Defective accounts alone do not attract section 13 unless income cannot properly be deduced from the books.

The proviso to section 13 of the Indian Income-tax Act, 1922 was inapplicable because the assessee maintained regular account books and the statutory condition of inability to deduce income from the accounts was not met. Defects in the books, including unproved claims for tulai and kacha arhatia commission, could justify disallowance of specific items, but they did not by themselves establish that the accounts were unreliable for estimating income under the proviso. The Income-tax Officer was therefore not justified in invoking section 13 on these facts, and the assessment could not be sustained on that basis.

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Issues: Whether the proviso to section 13 of the Indian Income-tax Act, 1922 was applicable on the facts of the case and whether the Income-tax Officer was justified in estimating income on that basis.

Analysis: The assessee maintained regular account books for the foodgrains business, and the case did not fall within the first limb of the proviso, namely absence of a regular method of accounting. The defects noticed in the accounts, including unproved claims for tulai and kacha arhatia commission, may have justified disallowance of particular items, but they did not by themselves establish that income could not properly be deduced from the accounts maintained. The statutory condition for invoking the proviso was therefore not satisfied.

Conclusion: The proviso to section 13 was not applicable, and the Income-tax Officer was not justified in applying it. The answer was in the negative and in favour of the assessee.

Final Conclusion: The reference was answered by holding that the assessment could not be sustained under the proviso to section 13 on the stated facts.

Ratio Decidendi: Defects in account books or disallowance of certain claims do not attract the proviso to section 13 unless the accounts are shown to be such that income cannot properly be deduced from them.

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