Book results in contract business accepted where no serious defect was found and later-year profits could not justify higher estimation.

Books of account maintained by a first-year contract business, showing profit of 7.7% on a small turnover, were accepted because no serious defect in the accounts was established beyond routine objections about some unpaid vouchers. Later-year profits could not justify rejection of the current year's book results, since each assessment year must be judged independently and the small scale of receipts and the assessee's inexperience were relevant factors. Enhancement of income by applying a higher estimated profit rate was therefore not justified, and the declared results were accepted.

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Issues: Whether the income returned by the assessee from contract business was liable to be enhanced by estimating profit at a higher rate.

Analysis: The assessee had maintained books of account and declared profit at 7.7% on a small turnover in its first year of business. No serious defect in the accounts was shown apart from the usual objection that some payments were not vouched. The fact that higher profits were earned in later years did not justify rejection of the current year's book results, because each assessment year has to be considered independently and the smallness of the receipts and inexperience of the assessee were relevant circumstances.

Conclusion: The enhancement of income by estimating a higher profit rate was not justified and the book results were accepted.

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