Daily wage addition fails without proper verification and defective books; suspicion alone cannot justify an estimated disallowance.

Daily wage additions based on alleged signature and thumb impression variations were unjustified where the assessee produced payment records, the labourers were not examined under section 131, and the books of account were neither defective nor incomplete. Naked-eye comparison of signatures and thumb impressions was held unreliable, especially for thumb impressions, and an estimate could not be sustained merely on suspicion or on a general view that net profit was low. The estimated sustainment of part of the addition by the first appellate authority lacked supporting material, and the full daily wage claim was allowed in favour of the assessee.

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Issues: Whether the addition of Rs. 75,000 made on account of daily wages was sustainable when the Assessing Officer relied on alleged variation in signatures and thumb impressions without examining the labourers under section 131, and whether the estimated addition sustained by the first appellate authority could stand in the absence of any defect in the books of account.

Analysis: The assessee's business was labour-oriented and payment records were produced. The variation in signatures and thumb impressions could not be reliably judged by naked eye comparison, particularly in respect of thumb impressions. In such a situation, the Assessing Officer ought to have used the power under section 131 to summon the labourers or otherwise obtain proper verification. The books of account were not found defective or incomplete, and there was no basis for making an estimate merely on suspicion or on a general view that net profit was low. The estimated sustainment of part of the addition by the first appellate authority was therefore unsupported by material.

Conclusion: The addition on account of daily wages was not justified and the entire claim of Rs. 75,000 was allowable in favour of the assessee.

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