Low yield addition cannot stand when regular books are maintained and no defect in accounts is shown.

Addition based solely on low yield in ground-nut and cotton-seed accounts cannot be sustained where the assessee maintains regular books of account with quantitative details and the department points out no specific defect in the accounts or accounting system. Yield of oil may vary with seed quality, climatic conditions, machinery, extraction method, and management efficiency, so a year-to-year comparison by itself is insufficient. The ITAT deleted the addition, holding the adjustment unjustified on the facts presented.

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Issues: Whether the addition made on account of low yield in ground-nut and cotton-seed accounts was sustainable when the assessee maintained regular books of account and no specific defect in the accounting system was pointed out.

Analysis: The assessee had furnished a detailed explanation showing that regular and systematic books of account with quantitative details were maintained. The yield of oil depended on several variables, including quality of seeds, climatic conditions, machinery, method of extraction, and management efficiency, and could not be expected to remain constant from year to year. The authorities below did not identify any specific defect in the books or the accounting method, and the addition was made only on the basis of alleged low yield.

Conclusion: The addition was not justified and was deleted; the issue was decided in favour of the assessee.

Ratio Decidendi: An addition based solely on low yield cannot be sustained where regular books of account are maintained and no specific defect in the accounts or accounting system is shown.

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