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Section 143 of the income-tax act, 1961-Assessment-Addition-ITO rejected assessee's account books and added Rs. 75,000 in total Income-tribunal found as a fact that defects pointed out by ITO did not exist in account books but sustained an addition of Rs. 10,000-Whether tribunal justified in upholding addition-Held, on facts, No Facts The assessee carried on the business of supplying fire-wood to sugar mills. For the assessment year 1970-71, his trading account showed a lower gross profit and excessive shortage of fuel-wood as compared to earlier two years. For various such unproved defects in his account books, the ITO rejected the accounts and made an ad hoc addition of Rs. 75,000 in his total income which was reduced by the AAC to Rs. 17,000. On further appeal, the Tribunal found as a fact that (i) no defects existed in the assessee's account books warranting their rejection; (ii) the profit rate disclosed by the assessee had been accepted for the earlier two years; and (iii) certain additions could be made for unproved excessive shortages in wood which could be attributable to the pilferage, theft and driage while stocks were lying unattended at various places. The Tribunal did not estimate the extent of such loss but upheld an addition of Rs. 10,000 on ad hoc basis. On reference: Held 1. An addition to the returned income could only be made when the accounts maintained by the assessee were not correct and complete as contemplated by section 145. 2. There was no finding by any of the lower authorities that the method of accounting adopted by the assessee was such that the income could not be properly deduced there from. The ITO rejected the account books, inter alia, on account of excessive shortage and low gross profit. The order of the ITO and his reasons could not be re-written so as to bring the case within the mischief of the proviso to section 145(1). 3. The Tribunal found, as a fact, that the accounts were correct and complete and that the shortage in fuel-wood account could possibly be due to pilferage, theft and drainage. It, therefore, had no option but to accept the returned income. 4. The Tribunal was, therefore, not justified in sustaining the…

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