VIPIN SANGHI, J. ( 1 ) THIS appeal under Section 260a of the Income Tax Act, 1961 (the Act)has been preferred by the Revenue against the order passed by the Income Tax appellate Tribunal (the Tribunal) dated 23rd November, 2004 in ITA No. 3504/del/03 in relation to assessment year 2000-01. By the impugned order the tribunal partly allowed appeal filed by the Respondent/assessee thereby reversing the order passed by the CIT (Appeals) dated 7. 5. 2003 and deleting the additions of Rs. 30,83,659/- made by the Assessing Officer and confirmed by the cit (Appeals ). ( 2 ) THE facts in brief as noticed by the Tribunal are that the assessee was engaged in the business of manufacture of rigid PVC pipes and profiles. The Assessee returned a total income of Rs. 25,26,292/- for the assessment year 2000-01. Survey operations under Section 133a of the Act were carried out at the business premises of the Assessee on 17. 12. 1999. In the course of survey operations, the Assessee surrendered a total amount of rs. 25,07,500/- out of which Rs. 9 lacs were on account of unexplained investment in machinery, Rs. 4 lacs on account of unexplained investment in building and rs. 12,07,500/- on account of excess cash. ( 3 ) THE Assessing Officer noticed during the course of assessment proceedings that the Assessee had shown scrap generation at 24. 9%, that is a yield of 75. 10% in the concerned year while in the previous assessment year 1999-2000 the scrap generation was shown at 13. 31%. On account of this apparent deviation the Assessing Officer issued a show cause notice thereby intending to treat the claim of excess scrap generated in the year in question as utilization for unaccounted manufacture and sale of pipes, outside the books. Subsequently, the Assessing Officer on basis of the figures for scrap generation for the last 6 years arrived at the average scrap generation figure of 16. 38%. On that basis, the Assessing Officer computed the scrap generation at 71,631 kgs. , in the relevant year. Consequently, he worked out the figure of Rs. 30,80,133/- as the unaccounted total sales of finished goods. He proceeded to issue a second show cause notice to the Assessee, to show cause as to why an addition of Rs. 30. 80 lacs should not be made. , in the relevant year. Consequently, he worked out the figure of Rs. 30,80,133/- as the unaccounted total sales of finished goods. He proceeded to issue a second show cause notice to the Assessee, to show cause as to why an addition of Rs. 30. 80 lacs should not be made. ( 4 ) THE Assessee, in response to the second show cause notice, explained that in the process of manufacture of pipes etc. scrap is generated and most of the scrap is of the reusable kind and in fact is utilized in making finished products, while some scrap which is not reusable is sold in the market. Earlier the Assessee was maintaining record of only that scrap which was not reusable and was simply lifting the reusable scrap from the floor and putting it to use in the manufacture of pipes. The Assessee further explained that it had applied for ISO 9000 certificate in the relevant year. At this stage we may notice that the ISO 9000 certification was in fact granted to the Assessee in august, 1999. The Assessee explained that the audit team which visited the works of the Assessee for the purpose of granting ISO certification insisted that reusable stock be also taken into the books and hence, in July, 1999, the assessee brought into the books all the scrap that was reusable which weighed about 81. 8 tons. The Assessee also explained that 62 tonnes of scrap was physically verified by the survey team which was carried forward as closing stock. ( 5 ) THE Assessing Officer however, proceeded to make addition of rs. 30,83,659/ -. He did so by taking note of the scrap generated in the preceding 3 years and succeeding 2 years which ranged from 0. 61% to 11. 59% as compared to 24. 9% claimed in the relevant year. He also took note of the fact that in 8 months of the year under consideration, the Assessee had shown nil scrap generation and that 24. 9% scrap shown for the whole year under consideration was generated only during 4 months of April, June, July and october, 1999. The Assessing Officer rejected the explanation of the Assessee as merely self-serving and without any basis. The Assessing Officer also observed that the books of the Assessee were not foolproof since the Assessee had on its own surrendered/made a disclosure of Rs. The Assessing Officer rejected the explanation of the Assessee as merely self-serving and without any basis. The Assessing Officer also observed that the books of the Assessee were not foolproof since the Assessee had on its own surrendered/made a disclosure of Rs. 25,07,500/- during the survey. ( 6 ) THE CIT (Appeals) confirmed the addition made by the Assessing officer. As noticed above, on appeal by the Assessee before the Tribunal by the impugned order, the Tribunal reversed the Orders of the AO and the CIT (Appeals)on the aforesaid aspect. ( 7 ) LEARNED counsel for Revenue contends that the order passed by the Tribunal suffers from perversity and is contrary to the relevant provisions of the Act. He contends that since, admittedly, the Assessee had made a surrender of over Rs. 25 lacs, during survey operation, the books of the Assessee could not be relied upon and that the Assessing Officer was entitled to make his best judgment assessment since he was not satisfied about the correctness