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INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “B” NEW DELHI

ITA no. 2419/Del/2012 Asstt. Yr: 2008-09
Income Tax Officer (Appellant) vs. Chaman Lal Gupta (Respondent)
Date of Order: 02-02-2016

ORDER

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 the Person in whose Name the Connection is	K. No.	Units	Amount paid	Remarks whether through bank or cash	Enclosures
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	5 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.

(SUCHITRA KAMBLE )                        (S.V. MEHROTRA)
JUDICIAL MEMBER                ACCOUNTANT MEMBER

Electricity Expenses of factory allowed despite meter, bill not in the name of the assessee-ITAT | 04-02-2016 |