Rejection of books cannot rest on electricity-consumption variation alone without corroborative evidence of suppressed production or unrecorded sales.

Books of account could not be rejected under section 145 merely because electricity consumption differed from milling output, where the assessee maintained stock and production registers and no defect was shown in the books, stock records, purchases, sales, or accounting method. In the absence of corroborative material showing unreliability of the accounts or unrecorded transactions, a presumed suppression of milling was not justified, and the estimated addition on that basis could not survive. The consequential addition for estimated capital employed in the alleged suppression also failed.

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Issues: Whether the books of account could be rejected and addition made for alleged suppressed milling solely on the basis of variation in electricity consumption, and whether the consequential addition for estimated capital employed in such alleged suppression could survive.

Analysis: The assessee maintained stock and production registers, and no defect in the books, stock records, purchases, sales, or accounting method was brought on record. Rejection of accounts under section 145 of the Income-tax Act, 1961 cannot rest on a single circumstance such as disparity between electricity consumption and milling output unless supported by corroborative material showing unreliability of the books or unrecorded transactions. Variations in power consumption may arise from multiple operational factors beyond the assessee's control. In the absence of evidence of unaccounted purchases or sales, the estimate of suppressed milling was not justified.

Conclusion: The rejection of books and the addition for alleged suppressed milling were not sustainable, and the consequential addition for estimated capital also failed.

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