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Issues:
Dispute over addition of Rs. 47,908 to trading account based on yield rate calculations. Analysis: The firm maintained two sets of accounts, with the first set showing a gross profit of Rs. 2,51,507, and the second set being incomplete. Following a departmental survey, all transactions were integrated into the first set, requiring adjustments. The ITO calculated the yield rate of Bhagar from Warai for two periods and estimated suppressional yield at 208 quintals, adding Rs. 47,908 to the trading account. The CIT(A) upheld the addition. The assessee argued that the yield rate calculation was unwarranted, emphasizing the need for adjustments in the accounts. The ITO's bifurcation of the accounting year was contested, citing a timber merchant case where similar additions were not accepted by the Tribunal. The overall yield rate's reasonableness was stressed, pointing out the ITO's acceptance of a 64% yield in the subsequent year. The Tribunal examined the ITO's calculations and the assessee's explanation regarding purchases and yields. It was noted that part of the purchases debited for the second period may have been milled in the first period, affecting the yield calculations. The confusion in the accounts led to the acceptance of the assessee's explanation as reasonable. The Tribunal found the average yield rate satisfactory, especially considering the acceptance of a 64% yield in the subsequent year. The ITO's assumption that the assessee manipulated yields for the two periods was refuted, as there was no evidence of such behavior. The Tribunal concluded that the addition was unjustified, given the reasonable explanation provided by the assessee. Consequently, the addition of Rs. 47,908 was deleted, and the appeal was allowed.
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