KISHORE RAMCHANDANI, MUMBAI V. ITO 19(3)(2), MUMBAI

ITA 199/MUM/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4130 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 19-01-2016
• Assessment Year: 2003-2004
• Appeal Filed On: 09-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GANESH BARC
• Keywords: Business income; Principle of natural justice; Additional evidence; Competent authority
• Section: 143(3); 142(1); 80IB; 133(6)

Judgement Text

A IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ./ I.T.A. NO. 199 /MUM/2012 ( / ASSESSMENT YEAR : 2003-04) ./ I.T.A. NO. 200 /MUM/2012 ( / ASSESSMENT YEAR : 2004-05) MR. KISHORE RAMCHANDANI, 804, OCEANIC, CARTER ROAD, BANDRA (WEST), MUMBAI 400 0 5 0 . / V. ITO 19(3)(2), MUMBAI. ./ PAN : ABNPR8926N ( / APPELLANT ) .. ( / RESPONDENT ) ASSESSEE BY SHRI VIJAY MEHTA REVENUE BY : SHRI GANESH BARC (SR. D.R.) / DATE OF HEARING : 19-01-2016 / DATE OF PRONOUNCEMENT : 01-02-2016 / O R D E R PER RAMIT KOCHAR, ACCOUNTANT MEMBER : THESE TWO APPEALS BY THE ASSESSEE ARE DIRECTED AGAI NST 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 YEARS 2003-04 & 2004-05. SINCE IDENTICA L ISSUES ARE INVOLVED IN BOTH THESE APPEALS, THESE TWO APPEALS WERE HEARD TO GETHER AND ARE DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE AND BREVITY. ITA 199/MUM/12 & ITA 200/MUM/12 2 2. COMMON AND IDENTICAL GROUNDS ARE TAKEN BY THE A SSESSEE IN BOTH THESE APPEALS WHEREBY THE ASSESSEE HAS CHALLENGED T HE ACTION OF THE CIT(A) IN DISMISSING THE APPEALS FILED BY THE ASSESSEE WHEREB Y CLAIM OF THE ASSESSEE FOR DEDUCTION U/S 80IB OF INCOME TAX ACT,1961 (HEREINAF TER CALLED THE ACT) WAS REJECTED AND DENIED TO THE ASSESSEE. WE SHALL TAKE THE APPEAL ITA NO. 199/MUM/2012 FOR THE ASSESSMENT YEAR 2003-04 AS THE LEAD APPEAL AND OUR DECISION IN ITA NO. 199/MUM/2012 SHALL APPLY MUTATI S MUTANDIS TO THE APPEAL ITA NO. 200/MUM/2012 FOR ASSESSMENT YEAR 200 4-05, 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 A ND ON FACTS. 2. THE LEARNED CIT (A) HAS ERRED IN DISMISSING THE A PPEAL FILED BY THE ASSESSEE ON DISALLOWANCE MADE BY THE ASSESSING OF FICER 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 ELECTRI CITY 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 ASSES SING OFFICER HAS CONTENDED THAT POWER WAS NOT USED AND THE ASSESSEE W AS CARRYING OUT ITS ACTIVITIES BY NON-ELECTRICAL METHODS. 3. THE LEARNED CIT (A) HAS ERRED IN CONCLUDING THAT S INCE MACHINERY INSTALLED IN THE FACTORY COULD NOT BE USED WI THOUT POWER, THE ASSESSEE MUST HAVE CARRIED OUT THE MANUFACTURING ACTIVI TY OUTSIDE THE FACTORY. 3. THE BRIEF FACTS ARE THAT THE ASSESSEE IS AN INDI VIDUAL 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 OR DER DATED 23.12.2005 WAS PASSED U/S 143(3) OF THE ACT BY THE LEARNED ASSESSI NG 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 DENIE D TO THE ASSESSEE AS ASSESSEE HAS NOT FULFILLED THE CONDITIONS AS STIPUL ATED U/S 80IB(2)(IV) OF THE ACT, FOR CLAIMING DEDUCTION U/S 80IB OF THE ACT. A GAINST 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 ALL OWED 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 M ADE 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 03.12.2 007 IN THE FIRST ROUND, THE REVENUE PREFERRED AN APPEAL BEFORE