The Assessing Officer rejected the books of account, estimated profit at 8% of turnover, made an addition for the difference between the turnover reflected in Form 26AS and the books, and taxed the waiver of the principal amount of the loan. The Tribunal held that the rejection of books was unjustified as the assessee consistently followed the mercantile system and recognised revenue on the percentage-completion method in accordance with Accounting Standard-7 and ICDS. The reconciliation with Form 26AS was duly explained. It was further held that waiver of the principal amount of the loan under a one-time settlement was neither taxable under section 41(1) nor under section 28(iv), as only the principal was waived and the interest had already been paid. Accordingly, all additions were rightly deleted. (AY. 2018-19)