Honesty is such a lonely word

I recently had a rejection which stated they thought my story would find a home somewhere, but that I should not have said in my query that a previously published e-book had not sold many copies (I gave a few reasons, including my lack of time promoting plus maybe people just didn't like it) though it was a finalist for an award. I thought it was better to be honest up-front: after all, can't they easily check that it had a poor sales record? I had read somewhere that lack of sales could be off-putting for future publishers, but I didn't want to pretend that it had sold well. What is your advice? 

There is currently no way - for Australian publishers, at least - to know how many copies of an ebook have been sold. BookScan is the technology used to track print book sales, but as yet ebooks are not part of BookScan. And it may take some time for there to be accurate reporting of ebook sales anyway, as the retailers who currently have to report ebook sales - e.g. Apple and Google - are mostly not booksellers at their core, so they aren't as attuned to the rhythms of publishing as a bookseller would be. 

However, you're under no obligation to say how many copies of any of your books have sold, in print or digital. While it's admirable that you want to be honest about your sales record, almost every author starts her or his career with small sales and no publisher is going to expect that you've sold a tonne - otherwise they'd have heard about it already. And if they really want to know how many books you've sold, they can ask you. 

The other point in your question is that you mentioned in the query that you hadn't had much time to promote the book, as well as giving other reasons. Well, don't do that again - you have no way of knowing why your books do and don't sell, and neither does the publishing industry (if we knew, we'd patent it). So don't make excuses, don't give reasons which may or may not be true. The salient points are that you have written and you have published, so you already have experience. State your experience; state what your current project is. Be proud of the fact that you have both. That's it.