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Issues Involved:
1. Deletion of addition made on account of suppressed production of mung dal. Summary: Issue 1: Deletion of addition made on account of suppressed production of mung dal The Revenue appealed against the CIT(A)-VII, Ahmedabad's order dated 07-12-2005 for the assessment year 2002-03, challenging the deletion of an addition of Rs. 11,75,658/- made on account of suppressed production of mung dal. The facts of the case reveal that a survey operation u/s 133A of the Income Tax Act, 1961, was conducted on 04-02-2002, uncovering discrepancies in stock and cash. The AO noticed a discrepancy in the percentage of chuni and wastage, which was 8% of the total consumption, whereas the assessee had shown it as 11.44%. The AO issued a show cause notice and an exhaustive questionnaire to the assessee, who provided a detailed reply explaining the actual production and wastage percentages. The assessee contended that the real waste was 3.9%, not 8%, as the fotri (kurma or chuni) was sold in the open market and credited in the books of accounts. The assessee maintained day-to-day quantity details, periodically inspected by the civil supplies department, and certified by auditors. The AO, however, did not accept the assessee's explanation and made an addition of Rs. 11,75,658/-. On appeal, the CIT(A) deleted the addition, observing that the AO's methodology was flawed. The CIT(A) noted that the AO did not deduct the weight of bardan and shortage in weight while working out the actual yield. The CIT(A) also referenced a similar case involving M/s. Jai Pulse Mills, where a proper wastage allowance of 9.5% was accepted, resulting in a yield of 90.5%. The CIT(A) found that the yield for the year actually worked out to 90.88%, supporting the assessee's case. The Tribunal upheld the CIT(A)'s order, agreeing that the AO's basis was incorrect and that the CIT(A) had passed a well-reasoned order after appreciating the facts and evidence. The Tribunal noted that in previous assessment years (1999-2000 and 2000-01), similar additions were deleted by the CIT(A), and the Revenue did not challenge those orders before the Tribunal. In conclusion, the Tribunal dismissed the Revenue's appeal, affirming the CIT(A)'s order and finding no valid ground for interference. The order was pronounced in the open court on 25-09-09.
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