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Income Tax Appellate Tribunal, “A” BENCH, MUMBAI
Before: SHRI AMIT SHUKLA & SHRI RAMIT KOCHAR
आदेश / O R D E R PER RAMIT KOCHAR, ACCOUNTANT MEMBER:
These two appeals by the assessee are directed against two separate orders both dated 27-10-2011 passed by the learned Commissioner of Income Tax(Appeals)- 30 , Mumbai (Hereinafter called “the CIT (A)”) pertaining to the assessment year’s 2003-04 & 2004-05. Since identical issues are involved in both these appeals, these two appeals were heard together and are disposed of by this common order for the sake of convenience and brevity.
ITA 199/Mum/12 & ITA 200/Mum/12 2
Common and identical grounds are taken by the assessee in both these appeals whereby the assessee has challenged the action of the CIT(A) in dismissing the appeals filed by the assessee whereby claim of the assessee for deduction u/s 80IB of Income Tax Act,1961 (Hereinafter called “the Act”) was rejected and denied to the assessee. We shall take the appeal 2003-04 as the lead appeal and our decision in shall apply mutatis mutandis to the appeal ITA No. 200/Mum/2012 for assessment year 2004-05, the following grounds of appeal have been raised by the assessee with respect to appeal ITA No 199/Mum/2012 for the assessment year 2003-04 in the memo of appeal filed with the Tribunal :-
“1. The Order of the Learned CIT (A) is bad in law and on facts.
2. The Learned CIT (A) has erred in dismissing the appeal filed by the assessee on disallowance made by the assessing officer deduction under Section 80IB despite:
2.1 The assessee having produced a certificate from the machinery manufacturer regarding the use of power.
2.2 Producing the evidence collected from the Electricity Department, Dadar & Nagar Haveli, Silvassa, received in response to the notice U/s 133 (6), calling for information of the electric units consumed for the period from April 2002 to March 2003 and April 2003 to March 2004 on the basis of which the Learned Assessing Officer has contended that power was not used and the assessee was carrying out its activities by non-electrical methods.
3. The Learned CIT (A) has erred in concluding that since machinery installed in the factory could not be used without power, the assessee must have carried out the manufacturing activity outside the factory.”
The brief facts are that the assessee is an individual having income from consultancy and business income. The assessee is proprietor of firm ITA 199/Mum/12 & ITA 200/Mum/12 3 “”Kisamago” engaged in the business of manufacture of industrial lubricants. In the first round of litigation, the assessment order dated 23.12.2005 was passed u/s 143(3) of the Act by the learned assessing officer (hereinafter called “the AO”) whereby the claim of the assessee u/s 80IB of the Act amounting to Rs. 13,85,048/- was rejected and denied to the assessee as assessee has not fulfilled the conditions as stipulated u/s 80IB(2)(iv) of the Act, for claiming deduction u/s 80IB of the Act. Against the assessment order dated 23.12.2005 passed u/s 143(3) of the Act by the AO, the assessee preferred an appeal before the CIT(A) which was allowed by the CIT(A) vide his orders dated 03-12-2007 by observing as under:-
“I am of the opinion that the claim and arguments made by the appellant are fair and reasonable and the benefit u/s 80IB should be allowed to the assessee.”
Against the above order of the CIT(A) dated 03.12.2007 in the first round, the Revenue preferred an appeal before the Mumbai Tribunal and the Mumbai Tribunal vide orders dated 25/06/2009 in & 1479/Mum/2008 for assessment year’s 2003-04 and 2004-05 respectively set aside the matter to the file of the A.O. to decide the issue afresh in accordance with the observations of the Tribunal as under:-
“ On the other hand learned AR has stated that the machinery used in the manufacturing process operated with low speed heavy duty geared which was indicative of the power and very low consumption of power was required. However, no expert opinion or other relevant material was placed on record in support of this contention. In our considered opinion no findings can be given on this issue unless there is some clinching material available on record. The learned A.R. conceded that he did not possess any such technical report etc. Under these circumstances we are of the considered opinion that it will be just and fair if the impugned order on this issue is set aside and the matter is restored to the file of the A.O. We order accordingly and direct him to decide the issue afresh in accordance with our aforesaid observation.”
