Excessive electricity consumption can justify rejection of books only when backed by material showing suppressed production or sales.

Excessive electricity consumption cannot by itself justify rejection of books of account; corroborating material is needed to show that production or sales are not commensurate with the power used. On the facts, the assessee's electricity consumption per quintal was materially higher than in the earlier period, while production did not increase correspondingly, and the explanation based on old machinery and domestic use at the factory was not accepted for the winter period. The earlier private report relied on by the assessee was treated as irrelevant to the assessment period. The books were therefore rejected and the addition sustained in favour of the Revenue.

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Issues: Whether the books of account of the assessee could be rejected solely on the basis of excessive consumption of electricity, and whether the consequent addition based on higher electricity usage and lower disclosed production was justified.

Analysis: High electricity consumption, by itself, is not an automatic ground for rejecting books of account; it may at most create suspicion and justify scrutiny of other material. The controlling principle applied was that rejection of accounts requires supporting material showing that production and sales are not commensurate with the consumption of electricity. On the facts, the assessee's consumption per quintal during the relevant period was substantially higher than in the earlier period, while the production did not increase correspondingly. The explanation based on old machinery and domestic use of electricity at the factory premises was not accepted for the winter period in question. The earlier report relied upon by the assessee, being subsequent and private, was held not to be relevant for the assessment period.

Conclusion: The rejection of the books of account was justified and the assessee's challenge failed; the finding was in favour of the Revenue.

Ratio Decidendi: Excessive electricity consumption can justify rejection of books of account when it is supported by material showing suppressed production or sales, but not when relied upon in isolation without such corroboration.

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