Non-production of books during survey can justify rejection of accounts and best judgment assessment when no satisfactory explanation is given.

Non-production of books of accounts during survey may be treated as a relevant circumstance in assessing whether the books are reliable. The assessee must offer a plausible explanation for failure to produce the records, and where no satisfactory explanation is given, an adverse inference may be drawn. Later production of the accounts does not remove the effect of non-production at the time of survey. On that basis, rejection of the books and assessment on a best judgment basis may be justified under the trade tax regime, and the issue was answered against the assessee and in favour of the Revenue.

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Issues: Whether non-production of books of accounts at the time of survey could validly justify rejection of the books and a best judgment assessment.

Analysis: Non-production of the books of accounts at the time of survey is a relevant circumstance that may be taken into account by the Assessing Officer while examining the return and deciding whether the books are reliable. The assessee carries the burden to offer a plausible explanation for the failure to produce the books, and adverse inference may be drawn if no satisfactory explanation is shown. The later production of accounts does not erase the effect of their non-production during survey. Reliance was placed on the principle that, under the trade tax regime, such non-production can support rejection of the books and assessment on best judgment basis.

Conclusion: The issue was answered against the assessee and in favour of the Revenue.

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