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Income Tax Appellate Tribunal, DELHI BENCH ‘C’ : NEW DELHI
Before: SHRI B.P. JAIN & SHRI KULDIP SINGH
(PAN : AABFN2263M) (APPELLANT) (RESPONDENT) ASSESSEE BY : Shri H.K. Jain, Advocate REVENUE BY : Shri Arun Kumar Yadav, Senior DR Date of Hearing : 23.08.2017 Date of Order : 18.09.2017 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : Appellant, Income-tax Officer, Ward 2 (1), Meerut (hereinafter referred to as ‘the Revenue’), by filing the present appeal sought to set aside the impugned order dated 08.09.2015 passed by the Commissioner of Income-tax (Appeals), Meerut, for the Assessment Years 2011-12 on the grounds inter alia that :-
“1. Whether the Ld. Commissioner of Income tax (Appeals) has erred in law in deleting the addition of Rs.37,35,748/- made by the A.O on account of bogus liability having been created by the assessee without considering the fact that the said figure of bogus liability was arrived at by the A.O after having deducted the actual payments received through bank from the advance received by the assessee from M/s Beeco Electricals (India), Meerut.
Whether the Ld. Commissioner of Income Tax (Appeals) has erred in law in deleting the addition of Rs.2,49,964/- made by the A.O due to disallowance of electricity expenses ignoring the fact that the electricity bills did not bear the name of the firm and were infect issued in the name of some other person.
Whether the Ld. Commissioner of Income Tax (Appeals) may be set aside and that of the A.O be restored.
4. That the appellant craves leave to add, modify and / or delete any ground(s) of appeal.” 2. Briefly stated the facts necessary for adjudication of the controversy at hand are : During the scrutiny proceedings, Assessing Officer noticed that in the name of M/s. Beeko Electricals (India), Meerut, an amount of RS.69,13,519/- was outstanding. From the reply furnished by the assessee, AO got satisfied that two entries amounting to Rs.11,15,263/- and Rs.20,62,508/- are through banking channel. However, AO being not satisfied with the reply filed by the assessee proceeded to hold that the remaining amount of Rs.37,35,748/- is a bogus liability credited by the assessee and consequently, made addition thereof to the total income of the assessee. AO also disallowed an amount of Rs.2,49,964/- on account of electricity expenses on the ground that address of the firm is not reflected on the electricity bills.
3. Assessee carried the matter by way of filing appeal before the ld. CIT (A) who has deleted the addition of Rs.37,35,748/- on account of bogus liability and Rs.2,49,964/- on account of electricity expenses by partly allowing the appeal. Feeling aggrieved, the Revenue has come up before the Tribunal by way of challenging the impugned order passed by ld. CIT (A).
We have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case.
GROUND NO.1 5. Undisputedly, balance sheet of the assessee is duly audited and the AO has not rejected the books of account. It is also not in dispute that the assessee has maintained only one account of sale and purchase which has also not been disputed by the AO. It is also not in dispute that the AO has not disputed the sale by the assessee firm to M/s. Beeko Electricals (India).
In the light of the aforesaid undisputed fact, the ld. CIT (A) has examined the complete account maintained by the assessee company qua M/s. Beeko Electricals (India) which have been reproduced in para 5.1 of the impugned order itself.
From the documents available at pages 84 – 85 of the paper book, it is amply clear that an amount of Rs.14,10,197/- is a closing balance of AY 2010-11, which becomes opening balance for AY 2011-12. Closing balance of Rs.14,10,197/- has already been accepted by AO for AY 2010-11. When we further examine the purchases made by the assessee to the tune of Rs.26,22,055/- from the bill nos.1 to 4, available in Book No.1 of M/s. Beeko Electricals (India), available at pages 86 to 89 of the paper book, the extract thereof has been reproduced by CIT (A) in para 5.1 of the impugned order, these purchases have been duly corroborated from the Commercial Tax Vat Return Form 26 for FY 2010-11, available at pages 90 to 995 of the paper book, which have been accepted by the Commercial Tax Department.
AO lost sight of the fact that M/s. Beeko Electricals is a sister concern of M/s. Beeko Electricals (India) of which only one account is maintained by the assessee company which is permissible under the Act. When we take into account the opening balance of Rs.14,10,197/- and take note of the fact that the assessee company has not maintained separate account for advance from customers and list for sundry creditors, addition made by AO is not sustainable. Even otherwise, in case, separate accounts for advance from customers and list of sundry creditors is maintained, both the entries would have been there on the liability side of the balance sheet. In these circumstances, the ld. CIT (A) after examining the entire account maintained by the assessee for M/s.
Beeko Electricals (India) as well as of its sister concern has rightly deleted the addition. Consequently, ground no.1 is determined against the Revenue.
GROUND NO.2
AO made an addition of RS.2,49,964/- on account of disallowance of electricity expenses claimed by the assessee on the ground that address of the firm is not reflected on the electricity bills relied upon by the assessee. Undisputedly, identical addition of Rs.48,286/- for AY 2006-07 was deleted by the ld. CIT (A), Meerut in assessee’s own case vide order dated 25.02.2011.
Assessee’s case is that it is operating from hired premises which were earlier occupied by other tenant and assessee has been receiving the electricity bills in the name of the said individual.
When such expenses have been allowed for AY 2006-07 and AY 2009-10 by considering the fact that this is a hired premises and electricity bill is being generated in the name of earlier tenant, the ld. CIT (A) has rightly deleted the addition. So, there is no scope for interference in the findings returned by the ld. CIT (A) and consequently, this ground is also determined against the Revenue.
GROUNDS NO.3 & 4 10. Grounds No.3 & 4 are general in nature and do not re4quire any specific adjudication.
Resultantly, the appeal filed by the Revenue is dismissed. Order pronounced in open court on this 18th day of September, 2017.