THE MUMBAI TRIBU NAL AND THE MUMBAI TRIBUNAL VIDE ORDERS DATED 25/06/2009 IN ITA NO. 14 78 & 1479/MUM/2008 FOR ASSESSMENT YEARS 2003-04 AND 2004-05 RESPECTIV ELY 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 V ERY LOW CONSUMPTION OF POWER WAS REQUIRED. HOWEVER, NO EXP ERT OPINION OR OTHER RELEVANT MATERIAL WAS PLACED ON RECORD IN SUP PORT 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 CIRCUMSTANC ES 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 ISSU ED BY THE AO TO THE ASSESSEE TO SUBMIT THE EVIDENCE TO PROVE THAT POWER WAS USED FOR THE MANUFACTURING PROCESS. HOWEVER, THE ASSESSEE FAILE D TO FILE DOCUMENTARY EVIDENCE THAT THE MACHINERY USED IN THE MANUFACTURI NG PROCESS OPERATED WITH LOW SPEED HEAVY DUTY GEARED WHICH WAS INDICATIVE OF THE POWER AND VERY LOW CONSUMPTION OF POWER WAS REQUIRED. THE ASSESSEE AL SO FAILED TO FILE EXPERT OPINION OR ANY OTHER MATERIAL AS DIRECTED BY THE TR IBUNAL. 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, SILVA SA CALLING INFORMATION OF ELECTRICAL UNITS CONSUMED FOR THE PERIOD APRIL, 200 2 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 NAGA R HAVELI, SILVASSA THAT THE MINIMUM ELECTRICAL CONNECTION CHARGES FOR THE ASSES SEES 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 ME TER RENT RS. 240/- AND DELAY IN PAYMENT RS.184/-) FOR THE PERIOD OF 24 MON THS FROM SEPTEMBER, 2001 TO AUGUST,2003. THE YEARLY ELECTRICAL CHARGES ARE PROPORTIONATELY ARRIVED AT RS.4,500/- AND THE NET CHARGES FOR EVERY MONTH C OMES 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 TH AT 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 T HE 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 O F POWER WAS LOWER. SECONDLY, THE ASSESSEE SUBMITTED THAT THE ELECTRICI TY METER INSTALLED ON THE FACTORY PREMISES WAS FAULTY WHEREBY A SINGLE BILL W AS RECEIVED FROM THE ELECTRICITY DEPARTMENT FOR THE PERIOD SEPTEMBER, 20 01 TO AUGUST, 2003. THE ITA 199/MUM/12 & ITA 200/MUM/12 5 ASSESSEE ALSO SUBMITTED THAT THE MANUFACTURING PROC ESS BY ITSELF DOES NOT REQUIRE HIGH POWER CONSUMPTION. THE A.O. AFTER CON SIDERING THE SUBMISSION OF THE ASSESSEE CONCLUDED THAT THE ELECTRICITY DEPA RTMENT HAS CHARGED MINIMUM AMOUNT OF CHARGES LEVIABLE OF RS. 375/- PER MONTH AND THE ASSESSEE HAS NOT CONSUMED ANY POWER FOR THE YEAR UN DER CONSIDERATION FOR THE PURPOSE OF MANUFACTURING. THE ASSESSEE WAS AGAI N ASKED BY AO TO DEMONSTRATE THAT MANUFACTURING IS CARRIED ON WITH T HE AID OF THE POWER. THE ASSESSEE HAS FILED A COPY OF CERTIFICATE FROM M/S E LECKTROCRAFT (INDIA) PVT. LTD. CERTIFYING THAT HP BLENDER MIXER USED BY M/S KIS AMANGO (ASSESSEES PROPRIETARY CONCERN) CANNOT BE USED WITHOUT POWER W HICH AS PER AO INDICATED THAT THE ASSESSEE HAS DONE THE MANUFACTURING ACTIVI TY ELSEWHERE AS THE TURNOVER OF THE ASSESSEE IS RS. 33.11. LAKHS AND TH E ASSESSEE HAS USED THE BARE MINIMUM ELECTRICITY. THE A.O. FURTHER OBSERVE D THAT THE ASSESSEE FAILED TO PRODUCE ANY EXPERT OPINION OR OTHER RELEVANT MAT ERIAL TO SUBSTANTIATE HIS CLAIM BY EVIDENCES THAT MANUFACTURING IS CARRIED O N 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 CORR ECTNESS OF DEDUCTION U/S 80IB OF THE ACT , THAT IT CARRIED OUT ITS MANUFACTU RING ACTIVITY BY USE OF ELECTRICITY AND ALSO NOT EMPLOYING TWENTY OR MORE W ORKERS 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. 