Accounts rejection upheld, but excessive best judgment turnover addition was reduced to actual suppression proved on record.

Accounts rejection was upheld where inspection of the business premises revealed shortage of tamarind seeds, the assessee sought compounding of the offence, and additional defects were found in the books, supporting the assessing authority's conclusion that the accounts were unreliable. The best judgment turnover addition was then reduced because the original estimate was found excessive, and the Tribunal confined the addition to the actual suppression established on the record. The assessment therefore survived on rejection of accounts, but the turnover estimate was scaled down to give partial relief to the assessee.

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Issues: (i) whether the rejection of the assessee's accounts was justified on the facts found by the assessing authority; (ii) whether the turnover addition made on best judgment assessment was excessive and required reduction.

Issue (i): whether the rejection of the assessee's accounts was justified on the facts found by the assessing authority.

Analysis: The accounts were rejected after inspection of the business premises revealed a shortage of tamarind seeds, the offence was compounded at the assessee's request, and other defects were also noticed in the books. These circumstances supported the assessing authority's view that the accounts could not be accepted.

Conclusion: The rejection of accounts was upheld and is against the assessee.

Issue (ii): whether the turnover addition made on best judgment assessment was excessive and required reduction.

Analysis: The addition initially made was three times the actual suppression detected. The Tribunal found that the increase was excessive and that justice would be met by confining the addition to the actual suppression established on the record.

Conclusion: The turnover addition was reduced and is partly in favour of the assessee.

Final Conclusion: The assessment was sustained as to rejection of accounts, but the turnover estimate was scaled down to the extent of the actual suppression, resulting in partial relief to the assessee.

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