or completeness of the accounts of the Assessee. He relies upon a decision of this Court in Action Electricals Vs. Deputy Commissioner of Income Tax reported as 2002 258 ITR 188 to contend that where the Assessee has made disclosure/surrender at the time of search, the same constituted sufficient material for the Assessing Officer to base his satisfaction that the books of account of the Assessee were not correct and complete. ( 8 ) WE are in respectful agreement with the proposition laid down in the aforesaid decision. However, the Assessing Officer even while making a best judgment assessment is obliged to take into account all the relevant material as are brought before him and he has gathered, and are not in dispute. ( 9 ) WE find that the Tribunal has reasonably analysed the facts and circumstances of the case in paragraph 8 of its order. Since we agree with the reasons given by the Tribunal we reproduce them below:-"we have duly considered the rival contentions and the material on record. Appreciating the facts in its true perspective, we find that there is much ado about nothing. The whole problem, it appears, is created because of the reporting in absolute terms by the auditors. The auditors did certify the results correctly. Appreciating the facts in its true perspective, we find that there is much ado about nothing. The whole problem, it appears, is created because of the reporting in absolute terms by the auditors. The auditors did certify the results correctly. But it would have been better appreciated, and it is also expected of them, if they had inserted an explanatory note explaining the reasons of low yield. The revenue authorities failed to appreciate that hitherto only non-reusable scrap was brought into the books and the yield was arrived at taking into consideration only the non-reusable scrap. The reusable scrap was never brought into the books, nor was it taken into reusable scrap was taken into production. This year the situation was totally different. The ISO certification requirements compelled the assessee to bring into the books even the reusable scrap. The auditors took this scrap also into consideration to compute the yield. Naturally, on application of simple common sense, the arithmetical computation of yield would show a lower figure than earlier years when more scrap is taken into consideration for calculation purposes. In reality, the generation of scrap has been more or less the same. This situation is well-supported by the accounts of the earlier year and the succeeding year. The fact the assessee received ISO certification in August, 1999 in not in dispute. The fact that the assessee used a bulk out of the carried forward stock of reusable scrap in the following year is well document, and it also explains the high yield of 92. 75% in that year. The gross profit ratio at 14. 84% during the year is comparable to the ratio of 15. 48% in the preceding year. If the addition made by the Assessing Officer is sustained, it will reflect non-existent production and unearned profit in the abnormally high gross profit of 26. 33%. The changed situation also explains that the assessee was always valuing its stock of scrap at Rs. 7/- per kg. as it contained only non-reusable scrap. This year, it was valued at Rs. 27/- per kg. because for the first time the closing stock also included the reusable scrap. Thus, considering all the facts and circumstances of the case, we see no justification at all to the sustain the addition. 7/- per kg. as it contained only non-reusable scrap. This year, it was valued at Rs. 27/- per kg. because for the first time the closing stock also included the reusable scrap. Thus, considering all the facts and circumstances of the case, we see no justification at all to the sustain the addition. This is more so in the light of the fact that, a) there was no discrepancy found by the survey party between the physical stock of scrap and the books stock, and (b) there is no material at all to suggest any sales outside the books of account. We reiterate, most of the reusable scrap which was brought into the books during the year, was used in the subsequent year which is reflected in a higher yield in that year. " ( 10 ) WE find that the Assessing Officer and the CIT (Appeal) did not take into consideration the following admitted facts that were on record. i. The Assessee had applied for ISO 9000 certificates in the relevant year. This necessitated the assessee to bring into its book even reusable scrap, an exercise that was not carried out in earlier years. ii. Most of the scrap was of the reusable kind and in fact was utilized in making finished products. iii. The quantity of scrap physically verified by the survey team had been carried forward as closing stock. iv. The Assessee had used a bulk of the carried forward stock of reusable scrap in the following years which is well documented and also explains the high yield of 92. 75% in that year. v. There was no material to suggest that any sales outside the books of accounts had taken place. vi. The gross profit ratio at 14. 84% during the year under consideration was comparable to the ratio of 15. 48% in the preceding year. However, if the addition made by the Assessing Officer is sustained, it would reflect an abnormally high gross profit ratio of 26. 33%. ( 11 ) IN view of the aforesaid conclusions, which are all findings of fact, no substantial question of law arises in the present case. Dismissed.