ITA 199/Mum/12 & ITA 200/Mum/12 4 Accordingly , notice u/s 142(1) of the Act was issued by the AO to the assessee to submit the evidence to prove that power was used for the manufacturing process. However, the assessee failed to file documentary evidence that the machinery used in the manufacturing process operated with low speed heavy duty geared which was indicative of the power and very low consumption of power was required. The assessee also failed to file expert opinion or any other material as directed by the Tribunal. A notice dated 30.11.2010 u/s 133(6) of the Act was issued to the Dy. Engineer (N.Z.), Electricity Department, Dadra & Nagar Haveli, Silvasa calling information of electrical units consumed for the period April, 2002 to March, 2003 and April, 2003 to March, 2004. On perusal of the information submitted by the Deputy Engineer (N/Z-1I), Electrical Dept, Dadra and· Nagar Haveli, Silvassa that the minimum electrical connection charges for the assessee’s unit, per month is fixed at Rs.375/-. The electricity bill dated 17.09.2003 has been raised by electricity department for Rs.9,000/- (excluding Meter rent Rs. 240/- and delay in payment Rs.184/-) for the period of 24 months from September, 2001 to August,2003. The yearly electrical charges are proportionately arrived at Rs.4,500/- and the net charges for every month comes to Rs.375/- which is fixed monthly charges of Rs. 5.375/-. As per the information given by the electrical department it was concluded by the AO that the assessee is carrying out its activities by non-electrical help methods. The assessee has submitted before the A.O. that in the financial years 2002-03 and 2003-04, being early years of business, the production was limited and the factory was not operated on a daily basis. The product manufactured was a proprietary product and was tailor-made to the requirements of various customers. The production was limited, and hence the consumption of power was lower. Secondly, the assessee submitted that the electricity meter installed on the factory premises was faulty whereby a single bill was received from the electricity department for the period September, 2001 to August, 2003. The ITA 199/Mum/12 & ITA 200/Mum/12 5 assessee also submitted that the manufacturing process by itself does not require high power consumption. The A.O. after considering the submission of the assessee concluded that the electricity department has charged minimum amount of charges leviable of Rs. 375/- per month and the assessee has not consumed any power for the year under consideration for the purpose of manufacturing. The assessee was again asked by AO to demonstrate that manufacturing is carried on with the aid of the power. The assessee has filed a copy of certificate from M/s Elecktrocraft (India) Pvt. Ltd. certifying that ½ HP blender mixer used by M/s Kisamango (assessee’s proprietary concern) cannot be used without power which as per AO indicated that the assessee has done the manufacturing activity elsewhere as the turnover of the assessee is Rs. 33.11. lakhs and the assessee has used the bare minimum electricity. The A.O. further observed that the assessee failed to produce any expert opinion or other relevant material to substantiate his claim by evidence’s that manufacturing is carried on with the aid of power despite opportunities given to the assessee and as the assessee is employing less than twenty employees , the claim of assessee was denied due to non- compliance of provisions of Section 80IB(2)(iv) of the Act. Thus the AO held that the assessee has also failed to establish correctness of deduction u/s 80IB of the Act , that it carried out its manufacturing activity by use of electricity and also not employing twenty or more workers to carry out his business without electricity, hence, deduction u/s 80IB of the Act was denied to the assessee by the AO in the second round vide assessment orders dated 30-12-2010 passed u/s 143(3) read with Section 254 of the Act.
Aggrieved by the assessment order dated 30-12-2010 passed by the AO u/s 143(3) read with Section 254 of the Act, the assessee preferred an appeal before the CIT(A).
