TaxTMI 
TaxTMI 
2017 (12) TMI 803
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..../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 printing etc. The bills, so raised, were not reflected in security register, stock inward register, day book, ledger of material consumption. AO after obtaining necessary approval for reopening of assessment, notice u/s 148 of the Act dated 23/03/2015 duly served on the assessee. Based on the above notice, assessee filed return of income on 12/05/2015. 3.1 Assessee vide its letter dated 15/05/2015 asked for the reasons for reopening and the same were communicated through letter dated 15/06/2015 by the AO. Further, assessee raised objection for such reopening vide its letter dated 03/11/2015 and the same was duly replied on 18/01/2016. 3.2 AO relied on the findings made during the survey proceedings and the discrepancies found during survey in recording of bills and material receipts in assessee's stock registers were again pointed out few instances in the assessment order and in order to verify genuineness of the transactio....
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....umed 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 tally furnished by the assessee is found to be correct. Therefore, AR contends that if the quantitative particulars furnished to the AO stand undisputed the addition made is not sustainable. 5. Further, before making additions to the returned income, the AO has given a few instances of discrepancies pointed out in the survey action ujs.133A of the Act. They are as under: a)Invoice dt.7-7-2012ofECC Trading Pvt. Ltd. b )Invoice dt.14-7-20 12 of ECC Trading Pvt. Ltd. c)Invoices dt.20-4-2007, 29-4-2007, 26-5-2007, 27-5- 2007 of Mittal TradingCompany. 5.6. I have perused the same and I find that these instances pointed out relate to the F.Y. 2012-13 relevant to the A.Y. 2013-14 and the F.Y. 2007-08 relevant to the A.Y. 2008-09. Out of five assessment '. ears these discrepancies are highlighted only for two assessment \ ears. Two are for the A. Y. 2013-14 and four are for the A.....
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....he year under appeal and the value of the same was booked at Rs. 1,99,15,262. In other words, the A.O's. action in making addition of Rs. 1,13,51,139 was not based on material evidence and hence the same cannot stand test of reasoning." 5.9. Identical factual position prevails for the above assessment years. Taking into consideration cumulatively the entirety of factual position, I am of the considered view that the additions made towards inflation of purchases by disallowing the wastage in the course of printing are not justified. Hence, the additions of Rs. 41,93,444/-, 1,15,18,170/-, 53,91,172, 1,54,80,362/- and 2,04,69,366/- for the A.Ys. 2008-09, 2009-10, 2010-11, 2011-12 and 2013-14 respectively are hereby directed to be deleted. As a result, the grounds raised are allowed." 4. Aggrieved with the above order, the revenue is in appeal before us raising the following grounds of appeal: "1. The Ld. CIT (A) erred both on facts and in law. 2. In the facts and circumstances of the case, whether the CIT(A) is correct in allowing the appeal of the assessee on the issue of inflation of purchases when the modus operandi practiced by the assessee clearl....
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....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 the invoices raised by the suppliers and all the suppliers dues were settled by cross account payee cheques only. He submitted that assessee not only does its own printing but also undertakes job work for which materials are supplied by others. In fact, the total wastage of material sold by the assessee is 12,42,892 kgs and the same was recorded in the books of account as 'scrap sales', realized an amount of Rs. 90,63,070/- and the same was offered as income during the year. The above wastages are cumulative of assesse's own wastage as well as out of job work. Finally, ld. AR submitted that the claim of the AO is wrong that MD has accepted the recording of such bogus invoices or discrepancies in recording of the purchases, it is only few instances, which he agreed to revert back after verification. He concluded his submission by fully relying on the findings of the ld. CIT(A). 8. Considered the rival sub....