ITO, NEW DELHI vs. SHRI CHAMAN LAL GUPTA, NEW DELHI

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ITA 2419/DEL/2012Status: DisposedITAT Delhi02 February 2016AY 2008-095 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the decision of the CIT(A) who deleted the addition. The CIT(A) found that the electricity bills, even though in different names, pertained to the same factory premises and were thus attributable to the assessee's business. The AO had incorrectly considered purchases as electricity expenditure.

What were the facts?

The Assessing Officer (AO) disallowed a portion of the electricity expenses claimed by the assessee, alleging that the books were unreliable due to incorrect electricity consumption figures and unverified purchases. The AO based his disallowance on information obtained under Section 133(6) regarding electricity charges.

What were the issues?

Whether the disallowance of electricity expenses by the AO was justified, considering the assessee's explanation and additional evidence regarding multiple electricity meters at the business premises.

Which sections of the Income-tax Act were involved?

Section 133(6)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH “B” NEW DELHI

For Appellant: Shri Amrit Lal Sr. DR
For Respondent: Shri Rajeev Saxena Adv
Hearing: 09/12/2015

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “B” NEW DELHI BEFORE SHRI S.V. MEHROTRA : ACCOUNTANT MEMBER AND Ms. SUCHITRA KAMBLE : JUDICIAL MEMBER Asstt. Yr: 2008-09 Income Tax Officer, Vs. Shri Chaman Lal Gupta, Ward 25(4), New Delhi. Prop. M/s Madan Plastics C-1/24, Miyanwali Nagar, Peera Garhi, New Delhi-110087. PAN: AEJPG 3195 B ( Appellant ) (Respondent) Appellant by : Shri Amrit Lal Sr. DR Respondent by : Shri Rajeev Saxena Adv. Date of hearing : 09/12/2015. Date of order : 02/02/2016. O R D E R PER S.V. MEHROTRA, A.M:

This is Revenue’s appeal against the order dated 9.3.2012 passed by the ld. CIT(A)-XXIV, New Delhi in appeal no. 274/10-11, relating to A.Y. 2008-09. 2. Brief facts of the case are that the assessee had filed return of income declaring total income of Rs. 52,800/- after claiming deduction of Rs. 1,21,090/- under Chapter VI-A. The assessee’s case was selected for scrutiny on the basis of CASS. The assessee was engaged in the business of manufacturing of EVA/PVC Footwears and compounds under the proprietorship M/s Madan Plastics. The AO noted from tax audit report that assessee did not produce the stock register at the time of audit. He, therefore, concluded that the books were not reliable as the consumption of electricity for both the years viz. AY 2007-08 and 2008-09 were not correct.

The details were as under:

Turnover Consumption Asstt. Year 2007-08 Rs. 18,76,287 Rs. 9,46,806 50.46% Asstt. Year 2008-09 Rs. 1,07,61,283 Rs. 59,63,397 55.54%

3.

He further observed that the purchases were not verifiable and the electricity bills did not tally with the actual consumption. He, therefore, called for information u/s 133(6) from North Delhi Power Ltd. as per which the electricity charges for the period from 28.4.2007 to 10.4.2008 were Rs. 24,83,885/-. The AO made addition of Rs. 28,97,389/-, inter alia, observing as under: 09.04.2007 Cheque no. 283936 Rs. 201,780/- 22.05.2007 Cheque no. 283947 Rs. 6,49,160/- 26.05.2007 Cheque no. 283950 Rs. 1,37,570/- 26.05.2007 Cheque no. 283949 Rs. 2,83,990/- These payments do not tally except Rs. 2,83,990/- received on 24.05.2007. These shows that the payments are made not on the bills raised by the NDPL on 22.05.2007 amounting to Rs. 6,49,160/-..

This proved that payment made are not open for verification. The total claim on electricity x at Rs. 52,03,194/-. But the payments received by NDPL is only Rs. 23,05,905/-. Thus the balance amount claimed is not allowed as deduction. Thus the disallowance will be Rs. 28,97,289/-.”

4.

Ld. CIT(A) deleted the addition after obtaining a remand report from the AO on additional evidence furnished before him.

5.

Ld. DR relied on the order of AO.

6.

We have considered the rival submissions and have perused the record of the case. The AO had called for the details from North Delhi Power Ltd. u/s 133(6) in respect of the electricity meters in the name of Mr. Chaman Lal Gupta only. However, in fact there were three electricity meters installed in the two factory premises and the details of the other two were not called for by the AO, since they were not in the name of Chaman Lal Gupta, even though the meters were installed in the name two factory premises. The two factory premises were at H-1278, DSIDC, Narela, Delhi, which was used for manufacture of PVC compound and the other factory premises at F-1838, DSIDC, Narela, Delhi was used for manufacture of PVC footwears. Details of power consumption of the three premises were as under:

Name of K. No. Units Amount Remarks Enclosures the paid whether Person in whose through Name the bank or Connection cash is Chaman Lal Gupta 435051957844 502991 24,83,885 Bank Copy of electricity a/c/ electric bills (pg. No. 17-27) K.G. Plastics 43200144691P 387245 15,30,929 Bank Copy of electricity a/c/ electric bills (pg. No. 29-40) Subhash Gupta 43200143210Q 232967 11,63,080 Bank Copy of electricity a/c/ electric bills (pg. no. 28)

7.

In the form of additional evidence before ld. CIT(A), the assessee had submitted all the bills and after examining all these details ld. CIT(A) has observed as under:

“A perusal of these bills reveals that they pertain to the same factory premises since telephone numbers on the bills are the same, whether the bill is in the name of Sh. Chaman Lal Gupta or M/s. K G Plastics or Sh. Subhash Gupta. Even the address is the same i.e. F-1838, DSIDC, Narela, Delhi or H-1278, DSIDC, Narela, Delhi. In view of the above finding of fact, it is held that all the three electricity meters were installed in the factory premises of M/s. Madan Plastics and that the appellant is entitled to the deduction for claim of electricity consumed at Rs.52,03, 194/-. The AO has wrongly taken Rs.59,63,397/- as the amount of expenditure on electricity consumption, - whereas this amount pertains to Purchases debited to the Trading Account. Therefore, the addition of Rs.28,97,289/- is hereby deleted.”

8.

These findings of ld. CIT(A) have not been controverted by the department by bringing any evidence on record to establish that the assessee was not consuming the electricity, which were supplied to it through the electricity meters in the names of K.G. Plastics and Subhash Gupta apart from the electricity meter in the name of Chaman Lal Gupta. In that view of the matter we see no reason to interfere in the order of ld. CIT(A) and the same is upheld.

9.

In the result, department’s appeal is dismissed. Order pronouncement in open court on 02/02/2016.

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