TaxTMI 
TaxTMI 
2009 (9) TMI 983
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....ssed production of mug dal of Rs. 11,75,658/-." 3. Briefly stated, the facts of the case are that the assessee is engaged in manufacturing mung dal as well as trading in Adad dal and Tuver dal. In this case, a survey operation u/s 133A of the Income Tax Act, 1961 (in short the Act) was carried out on 04-02-2002 in which certain discrepancies were noticed in respect of stock & cash. During the survey proceedings, for ascertaining the correct yield of main product and biITA products, a sample of milling of 1250 kg of mung was done. The above milling operation has shown the following results: Rough Mung 25 bags of 50 kg X 24 1250 kg. Mungdal 19 bags X 50 kg 950.000 C....
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....s the fotri or kurma or chuni is 5.6% and that it is actually sold. Further, it may please be noted that the sale A proceeds of fotrj or kurma is 3954.300 qts. and the sale proceeds of 22,55,7527- is credited into books of accounts. Therefore, the fotri cannot be taken into consideration is waste or process loss since there is no loss whatsoever of fotri. The fotri or kurma or chuni is used as cattle feed. Further the wastage of 3.9% is to be considered with reference the deduction made for quality difference and quantity difference. The amount deducted for shortages [14.30 Qts] and the quality difference of Rs. 30726/- is credited in the P & L account. Further it may please be noted that the physical stock found at the time of (surve....
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....3%. The loss on account of stone/dust comes to 2.93% as per the assessee. The AO did not accept the reply of the assessee and made addition of Rs. 11,75,658/- for the reasons stated in Para, 5, 6, 7, 8, 9 and 9.2 of the assessment order. 5. Aggrieved by the order of the AO the assessee carried the matter in appeal before the CIT(A). The assessee's main arguments before the CIT(A) was that entire addition is based on AO's presumption that shortage in production of mung dal as reflected in production of kurma which is without any evidence. It was also stated by the assessee before the CIT(A) that the shortage is worked out on the basis of purchase discount of Rs. 14,26,679/- though actual shortage was of Rs. 33,726/- i.e. 14.30 quintals on....
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....% 90.88% Kurma 5.60% 7.20% Dust, stone 3.90% 1.92% Total 100% 100% 5. In view of the above, the assessee submitted before the CIT(A) that average working is better than the survey result and therefore, there was no question of any suppressed production. The assessee also submitted that the physical stock and book stock was in agreement as per Panchnama prepared on the date of survey. According to the assessee the stock of bardan was not taken into account for the purpose of arriving at book stock. If the said stock is taken into account then the book stock and physical stock are in agreement. The assessee also submitted before the CIT(A) that is has maintained day to day complete quantity details which was c....
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....r the AO has himself pointed out that wei0ght loss and weight of bardan is to be reduced fro the actual working of yield. If that be the position, then for working out the actual yield as well as th8e yield as per audit report, these weights were to be reduced. I also find that in the group case of M/s. Jai Pulse Mills, in which simultaneously survey was carried out my predecessor vide order dated 5.3.2004 for A. Ys. 1995-96 to 1998-99 has held that proper wastage allowable to the appellant firm was 9.5% meaning thereby that the yield would be 90.5% If the yield is correctly worked out as shown in submissions of the assessee, the yield for the year actually works out to 90.88% as under: Consumption of mug as per stock record ....
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....the AO has taken the gross amount shown as consumption at 55505.77 quintals. The AO has not considered the weight of bardan while working out actual addition. We are in agreement with the observations of the CIT(A) that the entire basis adopted by the AO was incorrect. The CIT(A) has also observed that in the group cases of M/s. Jai Pulse Mills in which simultaneously survey was carried out, his predecessor has held that proper wastage allowable to the assessee firm was 9.5% meaning thereby that the yield would be 90.5%. The CIT(A) has correctly stated in the instant case that the yield in the year under consideration worked out to 90.88%. It is also seen that in the AY 1999-2000 and 2000-01 the CIT(A) has deleted such addition vide his ....