4. AGGRIEVED BY THE ASSESSMENT ORDER DATED 30-12-20 10 PASSED BY THE AO U/S 143(3) READ WITH SECTION 254 OF THE ACT, THE ASSESS EE PREFERRED AN APPEAL BEFORE THE CIT(A). ITA 199/MUM/12 & ITA 200/MUM/12 6 5. BEFORE THE CIT(A), THE ASSESSEE SUBMITTED THAT THE ASSESSEES PROPRIETARY CONCERN WAS OPERATING THE MACHINERY, WH ICH WAS INSTALLED ON THE FACTORY PREMISES. THE NECESSARY APPROVALS FROM THE ELECTRICITY DEPARTMENT AS WELL AS THE FACTORIES LICENSE AND THE CERTIFICATE O F REGISTRATION AS A SMALL SCALE UNDERTAKING WAS RECEIVED FROM THE DIRECTORATE OF IN DUSTRIES, WHICH ALL CONFIRM THE PRESENCE OF THE MACHINERY ON THE FACTOR Y PREMISES. THE SANCTION FROM THE ELECTRICITY DEPARTMENT REGARDING THE USE O F 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 P LANT 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 T HE MANUFACTURING ACTIVITY WAS CARRIED ON BY THE ASSESSEE WHICH IS CONFIRMED B Y THE TRIBUNAL ALSO VIDE ORDERS DATED 25.06.2009 IN ITA NO.1478 1479/MUM/200 8 FOR ASSESSMENT YEAR 2003-04 AND 2004-05 RESPECTIVELY . THE ASSESS EE SUBMITTED FLOW CHARTS AND SUBMISSIONS AT VARIOUS STAGES OF THE INITIAL AS SESSMENT AS WELL AS APPEALS WHICH EVIDENCES THAT THE MACHINERY USED IN THE PRO CESS OF MANUFACTURE WORKS ON A MOTIVE POWER. THE ASSESSEE SUBMITTED THA T USE OF MOTIVE POWER REQUIRES USE OF ELECTRICITY. THE 'GEARED STIRRER' U SED FOR MIXING OF OILS IS OPERATED ONLY THROUGH THE USE OF POWER AND A DETAIL ED 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 STAT ED THAT FROM THE MANUFACTURING PROCESS EXPLAINED THAT DIFFERENT OILS ARE MIXED IN HIGH SPEED STIRRERS AFTER MODERATELY HEATING TO 45 DEGREE CENT IGRADE 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 FACT ORY PREMISES. IT WAS SUBMITTED THAT THE USE OF POWER IS LOW ON ACCOUNT O F THE REASON THAT IN THE FINANCIAL YEARS 2002-03 AND 2003-04 BEING EARLY YEA RS OF BUSINESS, THE PRODUCTION WAS LIMITED AND THE FACTORY WAS NOT OPER ATED 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 PROD UCTION WAS LIMITED AND HENCE THE CONSUMPTION OF POWER NATURALLY LOWER. IT WAS SUBMITTED BY THE ASSESSEE THAT THE ELECTRICITY METER INSTALLED ON TH E FACTORY PREMISES WAS FAULTY AND THAT A SINGLE BILL WAS RECEIVED FROM THE ELECTR ICITY DEPARTMENT COVERING THE PERIOD FROM SEPTEMBER 2001 TO AUGUST 2003 WAS RECEI VED WHICH EVIDENCES THAT METER WAS FAULTY. FURTHER, THE MANUFACTURING P ROCESS BY ITSELF DOES NOT REQUIRE HIGH POWER CONSUMPTION. THE ASSESSEE SUBMIT TED THAT THERE WERE NO INSTALLATIONS SUCH AS AIR CONDITIONERS OR OTHER APP LIANCES BEING USED IN THE FACTORY. BESIDES THE MACHINERY, ONLY TWO LIGHT BULB S WERE INSTALLED ON THE PREMISES. THE A.O. HAS DISALLOWED THE CLAIM ON THE GROUND THAT THE STATEMENT OBTAINED FROM THE ELECTRICITY DEPARTMENT, SILVASA S HOWS BARE MINIMUM USAGE OF ELECTRICITY. THE A.O. ATTRIBUTES THE MINIMUM CHA RGES IN THE USE OF LIGHT BULBS, FANS, ETC. ACCORDINGLY THE ASSESSEE PRAYED T HAT 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 ORD ER AND SUBMISSION OF THE ASSESSEE OBSERVED THAT THE A.O. HAD CALLED FOR THE INFORMATION FROM THE DY. ENGINEER (N.Z.), ELECTRICITY DEPARTMENT, DADRA, NAG AR & 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 