Rejected book results and partner-use car expense disallowance were both pared back on the facts.

Books maintained on the same dak bahi basis as in the earlier accepted year, together with high turnover, comparable gross profit rates and surrounding facts, did not justify rejection of the trading results; the gross profit additions at the head office and branch office were deleted. Car expenses disallowed on the ground of partners' personal use were not sustained in full; the disallowance was reduced from one-third to one-fifth on the facts. The appeal succeeded only partly, with relief granted on both issues to the assessee.

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Issues: (i) Whether the additions made to the gross profit on account of rejection of the book results at the head office and branch office were justified; (ii) Whether the disallowance of car expenses on the footing of personal use by the partners was liable to be sustained in full.

Issue (i): Whether the additions made to the gross profit on account of rejection of the book results at the head office and branch office were justified.

Analysis: The books maintained during the year were of the same type as in the earlier year, when the trading results had been accepted. The assessee was following the regular dak bahi system accepted in the trade. In view of the high turnover, the comparable gross profit rates, and the surrounding facts, the additions to gross profit at both the head office and the branch office were not warranted.

Conclusion: The additions of Rs. 10,000 at the head office and Rs. 5,000 at the branch office were deleted, in favour of the assessee.

Issue (ii): Whether the disallowance of car expenses on the footing of personal use by the partners was liable to be sustained in full.

Analysis: The car expenses were disallowed by the tax authorities on the ground of personal use by the partners. On the facts of the case, a partial disallowance was considered appropriate rather than the one-third disallowance made below.

Conclusion: The disallowance was restricted to one-fifth, in favour of the assessee to that extent.

Final Conclusion: The appeal succeeded only in part, with the gross profit additions deleted and the car-expense disallowance reduced.

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