Rejection of books of accounts cannot rest solely on irregular electricity consumption when a reasonable explanation remains undisputed.

Allahabad HC reiterated that irregular electricity consumption, by itself, does not justify rejection of a dealer's books of accounts; it may be relied on only after the books are rejected on other valid material and the authority proceeds to best judgment assessment. The assessee's explanation that abnormal consumption arose from an accident in the furnace was reasonable and remained undisputed by the department, so rejection of the books on that solitary ground was unsustainable and the assessment orders were set aside in favour of the assessee.

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Issues: Whether books of accounts could be rejected solely on the ground of excessive or irregular electricity consumption, and whether the explanation offered for such consumption negatived the basis for rejection.

Analysis: The settled principle applied was that irregular electricity consumption, by itself, cannot justify rejection of the books of accounts of a dealer. Such consumption may be a relevant factor only after the books have been rejected on some other justifiable material, when the authority proceeds to make a best judgment assessment. The Court also noted that the assessee had offered a reasonable explanation for the abnormal electricity consumption, arising from an accident in the furnace, and that explanation was neither disbelieved nor disputed by the department.

Conclusion: Rejection of the books of accounts on the solitary ground of excess electricity consumption was unsustainable, and the orders of the assessing authority and the Tribunal were liable to be set aside in favour of the assessee.

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