Law:

Section:

Section 145, read with section 260A, of the Income-tax Act, 1961 - Method of accounting - Rejection of accounts - Assessment year 1991-92 - Pursuant to a search at premises of assessee, it surrendered Rs. 5,00,000 as income, which was credited to profit and loss account - That included unaccounted sales detected - Assessing Officer rejected assessee's books of account and made certain addition to its income - Tribunal held that surrender made by assessee during course of search after detecting some unaccounted sales, constituted sufficient material to come to conclusion that books of account were not complete and correct, and partially sustained addition - Whether on findings of fact recorded by Tribunal, no question of law, much less a substantial question of law, arose out of Tribunal's order - Held, yes FACTS During the course of search conducted at the premises of the assessee, the assessee surrendered Rs. 5,00,000 as income for the assessment year 1991-92 which was credited to the profit and loss account. That included unaccounted sales detected. The Assessing Officer, during the course of assessment proceedings, invoking proviso to section 145(1), rejected the books of account and estimated the turnover of the assessee. He made an addition of Rs. 3,45,180 to its income as extra profits by applying gross profit rate of 13.36 per cent. On appeal, the Commissioner (Appeals) upheld the Assessing Officer's action but reduced the addition to Rs. 1,35,000. On second appeal, the Tribunal partially allowed the appeal of the assessee and sustained an addition of Rs. 1,20,000. The Tribunal held that surrender made during the course of search after detecting some unaccounted sales, constituted sufficient material to come to the conclusion that the books of account were not complete and correct. On appeal : HELD Section 145(2) empowers the Assessing Officer to make a best assessment when he is not satisfied about the correctness or completeness of the accounts of the assessee. It is not possible to categorise various types of defects which may render rejection of books of account of an assessee on the ground that the accounts are not complete or correct. Each case has…

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