TMI Blog2002 (8) TMI 64X X X X Extracts X X X X X X X X Extracts X X X X ..... M. H. S. ANSARI. JUDGMENT The petitioner-assessee has, in the instant writ application, inter alia, questioned the order dated September 12, 2001, passed by the Commissioner of Income-tax Central-II (for short "the CIT"), being annexure P-15 whereby and whereunder the application filed by the petitioner under section 80HHC(2)(a) of the Income-tax Act, 1961, has been rejected and prayed for consequential orders in that behalf. The petitioners have also prayed for certain other reliefs. The order sheet dated July 8, 2002, shows that Mr. D. K. Shome, learned counsel appearing along with Md. Nizamuddin, advocate, for the respondent-tax authorities, submitted that the writ application can be heard without affidavit-in-opposition. The impugned order, it was submitted by Mr. Shome, can be sustained on the facts and for the reasons contained therein. The main question for consideration in the instant writ application is whether, in the facts and circumstances of the case, petitioner No. 1 is entitled to extension of time in terms of section 80HHC(2)(a) of the Income-tax Act, 1961, in respect of its claim for deduction in respect of the assessment year 1994-95. It is dependen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, the petitioner filed an application before the Commissioner of Income-tax on February 26, 1998, requesting for extending time for realisation of export proceeds. The hearing of the application was fixed for April 30, 1998, which was intimated to the petitioner by the Commissioner of Income-tax's letter dated April 23, 1998. The impugned order records that none appeared on the date of hearing and that there were no further proceedings for about three years until the petitioner wrote a letter dated August 4, 2001, requesting for grant of another opportunity of hearing. It is pursuant thereto that the Commissioner of Income-tax heard the matter and rejected the application filed for extension of time. It is this order of rejection by the Commissioner of Income-tax that has been assailed in the instant writ application. The grounds of rejection stated in the impugned order, briefly summarised, are as under: (i) The assessee could not produce any document to show that it had applied to the Reserve Bank of India in the prescribed form requesting for permission to extend the period for realisation of export proceeds. (ii) There was no material brought on record before the Commis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner, it is urged, was constrained to file a suit and obtained a decree in its favour in C. S. No. 266 of 1995 on January 29, 1998. An order dated January 25, 1999, was passed in the appeal against that suit by the Calcutta High Court and the petitioner could realise its dues when directions were issued by the court directing the Registrar of the High Court to invoke the bank guarantee for a sum of Rs. 20 lakhs. Therefore, it is contended that the delay has been duly explained and the same was beyond the control of the petitioner-assessee. It could realise the outstanding amounts only by execution of the decree. Lastly, it was contended that by arbitrary rejection of the petitioner's application made under section 80HHC(2)(a) of the Act, the petitioner has been illegally denied his entitlement to claim the statutory deduction of the sum of Rs. 2,86,565 for the assessment year in question. Learned counsel for the petitioner has relied upon the judgment of this High Court in Geekay Exim (India) Ltd. v. CIT [1998] 234 ITR 560 and sought to distinguish the judgments referred to and relied upon by the Commissioner of Income-tax in his impugned order. On the other hand, Mr. Shome ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authority to grant or refuse extension of time must be exercised reasonably and fairly and must not be exercised arbitrarily. The order passed by the concerned authority must reflect objective application of mind to the factors relevant to the determination of the issue as to whether the assessee could not bring or receive the sale proceeds of the exported goods due to reasons beyond his control. The expression 'reasons beyond his control" not having been defined in the Act, their Lordships of the Punjab and Haryana High Court in that case observed that the same shall have to be interpreted keeping in view the context in which it appears. Accordingly, it was held that the assessee can seek extension of time beyond six months only by showing that he had acted with due diligence and had taken necessary steps for bringing in the sale proceeds within the stipulated period but could not do so due to reasons on which he did not have any control. After having observed that the expression "such further period" has also not been defined in the Act, their Lordships keeping in view the limitation prescribed under section 153 of the Act for passing of the order of assessment, i.e., two years ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case [1998] 234 ITR 560, a learned single judge of this court relying upon the judgment of the Allahabad High Court in the case of Azad Tobacco Factory (P.) Ltd, v. CIT [1997] 225 ITR 1002, held that the right to deduction under section 80HHC is a right given to the assessee which can be easily availed of within a period of six months as contemplated in the section itself. Also the said right remains suspended if the assessee is unable to bring in the sale proceeds within the said period for reasons beyond his control and in such circumstances the competent authority is bound to exercise the power for allowing a further period to the assessee if he is satisfied that the assessee was unable to bring in the sale proceeds into India within the period of six months for reasons beyond his control. P. C. Ghosh, J. was further pleased to 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. I am in respectful agreement with the aforesaid views of P. C. Ghosh J. In the absence of any bar contained in the provision in question or any stipulation as t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... convertible foreign exchange is brought into the country within six months of the expiry of the previous year. Discretion to grant extension is to be exercised only if the assessee is unable to bring the convertible foreign exchange because of no fault of his. A dispute has arisen between the parties which apart from causing delay can be decided either in favour of the petitioner or the party opposite. Assessment proceedings could not be kept pending for an indefinite period till the conclusion of civil litigation. Under the Act assessment proceedings have to be finalised within the time prescribed under the Act, otherwise these become time barred. The purpose of giving incentive is to bring foreign convertible exchange into the country within a reasonable time. The very purpose of giving incentive by way of deduction in the computation of taxable income would stand defeated if there is an inordinate delay in bringing convertible foreign exchange into the country within a reasonable time." Mr. Sumit Talukdar sought to rely upon favourable statements and distinguish the unfavourable ones in that judgment by submitting that in the -case on hand the amount had been credited to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied period. The function performed by the Commissioner of Income-tax by virtue of the powers conferred upon him under section 80HHC(2)(a) is quasi-judicial in nature. Discretionary powers have thereby been conferred. Like all discretions when exercised by a judicial or quasi-judicial authority the same has to be exercised judicially and based upon objective considerations. Assessment proceedings cannot be kept pending for an indefinite period as they have to be completed within the time prescribed by the Act. The very object of giving the incentive stands defeated if there is an inordinate delay as in the case on hand in bringing in the convertible foreign exchange within a reasonable time, in the case on hand after the completion of the assessment which was made pursuant to the belated return filed sixteen months after notice issued under section 148. In Geekay Exim (India) Ltd.'s case [1998] 234 ITR 560 (Cal), it was held that the application can be filed even after the specified period of six months had elapsed. It does not imply or mean that an assessee can file the application for extension in time whenever it should suit the assessee. In D. B. Exports (India)'s case [1998] ..... X X X X Extracts X X X X X X X X Extracts X X X X
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