ITA 199/Mum/12 & ITA 200/Mum/12 6
Before the CIT(A), the assessee submitted that the assessee’s proprietary concern was operating the machinery, which was installed on the factory premises. The necessary approvals from the electricity Department as well as the Factories License and the certificate of registration as a small scale undertaking was received from the Directorate of Industries, which all confirm the presence of the machinery on the factory premises. The sanction from the electricity Department regarding the use of 15HP motive power and 2500 W. lighting connection is also on record. The certificate from the Sales tax department also states that the premises have plant and machinery for manufacture as well as the raw material for use in the manufacture. The assessee submitted that it is not in dispute that the manufacturing activity was carried on by the assessee which is confirmed by the Tribunal also vide orders dated 25.06.2009 in 1479/Mum/2008 for assessment year 2003-04 and 2004-05 respectively . The assessee submitted flow charts and submissions at various stages of the initial assessment as well as appeals which evidence’s that the machinery used in the process of manufacture works on a motive power. The assessee submitted that use of motive power requires use of electricity. The "geared stirrer" used for mixing of oils is operated only through the use of power and a detailed discussion on this aspect was submitted by the assessee. The assessee submitted that the A.O. in the second para of the assessment order has stated that from the manufacturing process explained that different oils are mixed in high speed stirrers after moderately heating to 45 degree centigrade to a smooth paste which indicates that the A.O. has accepted that the manufacturing process requires the use of power for heating the oils in a high speed stirrer, which forms a part of the machinery installed in the factory premises. It was submitted that the use of power is low on account of the reason that in the financial years 2002-03 and 2003-04 being early years of business, the production was limited and the factory was not operated on a daily basis. The product manufactured was a proprietary product and was tailor-made to the ITA 199/Mum/12 & ITA 200/Mum/12 7 requirements of various customers. As such the production was limited and hence the consumption of power naturally lower. It was submitted by the assessee that the electricity meter installed on the factory premises was faulty and that a single bill was received from the electricity department covering the period from September 2001 to August 2003 was received which evidences that meter was faulty. Further, the manufacturing process by itself does not require high power consumption. The assessee submitted that there were no installations such as air conditioners or other appliances being used in the factory. Besides the machinery, only two light bulbs were installed on the premises. The A.O. has disallowed the claim on the ground that the statement obtained from the Electricity Department, Silvasa shows bare minimum usage of electricity. The A.O. attributes the minimum charges in the use of light bulbs, fans, etc. accordingly the assessee prayed that the power was used in the manufacturing activity and hence the deduction u/s. 80IB of the Act should not be disallowed.
The CIT(A) after going through the assessment order and submission of the assessee observed that the A.O. had called for the information from the Dy. Engineer (N.Z.), Electricity Department, Dadra, Nagar & Haveli, Silvasa from which the A.O. found that the assessee was carrying out its activities by non- electrical help method. The CIT(A) further observed that the A.O. has analysed the report of Dy. Engineer, Electrical Department, Silvasa and noted that the net charges for electricity for every month comes to Rs. 375/- and from the chart provided by electrical department, it was seen that during the year the assessee had not consumed any power for the purpose of manufacturing. The A.O. has also rejected the contention of the assessee that the meter installed in the factory was faulty and defective on the ground that assessee is not a competent authority to decide about the same as he is a non-technical person. No certificate from the electricity department has been furnished by the assessee. No expert opinion was submitted by the assessee ITA 199/Mum/12 & ITA 200/Mum/12 8 to substantiate the claim of the assessee to prove very low electricity consumption. The CIT(A) observed that the assessee is contending that motive power is used in the manufacturing carried on by the assessee and motive power requires use of power but if the motive power was used by using electricity, then bill for electricity charges should have come. It was observed by the CIT(A) that no evidence of faulty meter was submitted by the assessee and for zero reading of power, it can be concluded that no electricity was used by the assessee. The CIT(A) further observed that for claiming deduction u/s 80IB of the Act by undertaking manufacturing by non-use of power, the assessee required to prove that twenty or more workers were employed by him to carry out his business activities, which the assessee failed to do so. Thus, the CIT(A) vide orders dated 27.10.2011 held that the assessee carried out its activities without the aid of power and the assessee has not fulfilled the condition of having employed twenty or more persons as stipulate u/s 80IB(2)(iv) of the Act, deduction u/s 80IB of the Act cannot be allowed and accordingly confirmed the order of A.O.
Aggrieved by the orders dated 27.10.2011 of the CIT(A), the assessee is in appeal before the Tribunal.