OBSERVE D THAT THE A.O. HAS ANALYSED THE REPORT OF DY. ENGINEER, ELECTRICAL DEP ARTMENT, SILVASA AND NOTED THAT THE NET CHARGES FOR ELECTRICITY FOR EVERY MON TH COMES TO RS. 375/- AND FROM THE CHART PROVIDED BY ELECTRICAL DEPARTMENT, I T WAS SEEN THAT DURING THE YEAR THE ASSESSEE HAD NOT CONSUMED ANY POWER FOR TH E PURPOSE OF MANUFACTURING. THE A.O. HAS ALSO REJECTED THE CONT ENTION 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 DECID E ABOUT THE SAME AS HE IS A NON-TECHNICAL PERSON. NO CERTIFICATE FROM THE ELEC TRICITY DEPARTMENT HAS BEEN FURNISHED BY THE ASSESSEE. NO EXPERT OPINION WAS S UBMITTED 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 O N BY THE ASSESSEE AND MOTIVE POWER REQUIRES USE OF POWER BUT IF THE MOTIV E POWER WAS USED BY USING ELECTRICITY, THEN BILL FOR ELECTRICITY CHARGES SHOU LD 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 F OR 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 WORK ERS WERE EMPLOYED BY HIM TO CARRY OUT HIS BUSINESS ACTIVITIES, WHICH THE ASS ESSEE FAILED TO DO SO. THUS, THE CIT(A) VIDE ORDERS DATED 27.10.2011 HELD THAT T HE ASSESSEE CARRIED OUT ITS ACTIVITIES WITHOUT THE AID OF POWER AND THE ASSESS EE 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 A CT CANNOT BE ALLOWED AND ACCORDINGLY CONFIRMED THE ORDER OF A.O. 6. AGGRIEVED BY THE ORDERS DATED 27.10.2011 OF THE CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 7. AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE DID NOT PRESS GROUND NO. 1, HENCE, THE SAID GROUND IS DISMISSED A S NOT PRESSED. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE A.O. HA S DOUBTED THE POWER CONSUMPTION FOR THE BUSINESS ACTIVITIES CARRIED OU T BY THE ASSESSEE. THE ORIGINAL ASSESSMENT ORDER DATED 23.12.2005 WAS FRAM ED U/S 143(3) OF THE ACT, WHEREBY THE A.O. HELD THAT THE ASSESSEE IS NOT ENGA GED IN ANY MANUFACTURING ACTIVITY AND HENCE DEDUCTION U/S 80IB OF THE ACT CA NNOT BE GRANTED TO THE ASSESSEE. IT WAS EXPLAINED FROM THE MANUFACTURING P ROCESS THAT DIFFERENT OILS ARE MIXED IN HIGH SPEED STIRRERS AFTER MODERATELY H EATING TO 45C 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 IT S 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 GRANTIN G 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 ORDER S OF THE CIT(A). THE TRIBUNAL VIDE ORDERS DATED 25-06-2009 IN ITA NO. 14 78 & 1479/MUM/2008 FOR ASSESSMENT YEAR 2003-04 AND 2004-05 RESPECTIVEL Y , SET ASIDE THE MATTER TO THE FILE OF A.O. FOR DECIDING THE ISSUE AFRESH W HETHER 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 ASSESS EE IS ENGAGED IN MANUFACTURING ACTIVITY, WHILE THE CONTROVERSY NOW C ENTERS AROUND THE CARRYING OUT OF THE MANUFACTURING PROCESS WITH OR W ITHOUT THE AID OF POWER, FOR WHICH THERE WAS NO MATERIAL PLACED ON RECORD B EFORE THE TRIBUNAL BY THE ASSESSEE IN THE FIRST ROUND OF LITIGATION. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS INSTALLED GEAR STIR RERS FITTED WITH HP AC/DC MOTORS AND THE PROCESS OF MIXING OF TWO OILS TAKES PLACE. THE MANUFACTURER OF THE MOTOR HAS CERTIFIED THAT THE MA CHINERY IS USING POWER FOR WHICH THE CERTIFICATE IS PLACED IN PAPER BOOK PAGE 96 WHEREBY M/S ELEKTROCRAFT (I) PVT. LTD. CERTIFIED THAT THE HP BLENDER MIXER CANNOT BE USED WITHOUT POWER. THE RELEVANT COPY OF INVOICES FROM V ARIOUS PARTIES ARE PLACED ON RECORD VIDE PAPER BOOK PAGE NOS. 18 TO 26. THE L D. COUNSEL ALSO SUBMITTED COPY OF SMALL SCALE INDUSTRIES REGISTRATION CERTIFI CATE WHICH IS PLACE AT PAGE 30 IN PAPER BOOK FILED BY THE ASSESSEE WITH THE TRIBUN AL. THE LD. COUNSEL ALSO SUBMITTED COPY OF APPROVAL OF POWER SANCTIONED BY E LECTRICITY DEPARTMENT OF 15HP MOTIVE AND 2500W LIGHTING CONNECTION WHICH ARE PLACED ON RECORD VIDE PAPER BOOK PAGE NO. 31. THE LD. COUNSEL ALSO SUBMIT TED COPY OF POLLUTION CONTROL BOARD CERTIFICATE FROM POLLUTION CONTROL CO MMITTEE VIDE PAPER BOOK ITA 199/MUM/12 & ITA 200/MUM/12 10 PAGE 32 AND COPY OF LICENSE TO WORK A FACTORY ENGAG ED 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 MAC HINERY FOR MANUFACTURE AS WELL AS THE RAW MATERIAL FOR USE IN THE MANUFACT URE. THE LD. COUNSEL SUBMITTED THAT THE ASSESSEES CLAIM U/S 80-IB OF TH E ACT WAS ALLOWED BY THE A.O. IN THE ASSESSMENT ORDER PASSED U/S 143(3) OF T HE ACT FOR THE ASSESSMENT YEAR 2006-07 VIDE ORDERS DATED 26.12.2008 WHEREIN T HE 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 ASSESS EE 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 ADD ITIONAL EVIDENCES WAS FILED BEFORE THE TRIBUNAL WITH THE PRAYER THAT THE SE ADDITIONAL EVIDENCES MAY BE ADMITTED. THE LD. COUNSEL OF THE ASSESSEE SUBMI TTED THAT BUT FOR THE TWO ASSESSMENT YEARS NAMELY 2003-04 AND 2004-05,THE CLA IM OF THE ASSESSEE FOR DEDUCTION U/S80IB OF THE ACT HAS BEEN ALLOWED BY TH E 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 M ECHANIZED EQUIPMENT RUN WITH ELECTRIC MOTORS AND PRODUCTION CANNOT BE DONE WITHOUT ELECTRIC POWER CONSUMPTION AND BASED ON THE TECHNICAL SPECIFICATIO N OF THE NOMINAL 1/S HP MOTOR(230V/2.5AMPS) USED IN THE MIXER EQUIPMENT AS FOLLOWS : ELTEK MAKE GM 63L2, 280RPM, SINGLE PHASE, CONTINUO US DUTY AT 45 DEGREE C AND POWER CONSUMPTION WAS WORKED OUT BASED ON TH E REPORTED PRODUCTION TO BE 528 UNITS FOR THE PREVIOUS YEAR 2002-03 AND 1 296 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 3 RD JUNE 2015 FROM INSTITUTE OF CHEMICAL TECHNOLOGY AS ADDITIONAL EVID ENCE 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 REQUI RED 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, W HICH 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 A SSESSEE IS OF ADVANCED AGA BEING 72 YEARS OF AGE AND IS ONLY PERSON IN THE OR GANIZATION 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 PROBL EM, DIABETES AND EYE PROBLEM AND ALSO DUE TO HIS ADVANCED AGE , HE COUL D NOT OBTAIN TECHNICAL EXPERT OPINION EARLIER FOR SUBMISSION BEFORE THE AO AND THE CIT(A). THE LD. COUNSEL OF THE ASSESSEE PRAYED THAT THESE ADDITIONA L EVIDENCES BE ADMITTED AND THE CASE BE DECIDED ON MERITS. THE ASSESSEE REL IED UPON THE DECISION OF HONBLE APEX COURT IN THE CASE OF COLLECTOR LAND AC QUISITION V. MST. KATIJI & ORS. (167 ITR 471) AND HONBLE GAUHATI HIGH COURT I N 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 TR IBUNAL 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 8. THE LD. D.R. WHILE RELYING ON THE ORDERS OF AUTH ORITIES BELOW SUBMITTED THAT THE ASSESSEE HAS FAILED TO PRODUCE THE EXPERT OPINION CERTIFICATE IN THE FIRST ROUND OF LITIGATION AND ALSO IN THE SECOND RO UND OF LITIGATION BEFORE THE A.O. AS WELL AS THE CIT(A) AND THE SAME ARE NOW BEE N 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 TH E AO FOR VERIFICATION OF THE CLAIM OF THE ASSESSEE. 