Once the books of account of an assessee are rejected then profit has to be estimated

We have to ascertain whether there was any evidence or material before the Tribunal to estimate the profits. It is not disputed that the books of account of the assessee were not accepted. That being so, profit had to be estimated. Such estimate was made by the authorities on the basis of the performance of the predecessor-in-interest of the assessee, namely, the partnership firm. On such material the Income-tax Officer, the Appellate Assistant Commissioner, and, the Tribunal came to their respective conclusions. Apart from, the performance of the firm the Tribunal had before it the disclosed turnover of the assessee. It cannot be said that there was no material before the Tribunal to come to a conclusion.

The Supreme Court has laid down the law clearly in the case of in the case of Commissioner of Income-tax v. K.Y. Pilliah & Sons. Once the books, of account of an assessee are rejected then profit has to be estimated. If same material is available the Tribunal can proceed to estimate profits on such material. The conclusion of the Tribunal has not been challenged as being perverse and in any event cannot be held to be mere guess-work.

Calcutta High Court

Dabros Industrial Co. (P.) Ltd.

vs

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