At the time of hearing, the ld. Counsel for the assessee did not press ground No. 1, hence, the said ground is dismissed as not pressed. The ld. Counsel for the assessee submitted that the A.O. has doubted the power consumption for the business activities carried out by the assessee. The original assessment order dated 23.12.2005 was framed u/s 143(3) of the Act, whereby the A.O. held that the assessee is not engaged in any manufacturing activity and hence deduction u/s 80IB of the Act cannot be granted to the assessee. It was explained from the manufacturing process that different oils are mixed in high speed stirrers after moderately heating to 45°C to a smooth paste. Merely mixing of articles does not involve process of manufacturing ITA 199/Mum/12 & ITA 200/Mum/12 9 and manufacturing involves transformation of matter into something else which is a different commercial commodity having its distinct character, use and name and commercially known as such and mixing and manufacturing are two different activities. Accordingly the A.O. denied the deduction u/s 80IB of the Act in the first round of litigation. However, the CIT(A) allowed the appeal in the first round of litigation granting deduction to the assessee u/s 80-IB of the Act , vide orders dated 03-12-2007 and the Revenue went in appeal before the Mumbai Tribunal against the orders of the CIT(A). The Tribunal vide orders dated 25-06-2009 in & 1479/Mum/2008 for assessment year 2003-04 and 2004-05 respectively , set aside the matter to the file of A.O. for deciding the issue afresh whether the manufacturing process carried on by the assessee is with the aid of power and at the same time the Tribunal accepted the fact that the assessee is engaged in manufacturing activity, while the controversy now centers around the carrying out of the manufacturing process with or without the aid of power, for which there was no material placed on record before the Tribunal by the assessee in the first round of litigation. The ld. Counsel for the assessee submitted that the assessee has installed gear stirrers fitted with ½ HP AC/DC motors and the process of mixing of two oils takes place. The manufacturer of the motor has certified that the machinery is using power for which the certificate is placed in paper book page 96 whereby M/s Elektrocraft (I) Pvt. Ltd. certified that the ½ HP Blender Mixer cannot be used without power. The relevant copy of invoices from various parties are placed on record vide paper book page nos. 18 to 26. The ld. Counsel also submitted copy of small scale industries registration certificate which is place at page 30 in paper book filed by the assessee with the Tribunal. The ld. Counsel also submitted copy of approval of power sanctioned by Electricity Department of 15HP motive and 2500W lighting connection which are placed on record vide paper book page No.
The ld. Counsel also submitted copy of Pollution Control Board Certificate from Pollution Control Committee vide paper book ITA 199/Mum/12 & ITA 200/Mum/12 10 page 32 and copy of License to Work a Factory engaged in the manufacture of oil based formulation which is placed in paper book page 33 . The ld. Counsel of the assessee also submitted the certificate from the Sales tax department which reflects that the premises have plant and machinery for manufacture as well as the raw material for use in the manufacture. The ld. Counsel submitted that the assessee’s claim u/s 80-IB of the Act was allowed by the A.O. in the assessment order passed u/s 143(3) of the Act for the assessment year 2006-07 vide orders dated 26.12.2008 wherein the deduction u/s 80IB of Rs. 5,87,494/- was allowed, copy of the order is placed as an additional evidence before the Tribunal. The P&L of the assessee showing turnover of Rs. 90,29,671/- and electricity consumption was of Rs. 25,220/- incurred by the assessee for the assessment year 2006-07, as an additional evidences was filed before the Tribunal with the prayer that these additional evidences may be admitted. The Ld. Counsel of the assessee submitted that but for the two assessment years namely 2003-04 and 2004-05,the claim of the assessee for deduction u/s80IB of the Act has been allowed by the Revenue for all the years as allowed under the Act.
The Ld. Counsel also submitted additional evidence by way of certificate from Triiton Mentors and Advisors Private Limited dated 01-06-2015 whereby as technical experts they have certified that products which are emulsion of water and oil need to be necessarily produced in mechanized equipment run with electric motors and production cannot be done without electric power consumption and based on the technical specification of the nominal 1/s HP motor(230V/2.5Amps) used in the mixer equipment as follows : “eltek make GM 63L2, 280RPM, single phase, continuous duty at 45 degree C” and power consumption was worked out based on the reported production to be 528 units for the previous year 2002-03 and 1296 units for the previous year 2003-04.
ITA 199/Mum/12 & ITA 200/Mum/12 11 The ld. Counsel also submitted copy of certificate dated 3rd June 2015 from Institute of Chemical Technology as additional evidence whereby the Institute certified that the numbers given in the letter for power consumption amounting to 0.5 KW per mixer of 20 liters each and totaling up to 528 units in one year and 1296 units in another year ,whereby for the process of making emulsions of oil and water, the amount required power consumption as given in that letter is realistic.
