Calcutta High Court
Geekay Exim (India) Ltd. And Anr. vs Commissioner Of Income-Tax And Ors. on 27 February, 1998
Equivalent citations: [1998]234ITR560(CAL)
Author: Pinaki Chandra Ghose
Bench: Pinaki Chandra Ghose
JUDGMENT Pinaki Chandra Ghose, J.
1. The stibject-matter of challenge in this writ application is an order dated October 3, 1997, passed by the Commissioner of Income-tax under Section 80HHC(2) of the Income-tax Act, 1961 (hereinafter referred to as "the said Act"), for the assessment year 1995-96.
2. By the said impugned order, the Commissioner of Income-tax has rejected the prayer of the writ petitioner for extension of time for realisation of export proceeds under Section 80HHC(2) of the said Act, inter alia, on the ground that the said extension application was filed after the expiry of six months from the end of the previous year.
3. The case of the writ petitioner is that the said order is illegal and in violation of natural Justice inasmuch as the Commissioner did not examine on merits the question as to whether the delayed realisation of the export proceeds was fot reasons beyond the assessee's control. It further appears from the records that according to the Commissioner an application for extension of time should be made before the expiry of the period of six months from the end of the previous year within which the export proceeds were required to be realised and in any event before the return was filed and could not be made thereafter. Mr. Bajoria, appearing on behalf of the writ petitioner, submitted that on two1 occasions in the earlier years the Commissioner of Income-tax on the same facts duly granted time to the writ petitioner and furthermore very recently the Commissioner of Income-tax again extended the time in favour of the writ petitioner in respect of the assessment year 1996-97. He also produced the said order before me. He further relied upon the judgment in Vikram Overseas (P.) Ltd. v. C1T and submitted that the application could be made at any time even after the expiry of the period of six months from the end of the previous year. He further submitted that the said decision of the Delhi High Court was based on the decision of the law laid down by the Supreme Court in the case of CIT v. Ajanta Electricals . The Supreme Court, while considering the provisions of Section 139 of the said Act relating to power of the Assessing Officer to grant extension of time to file the return even after the expiry of the period for filing of such return. He further submitted the Commissioner himself in the case of the writ petitioner in the earlier assessment years and even in the assessment year has allowed such extension of time under Section 80HHC(2), even though the application was made after the expiry of the period of six months from the end of the previous year.
4. Mr. Bajoria further submitted that Section 80HHC(2) itself does not provide for any period of limitation for making such application for extension to the Commissioner. He further submitted that when the statute itself does not provide for any period of limitation, no such period can be fixed by the authorities.
5. He further submitted that in the instant case the previous year relevant to the assessment year 1995-96 was the financial year ended on March 31, 1995. In terms of Section 80HHC(2), the petitioner-company was required to realise the export proceeds within September 30, 1995. However, as on the said date, there were 93 outstanding invoices. More than 2/3rds of the said invoices were realised in the month of October, 1995, itself and the remaining invoices were realised by January 5, 1996. There is no dispute as to the aforesaid facts and it is further the admitted position that the petitioner-company has fully realised the export proceeds. The Commissioner in his order has held that the petitioner-company's request for extension of time made on December 13, 1996, was too belated since the same was long after September 30, 1995, and even after the filing of the return and its processing under Section 143(1)(a) of the said Act.
6. He also submitted that the extension was granted by the successor-Commissioner for the assessment year 1996-97 although the application was made beyond six months after the expiry of the relevant previous year. He further submitted that the Commissioner of Income-tax is not in proceedings on the basis that claim for extension was or at the time of filing the return (sic).
7. There is no dispute that the petitioner-company had made the claim in the return.
8. Mr. Bajoria further submitted that in any event under Section 80HHC(2)(a) of the said Act, an assessee is not required to make any application to the Chief Commissioner or Commissioner for extension of time to realise the export proceeds. It is only necessary that a claim in that behalf should be made in the return. The matter regarding extension of time is required to be examined by the Chief Commissioner or Commissioner in the course of the assessment proceedings on a reference by the Assessing Officer. In the course of such proceedings, the assessee has to be given an opportunity to show that it is entitled to the extension. The section fixes the time for realisation of the export proceeds which can be extended by the Commissioner or Chief Commissioner. He further drew my attention to the order of the Commissioner where the Commissioner himself has not disputed this aspect. It appears from the said orders as follows :
"It is true that there is nothing in Section 80HHC(2)(a) that requires assessees to apply for extension of time if they are unable to receive in or bring into India foreign exchange representing export sale proceeds within the period of six months from the end of the relevant financial year."
9. Mr. Bajoria further submitted that this specific question arose before the Allahabad High Court in the case of Azad Tobacco Factory (P.) Ltd. v. CIT as follows (page 1008) :
"In fine, according to our view, a plain reading of Section 80HHC(2)(a) does not contemplate the making of any application by the assessee within a period of six months either for availing of the deduct-ibility with respect to sale proceeds received in or brought into India as contemplated therein within a period of six months from the end of the previous year or for the purpose of invoking the power of the Chief Commissioner or Commissioner to allow further period in case the assessee is unable to receive in or bring into India the sale proceeds for reasons beyond his control. If such a position is accepted, then there is no scope for making any application for the purpose of having the benefit of further period before the expiry of six months. On the other hand, it is our considered view that the deductibility claimed in the return is to be decided in computing the total income in case the six-month period has expired before the assessee received or brought into India the sale proceeds, in that event, it is for the assessing authority to place the same before the Chief Commissioner or Commissioner if the assessee proposes to satisfy that he was unable to do so for reasons beyond his control. Inasmuch as the assessing authority having not been invested with the; power granted under Sub-section (2)(a) for allowing further period, he can neither refuse nor deal with the same. Therefore, it is imperative on its part to place the same before the Chief Commissioner or Commissioner, as the case may be. The assessee may also bring the fact to the notice of the Chief Commissioner or Commissioner, but in that event, no time limit can be applied except that the claim is to be made in the return to be filed."
