Rejection of books of account upheld where records were unreliable and no prejudice from notice service was proved.

Delay of 152 days in filing the appeal was condoned because the explanation for non-receipt of notices through an unused email address was treated as bona fide. The objection that improper service under section 282 read with Rule 127 vitiated the appellate order was rejected because notices were issued through the ITBA system, multiple opportunities were given, and no prejudice was shown. Rejection of books of account under section 145(3) and estimation of income at 1.54% of turnover were upheld because salaries lacked primary records, creditors were unverified, stock discrepancies existed, and complete supporting evidence was not produced. The assessment was sustained.

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Issues: (i) whether the delay of 152 days in filing the appeal deserved condonation; (ii) whether alleged improper service of notices under section 282 of the Income-tax Act, 1961 read with Rule 127 of the Income-tax Rules, 1962 vitiated the appellate order; and (iii) whether rejection of books of account under section 145(3) of the Income-tax Act, 1961 and estimation of income at 1.54% of turnover were justified.

Issue (i): whether the delay of 152 days in filing the appeal deserved condonation.

Analysis: The delay was explained on the ground that hearing notices were sent to an email address of the assessee which was no longer in use and that the appeal disposal was noticed later on accessing the income-tax portal. The explanation was treated as bona fide and a liberal, justice-oriented approach was adopted.

Conclusion: The delay was condoned in favour of the assessee.

Issue (ii): whether alleged improper service of notices under section 282 of the Income-tax Act, 1961 read with Rule 127 of the Income-tax Rules, 1962 vitiated the appellate order.

Analysis: The record showed issuance of notices through the ITBA system and multiple opportunities during remand proceedings, but the assessee failed to participate effectively or place material showing prejudice caused by the alleged defect in service.

Conclusion: The plea of violation of natural justice was rejected against the assessee.

Issue (iii): whether rejection of books of account under section 145(3) of the Income-tax Act, 1961 and estimation of income at 1.54% of turnover were justified.

Analysis: Salary es were not supported by primary records, creditors remained unverified despite statutory notices, and stock discrepancies were noticed. The assessee also failed to produce complete books and supporting evidence. In these circumstances, rejection of the books and consequent estimation of income were held to be reasonable.

Conclusion: The rejection of books and estimation of income were upheld against the assessee.

Final Conclusion: The appellate order confirming the assessment was sustained, and the assessee's challenge failed on merits notwithstanding condonation of delay.

Ratio Decidendi: Where accounts are unreliable, incomplete, or unsupported by credible evidence, rejection under section 145(3) is justified and income may be estimated on a reasonable basis; a mere allegation of improper notice service does not vitiate the order absent proof of prejudice.

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