantial question of law arose.

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Issues: Whether an addition could be sustained on a particular trading entry without rejecting the books of account, and whether the finding of the income-tax authorities and the Tribunal suffered from perversity so as to give rise to a substantial question of law.

Analysis: The challenge was confined to the argument that, unless the books of account were rejected, no addition could be made. The Court held that rejection of books for a best judgment assessment is distinct from disallowing or taxing a particular item in the accounts. Even if the burden initially lies on the department, the Assessing Officer is not required to lead direct evidence in every case and may draw a permissible presumption from the material on record. A particular claim can be rejected on that basis unless the assessee rebuts it, and findings upheld by the first appellate authority and the Tribunal are findings of fact unless shown to be perverse.

Conclusion: The addition was sustainable without first rejecting the books of account, and the concurrent factual findings were not shown to be perverse. No substantial question of law arose.

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