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TMI Blog2017 (12) TMI 803X X X X Extracts X X X X X X X X Extracts X X X X ..... 744/Hyd/2017 - - - Dated:- 13-12-2017 - Smt. P. Madhavi Devi, Judicial Member And Shri S. Rifaur Rahman, Accountant Member Assessee by : Smt. N. Swapna Revenue by : Shri Y. Ratnakar ORDER Per S. Rifaur Rahman, AM All these appeals are preferred by Revenue against a common order of CIT(A) - 2, Hyderabad dated 31/01/2017 relates to the AYs 2008-09 to 2013-14. As identical issues are involved in these appeals, they were clubbed and heard together and therefore, a common order is passed for the sake of convenience. 2. As the facts and issues are common, we cull out of the facts from AY 2008-09 to dispose of these appeals. 3. Briefly the facts of the case are, assessee has filed return of income for AY 2008-09 on 29/08/2008 admitting total income of ₹ 1,74,23,890/- under the head income from business and the same was processed u/s 143(1) of the Income-tax Act, 1961 (in short the Act ) on 19/03/2010. A survey was conducted under section 133A of the Act on 02/09/2014. During the survey, it was found that the company was raising bogus purchase bills to cover up the wastage material produced while cutting paper to the required specifications, wrong prin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t due to wastage in printing should be deemed to be inflated purchases. It is relevant to mention here that the assessee has given quantitative particulars of paper sold as scrap and the amount realized for each year. The scrap sale is credited to the profit loss account. It is seen that the weight of paper sold as scrap is in fact much more than the wastage suffered in the course of printing. The AR explained that the sale of scrap of paper includes not only the scrap generated in the course of printing but also includes the scrap of paper generated while cutting. Further, it also includes not only the paper purchased by the assessee but also the paper supplied by the customers whose printing work was done by the assessee on job work basis. It is to be noted that on one hand the sale of scrap is accepted and taxed as income, at the same time for the purpose of making addition towards inflation of purchases, the AO has assumed that the scrap generated is NIL. 5.4. It is also seen in the course of assessment proceedings that the assessee has given quantitative particulars of purchases made, sales effected, opening and closing stocks, reprints and rejections. The quantitative ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o pointed out by the AO will be inconclusive and hence no addition is warranted in this regard. The fact remains that the weight of paper purchased tallies. If any addition has to be made for inflated purchases it should relate to that particular invoice, but the discrepancy in a few invoices cannot justify the wastage to be treated as NIL. It may be mentioned here that while disposing of the appeal for the A.Y.2012-13 on identical issue, the undersigned held as under: I have perused the above and it is interesting to note that during the survey action, no discrepancies with regard to stock were found by the Department. It is also to be seen that sales made by the assessee during the year under appeal are all accounted for. Apart from the above, the assessee has shown percentage of wastage below the industrial average of 10%. Also the assessee has accounted for the scrap sales made during the year under appeal and the value of the same was booked at ₹ 1,99,15,262. In other words, the A.O's. action in making addition of ₹ 1,13,51,139 was not based on material evidence and hence the same cannot stand test of reasoning. 5.9. Identical factual position pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penditure. 7. Ld. AR, on the other hand, submitted written submissions supporting the findings of CIT(A) and submitted that in the assessment order, the addition is mentioned as inflated expenditure whereas it is nothing but wastage of paper while printing . He submitted that during this AY, assessee has incurred wastage, which was quantified at ₹ 96,436 kgs, the cost of such wastage is ₹ 41,93,444/-. He further submitted that the wastage percentage is about 2.83% of paper consumed during this year, which is well below the normal wastage of 10% in the printing industry. It shows that assessee is working efficiently and the wastage percentage cannot be uniform throughout the year and cannot be same in every year. He further submitted that AO has not found any discrepancy in recording of the purchase and consumption of the papers during the year. He submitted that no doubt, he had found certain discrepancies while recording few instances in the material register, it does not mean that the whole purchases and consumption is incorrect. AO has highlighted few instances in his order, which is a human error and whatever purchases were recorded in stock register tallied with ..... X X X X Extracts X X X X X X X X Extracts X X X X
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