The ld. Counsel prayed that all the above documents submitted hereby in the form of additional evidences before the Tribunal, which goes to the roots of the matter, may kindly be admitted and the claim of deduction of the assessee u/s 80IB of the Act may be allowed to the assessee on merits. The Ld. Counsel for the assesssee submitted that the assessee is of advanced aga being 72 years of age and is only person in the organization who looks after the financial and taxation matter. The Ld. Counsel of the assessee has stated that the health of the assessee is deteriorating in the last six years as he is suffering from several ailments such as heart problem, diabetes and eye problem and also due to his advanced age , he could not obtain technical expert opinion earlier for submission before the AO and the CIT(A). The Ld. Counsel of the assessee prayed that these additional evidences be admitted and the case be decided on merits. The assessee relied upon the decision of Hon’ble Apex Court in the case of Collector Land Acquisition v. Mst. Katiji & Ors. (167 ITR 471) and Hon’ble Gauhati High Court in the case of Jeypore Timber and Veneer Mills Private Limited v. CIT (137 ITR 415) to contend that the additional evidences as submitted before the Tribunal may be admitted in the interest of equity and justice keeping in view the provisions of Section 255(6) of the Act read with Rule 29 of Income Tax( Appellate Tribunal) Rules, 1963.
ITA 199/Mum/12 & ITA 200/Mum/12 12
The ld. D.R. while relying on the orders of authorities below submitted that the assessee has failed to produce the expert opinion certificate in the first round of litigation and also in the second round of litigation before the A.O. as well as the CIT(A) and the same are now been submitted before the Tribunal in the form of additional evidences which needs verification by the A.O. and matter may be set aside to the file of the AO for verification of the claim of the assessee.
We have considered the rival contention and also perused the material available on record. We have observed that the assessee has set-up an industrial unit in Silvasa and is engaged in the manufacture of industrial lubricants. It is stated by the assessee that different oils are mixed in high speed stirrers after moderately heating to 45°C to a smooth paste . It is stated by the assessee that the assessee has installed gear stirrers fitted with ½ HP AC/DC motors and the process of mixing of two oils takes place. The process of mixing oil and water carried on by the assessee is held to be manufacturing by the Mumbai Tribunal in & 1479/Mum/2008 for assessment year 2003-04 and 2004-05 respectively in the assessee’s own case. The only controversy now is with regard to whether this manufacturing activity is carried on with the aid of power or not as required by the provisions of Section 80IB(2)(iv) of the Act , to get the claim of deduction u/s 80IB of the Act. We have observed that the manufacturer of the motor certified that the ½ HP Blender Mixer cannot be used without power, certificate is placed at page 96 of paper book. The assessee also submitted the relevant copy of invoices from various parties for purchase of machineries, which is on record in paper book, page 18-26. The assessee also submitted copy of small scale industries registration certificate for manufacture of oil based formulation and copy of approval of power connection of 15HP for motive power and 2500W for lighting sanctioned by Electricity Department which are also on record at page 30-31. The assessee also submitted copy of ITA 199/Mum/12 & ITA 200/Mum/12 13 Pollution Control Board Certificate from Pollution Control Committee and copy of certificate of License to Work a Factory engaged in the manufacture of oil based formulation which are again placed in paper book,page 32-33. We have observed that the assessee is registered with sales tax authorities and the certificate from the Sales tax department also reflect that the premises have plant and machinery for manufacture as well as the raw material for use in the manufacture. We also find that the assessee’s claim u/s 80-IB of the Act was allowed by the Revenue in the assessment order dated 26.12.2008 passed u/s 143(3) of the Act for the assessment year 2006-07 wherein the deduction u/s 80IB of Rs. 5,87,494/- was also allowed.
The Revenue has doubted that the assessee is not carrying on activity of manufacturing with the aid of power due to following reasons: a) The electricity bill is of minimum charges of Rs.375/- per month and in many months as per electricity bill the consumption of electricity is shown to be zero units consumed. b) From the chart provided by the electricity department, it is seen that the assessee has not consumed any power for the purposes of manufacturing. c) The contention of the assessee that meter is faulty is not supported by any certificate from electricity department. d) The assessee having failed to bring technical/expert opinion to substantiate its claim that the low speed heavy duty geared stirrer is enough for manufacturing carried on by the assessee and it consumes low power. e) The AO has concluded based on information from electricity department that the activity carried on by the assessee is by non- electrical help methods.