9. WE HAVE CONSIDERED THE RIVAL CONTENTION AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. WE HAVE OBSERVED THAT THE ASS ESSEE HAS SET-UP AN INDUSTRIAL UNIT IN SILVASA AND IS ENGAGED IN THE MA NUFACTURE OF INDUSTRIAL LUBRICANTS. IT IS STATED BY THE ASSESSEE THAT DIFFE RENT OILS ARE MIXED IN HIGH SPEED STIRRERS AFTER MODERATELY HEATING TO 45C TO A SMOOTH PASTE . IT IS STATED BY THE ASSESSEE THAT THE ASSESSEE HAS INSTALLED GEA R STIRRERS FITTED WITH 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 A SSESSEE IS HELD TO BE MANUFACTURING BY THE MUMBAI TRIBUNAL IN ITA NO 1478 & 1479/MUM/2008 FOR ASSESSMENT YEAR 2003-04 AND 2004-05 RESPECTIVEL Y IN THE ASSESSEES OWN CASE. THE ONLY CONTROVERSY NOW IS WITH REGARD TO WH ETHER THIS MANUFACTURING ACTIVITY IS CARRIED ON WITH THE AID OF POWER OR NO T AS REQUIRED BY THE PROVISIONS OF SECTION 80IB(2)(IV) OF THE ACT , TO G ET THE CLAIM OF DEDUCTION U/S 80IB OF THE ACT. WE HAVE OBSERVED THAT THE MANUFAC TURER OF THE MOTOR CERTIFIED THAT THE HP BLENDER MIXER CANNOT BE USE D 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 A SSESSEE ALSO SUBMITTED COPY OF SMALL SCALE INDUSTRIES REGISTRATION CERTIFI CATE FOR MANUFACTURE OF OIL BASED FORMULATION AND COPY OF APPROVAL OF POWER CON NECTION OF 15HP FOR MOTIVE POWER AND 2500W FOR LIGHTING SANCTIONED BY ELECTRICITY DEPARTMENT WHICH ARE ALSO ON RECORD AT PAGE 30-31. THE ASSESSE E 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 EN GAGED IN THE MANUFACTURE OF OIL BASED FORMULATION WHICH ARE AGAIN PLACED IN PAP ER 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 OR DER DATED 26.12.2008 PASSED U/S 143(3) OF THE ACT FOR THE ASSESSMENT YEA R 2006-07 WHEREIN THE DEDUCTION U/S 80IB OF RS. 5,87,494/- WAS ALSO ALLOW ED. THE REVENUE HAS DOUBTED THAT THE ASSESSEE IS NOT CA RRYING ON ACTIVITY OF MANUFACTURING WITH THE AID OF POWER DUE TO FOLLOWIN G REASONS: A) THE ELECTRICITY BILL IS OF MINIMUM CHARGES OF RS.37 5/- PER MONTH AND IN MANY MONTHS AS PER ELECTRICITY BILL THE CONSUMPT ION OF ELECTRICITY IS SHOWN TO BE ZERO UNITS CONSUMED. B) FROM THE CHART PROVIDED BY THE ELECTRICITY DEPARTM ENT, IT IS SEEN THAT THE ASSESSEE HAS NOT CONSUMED ANY POWER FOR TH E 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/EXPER T OPINION TO SUBSTANTIATE ITS CLAIM THAT THE LOW SPEED HEAVY DUT Y 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 ELEC TRICITY DEPARTMENT THAT THE ACTIVITY CARRIED ON BY THE ASSE SSEE IS BY NON- ELECTRICAL HELP METHODS. ITA 199/MUM/12 & ITA 200/MUM/12 14 THE ASSESSEE HAS SUBMITTED BEFORE THE TRIBUNAL ADDI TIONAL EVIDENCE BY WAY OF TECHNICAL CERTIFICATE FROM TRITON MENTORS AND ADVIS ORS PRIVATE LIMITED DATED 01-06-2015 WHEREBY AS TECHNICAL EXPERTS THEY HAVE C ERTIFIED THAT PRODUCTS WHICH ARE EMULSION OF WATER AND OIL NEED TO BE NECE SSARILY PRODUCED IN MECHANIZED EQUIPMENT RUN WITH ELECTRIC MOTORS AND P RODUCTION CANNOT BE DONE WITHOUT ELECTRIC POWER CONSUMPTION AND BASED O N THE TECHNICAL SPECIFICATION OF THE NOMINAL 1/S HP MOTOR(230V/2.5A MPS) USED IN THE MIXER EQUIPMENT AS FOLLOWS : ELTEK MAKE GM 63L2, 280RPM, SINGLE PHASE, CONTINUO US DUTY AT 45 DEGREE C AND POWER CONSUMPTION WAS WORKED OUT BASED ON TH E REPORTED PRODUCTION TO BE 528 UNITS FOR THE PREVIOUS YEAR 2002-03 AND 1 296 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 LIT ERS EACH AND TOTALING UP TO 528 UNITS IN THE PREVIOUS YEAR RELEVANT TO ASSES SMENT YEAR 2003-04 AND 1296 UNITS IN THE PREVIOUS YEAR RELEVANT TO ASSESSM ENT 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 EVIDE NCES NOW SUBMITTED BEFORE THE TRIBUNAL IN SECOND ROUND OF LITIGATION B E ADMITTED UNDER SECTION 255(6) OF THE ACT READ WITH RULE 29 OF INCOME TAX(A PPELLATE TRIBUNAL) RULES, 1963. THIS IS THE SECOND ROUND OF LITIGATION AND TH E ASSESSEE HAS PRODUCED THE ADDITIONAL EVIDENCES BEFORE THE TRIBUNAL IN THI S 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 ORGANIZA TION WHO LOOKS AFTER THE ITA 199/MUM/12 & ITA 200/MUM/12 15 FINANCIAL AND TAXATION MATTER. THE ASSESSEE HAS STA TED THAT HIS HEALTH IS DETERIORATING IN THE LAST SIX YEARS AS HE IS SUFFER ING FROM SEVERAL AILMENTS SUCH AS HEART PROBLEM, DIABETES AND EYE SIGHT PROBL EM ETC AND ALSO DUE TO HIS ADVANCED AGE , HE COULD NOT OBTAIN TECHNICAL EX PERT OPINION EARLIER FOR SUBMISSION BEFORE THE AO AND THE CIT(A). THE ASSESS EE RELIED UPON THE DECISION OF HONBLE APEX COURT IN THE CASE OF COLLE CTOR LAND ACQUISITION V. MST. KATIJI & ORS. (167 ITR 471) AND HONBLE GAUHAT I 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 K EEPING IN VIEW THE PROVISIONS OF SECTION 255(6) OF THE ACT READ WITH RULE 29 OF I NCOME TAX( APPELLATE TRIBUNAL) RULES, 1963. THE ASSESSEE HAS PRAYED THAT THESE ADDITIONAL EVIDENCES BE ADMITTED AND THE CASE BE DECIDED ON ME RITS. THE TRIBUNAL IN THE FIRST ROUND OF LITIGATION IN IT S ORDER DATED 25-06-2009 IN ITA NO.1478 & 1479/MUM 2008 FOR ASSESSMENT YEAR 200 3-04 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 M ANUFACTURING 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 V ERY LOW CONSUMPTION OF POWER WAS REQUIRED. HOWEVER, NO EXP ERT OPINION OR OTHER RELEVANT MATERIAL WAS PLACED ON RECORD IN SUP PORT 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 CIRCUMSTANC ES 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 TRIBUN AL. 29. THE PARTIES TO THE APPEAL SHALL NOT BE ENTITLED TO PRODUCE ADDITIONAL EVIDENCE EITHER ORAL OR DOCUMENTARY BEFORE THE TRIBUNAL, BUT IF THE TRIBUNA L REQUIRES ANY DOCUMENT TO BE PRODUCED OR ANY WITNESS TO BE EXAMINED OR ANY AFFIDAVIT TO BE F ILED TO ENABLE IT TO PASS ORDERS OR FOR ANY OTHER SUBSTANTIAL CAUSE, OR , IF THE INCOME-TAX AUT HORITIES HAVE DECIDED THE CASE WITHOUT GIVING SUFFICIENT OPPORTUNITY TO THE ASSESSEE TO ADDUCE EV IDENCE 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 REQUI RES ANY DOCUMENT TO BE PRODUCED OR ANY WITNESS TO BE EXAMINED OR ANY AFFID AVIT 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 MAT ERIAL. 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 O F 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 T HE 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 AUTHOR ITY AND IN ORDER TO ENABLE IT TO DECIDE DISPUTES BROUGHT BEFORE IT BY WAY OF SECO ND APPEAL IN A LAWFUL, FAIR AND JUDICIOUS MANNER, IT HAS NECESSARILY TO LOOK IN TO AND CONSIDER SUCH EVIDENCES AND OTHER MATERIALS HAVING A NEXUS A ND BEARING ON THE SUBJECT-MATTER OF THE APPEAL, VIZ., THE DISPUTE INV OLVED. 