TMI Blog2016 (5) TMI 717X X X X Extracts X X X X X X X X Extracts X X X X ..... nterest 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssa, 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. 3. The brief facts are that the assessee is an individual having income from consultancy and business income. The assessee is proprietor of firm 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 ₹ 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... March, 2004. On perusal of the information submitted by the Deputy Engineer (N/Z-1I), Electrical Dept, Dadra andF Nagar Haveli, Silvassa that the minimum electrical connection charges for the assessee s unit, per month is fixed at ₹ 375/-. The electricity bill dated 17.09.2003 has been raised by electricity department for ₹ 9,000/- (excluding Meter rent ₹ 240/- and delay in payment ₹ 184/-) for the period of 24 months from September, 2001 to August,2003. The yearly electrical charges are proportionately arrived at ₹ 4,500/- and the net charges for every month comes to ₹ 375/- which is fixed monthly charges of ₹ 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 consump ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icity 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 ITA No.1478 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 d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... electricity for every month comes to ₹ 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity, 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 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 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. 31. The ld. Counsel also submitted copy of Pollution Control Board Certific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r ,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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting sanctioned by Electricity Department which are also on record at page 30-31. The assessee also submitted copy of 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 ₹ 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 ₹ 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 ro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idence 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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