Tribunal overturns disallowance of business electricity expenses, finding evidence insufficient.

The Income Tax Appellate Tribunal, Chandigarh, allowed the appeal of the assessee, deleting the disallowance of expenses incurred on electricity. The Tribunal considered the ongoing nature of the business, supported by allowed expenses and evidence of payments to the electricity corporation. The Tribunal found the disallowed expenses unsustainable, overturning the decision of the First Appellate Authority and the Assessing Officer. The order was pronounced in Open Court on 15th December 2022.

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Issues:
1. Challenge to the order passed by the Ld. Commissioner of Income Tax (Appeals)
2. Disallowance of expenses incurred on electricity
3. Permission to add, amend, or alter any ground of appeal

Issue 1: Challenge to the order passed by the Ld. Commissioner of Income Tax (Appeals)

The appeal filed by the assessee challenges the order dated 15.11.2019 of CIT(A)-I Chandigarh regarding the 2013-14 assessment year. The grounds of challenge include the assertion that the order passed under section 250(6) by the Ld. Commissioner of Income Tax (Appeals) is contrary to law and facts of the case.

Issue 2: Disallowance of expenses incurred on electricity

The Assessing Officer (AO) disallowed expenses of Rs. 24,05,249/- claimed by the assessee on account of power and fuel expenses, as no manufacturing or business activities were carried out despite claiming such expenses. An Inspector was deputed to verify the genuineness of the expenditure, revealing no electricity connection with the assessee and the absence of manufacturing activities. Statements from Security Guards confirmed the non-functioning of the business. Despite efforts to keep the business functioning, the AO made the addition. The First Appellate Authority upheld the addition, leading the assessee to appeal before the ITAT.

Issue 3: Permission to add, amend, or alter any ground of appeal

The appellant sought permission to add, amend, or alter any ground of appeal before or at the time of the hearing of the appeal before the Hon'ble Income Tax Appellate Tribunal, Chandigarh.

The ITAT analyzed the case, noting that various other business expenses were allowed, indicating the business was an ongoing concern facing a temporary lull. Payments to Punjab State Electricity Corporation were supported by bills and receipts, providing third-party evidence. The statements of Security Guards in 2016 were deemed irrelevant to the 2012-13 assessment year under consideration. The failure of the Corporation to respond to inquiries was not the assessee's fault. Considering the efforts to keep the business viable, the disallowed expenses were deemed unsustainable, leading to the deletion of the addition. The appeal of the assessee was allowed, and the order was pronounced in the Open Court on 15th December 2022.

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