Selective use of registers cannot sustain yarn assessment without examining all accounts and explanations; fresh enquiry required.

The assessment of unaccounted yarn could not rest on selected registers alone where the assessee maintained interconnected books covering cotton purchase, yarn production, reeling, cloth production and sale contracts. A fact-finding authority must examine all relevant records, accept or reject them for cogent reasons, and address the assessee's explanation that the sale contract figures were only estimates and that actual cloth production reflected the true position. The matter required a fresh enquiry on the entire material, and the assessment on this point was remitted for reconsideration, with tax liability not to be increased beyond the original assessment.

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Issues: Whether the assessment of unaccounted yarn could rest on selected registers without considering all relevant accounts and the assessee's explanations, and whether the matter required a fresh enquiry on remand.

Analysis: The assessee maintained several interconnected registers covering the entire manufacturing process, including cotton purchase, issue, yarn production, reeling, actual cloth production and sale contracts. The authorities below relied substantially on the sale contract register and the daily yarn production register, but did not definitely determine the reliability of the other material accounts or deal with the assessee's explanation that the sale contract figures were only estimates and that actual cloth production figures reflected the true position. A fact-finding authority must consider all relevant books and records, accept or reject them for cogent reasons, and then determine the quantity of yarn produced on the basis of the accounts accepted and the other evidence.

Conclusion: The assessment could not stand on the selective use of registers alone, and a fresh enquiry was warranted. The matter was remitted for reconsideration of the entire material, with directions that the tax liability on this point could not be increased beyond the original assessment.

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