ITA 199/Mum/12 & ITA 200/Mum/12 14 The assessee has submitted before the Tribunal additional evidence by way of technical certificate from Triton Mentors and Advisors Private Limited dated 01-06-2015 whereby as technical experts they have certified that products which are emulsion of water and oil need to be necessarily produced in mechanized equipment run with electric motors and production cannot be done without electric power consumption and based on the technical specification of the nominal 1/s HP motor(230V/2.5Amps) used in the mixer equipment as follows : “eltek make GM 63L2, 280RPM, single phase, continuous duty at 45 degree C” and power consumption was worked out based on the reported production to be 528 units for the previous year 2002-03 and 1296 units for the previous year 2003-04. From the copy of certificate dated 03.06.2015 from Institute of Chemical Technology as additional evidence submitted before the Tribunal whereby the said Institute certified that the numbers given in the letter for power consumption amounting to 0.5 KW per mixer of 20 liters each and totaling up to 528 units in the previous year relevant to assessment year 2003-04 and 1296 units in the previous year relevant to assessment year 2004-05 whereby for the process of making emulsions of oil and water, the amount of required power consumption as given in that letter of Triiton Mentors and Advisors Private Limited was held to be realistic by Institute of Chemical Technology.
The assessee has prayed that these additional evidences now submitted before the Tribunal in second round of litigation be admitted under Section 255(6) of the Act read with Rule 29 of Income Tax(Appellate Tribunal) Rules, 1963. This is the second round of litigation and the assessee has produced the additional evidences before the Tribunal in this second round of litigation. The assesssee has submitted that the assessee is of advanced age being 72 years of age and is the only person in the organization who looks after the ITA 199/Mum/12 & ITA 200/Mum/12 15 financial and taxation matter. The assessee has stated that his health is deteriorating in the last six years as he is suffering from several ailments such as heart problem, diabetes and eye sight problem etc and also due to his advanced age , he could not obtain technical expert opinion earlier for submission before the AO and the CIT(A). The assessee relied upon the decision of Hon’ble Apex Court in the case of Collector Land Acquisition v. Mst. Katiji & Ors. (167 ITR 471) and Hon’ble Gauhati High Court in the case of Jeypore Timber and Veneer Mills Private Limited v. CIT (137 ITR 415) to contend that the additional evidences as submitted before the Tribunal may be admitted in the interest of equity and justice keeping in view the provisions of Section 255(6) of the Act read with Rule 29 of Income Tax( Appellate Tribunal) Rules, 1963. The assessee has prayed that these additional evidences be admitted and the case be decided on merits.
The Tribunal in the first round of litigation in its order dated 25-06-2009 in & 1479/Mum 2008 for assessment year 2003-04 and 2004-05 has observed that in the absence of expert opinion or other relevant material , no finding can be given on this issue whether the manufacturing process is carried on with the aid of power or not , as under:
“ On the other hand learned AR has stated that the machinery used in the manufacturing process operated with low speed heavy duty geared which was indicative of the power and very low consumption of power was required. However, no expert opinion or other relevant material was placed on record in support of this contention. In our considered opinion no findings can be given on this issue unless there is some clinching material available on record. The learned A.R. conceded that he did not possess any such technical report etc. Under these circumstances we are of the considered opinion that it will be just and fair if the impugned order on this issue is set aside and the matter is restored to the file of the A.O. We order accordingly and direct him to decide the issue afresh in accordance with our aforesaid observation.”
ITA 199/Mum/12 & ITA 200/Mum/12 16 The Rule 29 of Income Tax(Appellate Tribunal) Rules,1963 provides as under:
“[Production of additional evidence before the Tribunal.
The parties to the appeal shall not be entitled to produce additional evidence either oral or documentary before the Tribunal, but if the Tribunal requires any document to be produced or any witness to be examined or any affidavit to be filed to enable it to pass orders or for any other substantial cause, or , if the income-tax authorities have decided the case without giving sufficient opportunity to the assessee to adduce evidence either on points specified by them or not specified by them, the Tribunal, for reasons to be recorded, may allow such document to be produced or witness to be examined or affidavit to be filed or may allow such evidence to be adduced.]”