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 INDICAT ED THAT IN ABSENCE OF TECHNICAL EXPERT OPINION AND OTHER RELEVANT MATERIA L ON RECORD , IT IS NOT ABLE TO GIVE FINDING AS TO WHETHER THE MANUFACTURING PRO CESS CARRIED ON BY THE ASSESSEE IS WITH THE AID OF POWER OR NOT. THE ASSES SEE HAS NOT IN THE FIRST ROUND OF LITIGATION PRODUCED THE TECHNICAL EXPERT O PINION ABOUT THE REASONS AND JUSTIFICATION FOR NO OR LOW USAGE OF ELECTRICIT Y AND ALSO WHETHER THE MANUFACTURING IS CARRIED ON WITH THE AID OF THE POW ER. THE ASSESSEE HAS PRODUCED THESE TECHNICAL EXPERT OPINIONS BEFORE THE TRIBUNAL IN SECOND ROUND OF LITIGATION AND HAS EXPLAINED THAT IN THE INTERES T OF SUBSTANTIAL JUSTICE AND EQUITY, THE SAME SHOULD BE ADMITTED AND HAS CONTEND ED 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 T HESE EVIDENCES EARLIER , DUE TO THE VARIOUS REASONS CITED BY THE ASSESSEE IN ITS APPLICATION FOR ADMISSION OF ADDITIONAL EVIDENCES AND ALSO TO ADVANCE SUBSTANTIA L JUSTICE IN DECIDING THE CASE OF MERITS VIS--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 A T THRESHOLD WHICH IN OUR CONSIDERED VIEW WILL NOT ADVANCE JUSTICE. BUT AT TH E SAME TIME WE ARE EQUALLY CONSCIOUS OF THE FACT THAT THESE ADDITIONAL EVIDENC ES ARE TO BE SUBJECTED TO VERIFICATION AND SCRUTINY BY THE REVENUE AUTHORITIE S 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 AD MISSION OF ADDITIONAL EVIDENCES SUBMITTED BY THE ASSESSEE BEFORE THE TRIB UNAL IN THIS SECOND ROUND OF LITIGATION IN ACCORDANCE WITH PROVISIONS OF SECT ION 255(6) OF THE ACT READ WITH RULE 29 OF INCOME TAX(APPELLATE TRIBUNAL) RULE S, 1963 AND WE SET ASIDE THE MATTER TO THE FILE OF THE AO FOR DE-NOVO DETERM INATION OF THE ISSUE AFTER CONSIDERING THE ADDITIONAL EVIDENCES SUBMITTED BY T HE ASSESSEE.NEEDLESS TO SAY THAT PROPER AND ADEQUATE OPPORTUNITY OF HEARING WILL BE GIVEN TO THE ASSESSEE BY THE AO IN ACCORDANCE WITH THE PRINCIPLE S OF NATURAL JUSTICE IN ACCORDANCE WITH LAW. WE ORDER ACCORDINGLY. 10. IN THE RESULT APPEAL FILED BY THE ASSESSEE IN I TA NO. 199/MUM/2012 FOR THE ASSESSMENT YEAR 2003-04 IS ALLOWED FOR STATISTI CAL PURPOSES. 11. OUR DECISION IN APPEAL ITA NO. 199/MUM/2012 FOR THE ASSESSMENT YEAR 2003-04 SHALL APPLY MUTATIS MUTANDIS TO THE APPEAL ITA NO. 200/MUM/2012 FOR THE ASSESSMENT YEAR 2004-05 AS IDENTICAL ISSUES ARE INVOLVED IN BOTH THESE APPEALS. 12. IN THE RESULT APPEAL FILED BY THE ASSESSEE IN I TA NO. 200/MUM/2012 FOR THE ASSESSMENT YEAR 2004-05 IS ALLOWED FOR STATISTI CAL PURPOSES. 13. IN THE RESULT, BOTH THE APPEALS FILED BY THE AS SESSEE ARE ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON IST FEBRUAR Y, 2016. # $% &' 01-02-2016 ( ) SD/- SD/- (AMIT SHUKLA) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER $ MUMBAI ; & DATED 01-02-2016 [ ITA 199/MUM/12 & ITA 200/MUM/12 19 .9../ R.K. R.K. R.K. R.K. , EX. SR. PS !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. : ( ) / THE CIT(A)- CONCERNED, MUMBAI 4. : / CIT- CONCERNED, MUMBAI 5. =>( 99?@ , ?@ , $ / DR, ITAT, MUMBAI H BENCH 6. (BC D / GUARD FILE. / BY ORDER, = 9 //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , $ / ITAT, MUMBAI