10. He further placed reliance on the judgment of this court in the case of CIT v. Rai Bahadur Bissesswarlal Motilal Malwasie Trust [1992] 195 ITR 825.
11. Mr. Dipak Deb, appearing on behalf of the respondent, contended that the petitioner-company was not entitled to the deduction under Section 80HHC even otherwise since it did not submit a report of the accountant in accordance with Sub-section (4) of the said section along with the return of the income in respect of the export proceeds realised beyond the period of six months. He further submitted that the writ petitioner earlier filed a writ petition and did not pursue the said writ petition, since the writ petitioner-company succeeded in the appeal before the Commissioner (Appeals). Mr. Deb further submitted that the Commissioner after going through the records has passed a reasoned order and no grounds have been made out by the writ petitioner to set aside the said order. He relied upon a judgment in Calcutta Motor Cycle Co. v. Union of India, ; Assistant Collector of Central Excise v. Dunlop India Ltd. [1985] 154 ITR 172, and submitted that the Commissioner has examined all the aspects of the matter and thereafter has passed the said reasoned order. No ground has been made out in the writ petition to set aside the said order.
12. After considering all these aspects of the matter the question to be decided in the instant writ petition is as to whether, (i) the application to the Commissioner is required to be made before the expiry of the period of six months from the end of the previous year or before filing the return, and (ii) whether any application as such is at all necessary.
13. I have considered the case cited by Mr. Bajoria in Ajanta Electricals' case , where the Supreme Court while considering the provisions of Section 139 of the said Act observed as under page 120 ;
"We cannot accept the contention raised on behalf of the Revenue that the word 'extend' in the proviso to Section 139(2) implies that at the time of making the application the time allowed should not have expired. Though the Civil Procedure Code, 1908, by itself does not apply to the proceedings under the Income-tax Act, we see no reason why a principle of procedure evolved for doing justice to a party to the proceeding cannot be called in aid while interpreting a procedural provision contained in the Act. Section 148 of the Code provides that where any period is fixed or granted by the court for the doing of any act prescribed or allowed by the Code, the court may, in its discretion, from time to time, enlarge such period, even though the period originally fixed or granted may have expired. Various situations can be envisaged where a party to the proceeding is prevented by circumstances beyond his control from doing the required act within the fixed period. The assessee may be able to point out that because of a sudden death in the family or because of his sudden illness of a serious nature or because he has to leave for an outside place all of a sudden or because he could not return from outside in spite of his best efforts, or for other good reasons, as the case may be, he was not able to file the return within time."
14. At page 121-122 of the Reports :
"We do not think that the High Court was right in holding that it was not open to the assessee to file an application beyond the period within which he was required to file his return. What appears to have weighed with the High Court while taking that view is the absence of any specific provision in the Act or the rules permitting the assessee to file such an application. For various reasons, the Legislature may not make provisions in detail in matters of procedure to be followed. It may rest with conferring discretionary power upon the court or the authority and leave it to the court or that authority to exercise that power in its discretion as deemed proper and just depending upon the facts and circumstances of each case. Whether a particular thing could be done or not in the absence of a specific provision to that effect would depend upon the object of that provision and other relevant factors like the consequences which may follow if it is held that it cannot be done. From a mere absence of a specific provision authorising the Income-tax Officer to entertain an application made beyond time it was not proper to hold that it was not open to the assessee to make an application under Section 139(2) for extension of time after the time allowed had expired and that such an application could not be entertained by the Income-tax Officer. If an application could be made even after the time allowed had expired, it became the duty of the Income-tax Officer either to grant it or reject it. Once the assessee called upon the Income-tax Officer to exercise his discretion it was not open to him to ignore that request and not to pass any , order thereon."
15. I have also considered the judgment of the Allahabad High Court which is stated hereinabove.
16. After considering the views as stated hereinabove and the submissions made by Mr. Bajoria I do not have any hesitation to accept his contention and I endorse the view as expressed by the Allahabad High Court in Azad Tobacco Factory (P.) Ltd. .
17. In my opinion, the right to deduction under Section 80HHC is a right given to the assessee which can easily be available within a period of six months as contemplated therein. But the said right appears to remain suspended if the assessee is unable to have it for reasons beyond his control. In such circumstances, the Commissioner or the Chief Commissioner was bound to exercise the power for allowing a further period to the assessee if he is satisfied that the assessee was unable to receive in or bring into India the sale proceeds within the period of six months for reasons beyond his control. If he is satisfied about the existence of such a condition he has to exercise the discretion in favour of the assessee. In view of the aforesaid facts I hold that it is not necessary to make any application to the Commissioner before the expiry of the period of six months from the end of the previous year or before the filing of the return.
18. In these circumstances, I set aside the order dated October 3, 1997, passed by the Commissioner and I direct the Commissioner to decide the matter on merits after giving a hearing to the writ petitioner, within two weeks from the date of communication of this order. This writ application is allowed, however, without any costs.
19. All parties to act on a signed xerox copy of this dictated order on the usual undertaking.