The Commissioner Of Income-Tax, Madras vs A. Krishnaswami Mudaliar And Others on 16 April, 1964
"4.3 I have considered the submissions of the appellant, order of the AO and
facts of the case carefully. It is noticed that during the assessment
proceedings, the AO has given number of opportunities to the assessee to
submit complete details but only partial details were submitted. Secondly, the
special auditors has raised the objection that books of accounts, bills and
vouchers were not maintained properly. In view of these facts, the AO has
given an opportunity to the assessee to explain why the books of accounts
may not be rejected as per the provisions of section 145(2) of the IT. Act.
After considering the reply cf the appellant, the AO has rejected the books
of account because these were not giving correct result to determine the
profit for the year under consideration. To strengthen the view of the AO,
reliance is placed on the decision of the Hon'ble Supreme Court in the case of
CIT vs. A. Krishnaswamy Mudaliar 53 ITR 122 wherein it is held that
sec. 145 does not compel the ITO to accept in all cases the balance-sheet of
cash receipts and outgoing prepared from the books of account.