Rejection of books and turnover enhancement were unjustified where petty cash memo defects and no stock inventory did not prove suppression.

Books of account should not be rejected merely because a few petty retail sales were unsupported by cash memos or because no stock inventory was maintained, where those sales formed only a small part of the business and the books were otherwise up to date. A temporary fall in turnover was not, by itself, evidence of suppression, particularly when the following year showed a substantial increase. Absence of a stock inventory was also not treated as essential under section 12 of the U.P. States Tax Act. On these facts, rejection of the accounts was unjustified and the turnover additions could not stand.

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Issues: Whether the assessee's books of account were liable to be rejected and the turnover enhanced for the assessment years 1969-70 and 1970-71.

Analysis: The accounts were rejected mainly because some petty retail sales were not vouched by cash memos and no stock inventory was kept. The retail sales formed a very small part of the total business, the books were found posted up to date in survey proceedings, and the absence of cash memos for petty sales did not by itself justify an inference of suppression. The fall in turnover for one period was not treated as incriminating, especially when the following year showed a substantial increase in turnover. The absence of a stock inventory was also held not essential under section 12 of the U.P. States Tax Act.

Conclusion: The rejection of accounts was unjustified and the turnover additions could not stand.

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