Rule 29 clearly provides that if the Tribunal requires any document to be produced or any witness to be examined or any affidavit to be filed to enable it to pass orders or for any other substantial cause, the Tribunal may record reasons for production of the evidences and the material. From a judicial analysis of various decisions, it is amply settled and clear that the Tribunal can admit additional evidence in terms of rule 29 of the Income-tax (Appellate Tribunal) Rules,1963 if the receipt or admission of additional evidence is vital and essential for the purpose of consideration of the subject-matter of the appeal and arrive at a final and ultimate decision. The Tribunal, therefore, has also power to admit additional evidence in the interest of justice or if there exists substantial cause. The Tribunal, under the scheme of the Income-tax Act, 1961 is a final fact-finding authority and in order to enable it to decide disputes brought before it by way of second appeal in a lawful, fair and judicious manner, it has necessarily to look into and consider such evidences and other materials having a nexus and bearing on the subject-matter of the appeal, viz., the dispute involved. Even according to the ITA 199/Mum/12 & ITA 200/Mum/12 17 provisions of rule 29, the Tribunal is empowered to receive and admit additional evidence for any other substantial cause. The Tribunal in the first round has clearly indicated that in absence of technical expert opinion and other relevant material on record , it is not able to give finding as to whether the manufacturing process carried on by the assessee is with the aid of power or not. The assessee has not in the first round of litigation produced the technical expert opinion about the reasons and justification for no or low usage of electricity and also whether the manufacturing is carried on with the aid of the power. The assessee has produced these technical expert opinions before the Tribunal in second round of litigation and has explained that in the interest of substantial justice and equity, the same should be admitted and has contended that due to ailments and advanced age of the assessee the same could not be adduced earlier before the authorities below.
We are inclined to accept and admit the additional evidences submitted by the assessee in the interest of substantial justice as these evidences are vital and essential for resolving the controversy and go to the root of the matter for resolving the dispute , despite the fact that this is the second round of litigation and the assessee has failed to produce these evidences earlier , due to the various reasons cited by the assessee in its application for admission of additional evidences and also to advance substantial justice in deciding the case of merits vis-à-vis technicalities involved in admitting the additional evidences. By admitting these additional evidences, the case will at best be decided on merits instead of rejecting the matter at threshold which in our considered view will not advance justice. But at the same time we are equally conscious of the fact that these additional evidences are to be subjected to verification and scrutiny by the Revenue authorities in accordance with the principles of natural justice which demand that the Revenue need to be accorded an opportunity to verify these additional evidences now submitted ITA 199/Mum/12 & ITA 200/Mum/12 18 by the assessee before the Tribunal in second round of litigation.Thus, based on our above discussions and reasoning, we order admission of additional evidences submitted by the assessee before the Tribunal in this second round of litigation in accordance with provisions of Section 255(6) of the Act read with Rule 29 of Income Tax(Appellate Tribunal) Rules, 1963 and we set aside the matter to the file of the AO for de-novo determination of the issue after considering the additional evidences submitted by the assessee.Needless to say that proper and adequate opportunity of hearing will be given to the assessee by the AO in accordance with the principles of natural justice in accordance with law. We order accordingly.
In the result appeal filed by the assessee in 2003-04 is allowed for statistical purposes.
Our decision in appeal 2003-04 shall apply mutatis mutandis to the appeal for the assessment year 2004-05 as identical issues are involved in both these appeals.
In the result appeal filed by the assessee in for the assessment year 2004-05 is allowed for statistical purposes.
In the result, both the appeals filed by the assessee are allowed for statistical purpose. Order pronounced in the open court on Ist February, 2016. आदेश क� घोषणा खुले �यायालय म� �दनांकः 01-02-2016 को क� गई । Sd/- sd/- (AMIT SHUKLA) (RAMIT KOCHAR) ACCOUNTANT MEMBER JUDICIAL MEMBER मुंबई Mumbai; �दनांक Dated 01-02-2016 [ ITA 199/Mum/12 & ITA 200/Mum/12 19 व.�न.स./ R.K. R.K. R.K., Ex. Sr. PS R.K.