Low profit margin alone cannot justify rejection of books where accounts are otherwise properly maintained.

Books of account for purchases and sales could not be rejected merely because the disclosed profit margin was low. Where the dealer maintained accounts as required under section 15 of the Central Sales Tax Act and no defects, irregularities, suppressions, or fraudulent transactions were found, low profitability by itself was insufficient to treat the accounts as false or improperly maintained. An enhanced turnover estimate based only on a profit margin of less than 4 per cent was unsupported by legal proof and rested on surmise and conjecture. The accounts were therefore required to be accepted, and the assessment had to be confined to the returned figures.

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Issues: Whether the books of account maintained for purchases and sales could be rejected merely because the disclosed margin of profit was low, and whether the assessment should be reduced to the returned figures.

Analysis: The assessee maintained purchases and sales accounts as required for a dealer under section 15 of the Central Sales Tax Act. No defects, irregularities, suppressions, or fraudulent transactions were found in the accounts. The sole basis for rejection was that the disclosed profit margin was less than 4 per cent. In the absence of any valid reason to treat the accounts as false or improperly maintained, a low rate of profit by itself could not justify rejection of the books or an enhanced estimate of turnover. The finding of the assessing and appellate authorities rested on surmises and conjectures rather than legal proof.

Conclusion: The books of account were required to be accepted and the assessment had to be restricted to the returned figures.

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