ACIT, New Delhi V. M/s Magsons Exports, New Delhi

ITA 2714/DEL/2009

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 1020 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 26-11-2009
• Assessment Year: 1999-2000
• Appeal Filed On: 03-06-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SULEKHA VERMA
• Assessee Lawyers: DR S NARAYANAN
• Keywords: Additional evidence; Competent authority
• Section: 80HHC

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E NEW DELHI BEFORE SHRI G.E. VEERABHADRAPPA : VICE PRESIDENT AN D SHRI A.D. JAIN : JUDICIAL MEMBER ITA NO. 2714/DEL/09 ASSTT. YR: 1999-2000 ACIT, CIRCLE 32(1) VS. M/S MAGSONSEXPORTS, NEW DELHI. C-18, AMAR COLONY, LAJPAT NAGAR-VI, NEW DELHI. PAN/ GIR NO. AABFM1226D ( APPELLANT ) ( RESPONDENT ) APPELLANT BY : MS. SULEKHA VERMA SR. DR RESPONDENT BY : DR. S. NARAYANAN ADV. O R D E R PER A.D. JAIN, JUDICIAL MEMBER : THIS APPEAL, BY THE REVENUE, ARISES OUT OF THE ORDE R DATED 30-3-2009 OF THE CIT(APPEALS)-VIII, NEW DELHI FOR A.Y. 1999-20 00 2. FOLLOWING GROUNDS HAVE BEEN RAISED BY THE REVENU E IN ITS APPEAL: 1. ON THE FACTS AND CIRCUMSTANCES LD. CIT(A) HAS E RRED IN ALLOWING THE REGULARIZATION OF SALE PROCEEDS RECEIV ED AFTER THE ALLOWED PERIOD, AS THE APPLICATION FOR EXTENSION OF PERIOD WAS SUBMITTED AFTER EXPIRY OF SIX MONTHS OF THE END OF THE FINANCIAL YEAR IN WHICH SALE WERE MAD. 2. ON THE FACTS AND CIRCUMSTANCES LD. CIT(A) HAS ER RED IN REGULARIZATION THE LATE RECEIPT OF SALE PROCEEDS AM OUNTING TO RS. 1,20,52,120/- AS THE CERTIFICATE ISSUED BY INDIAN O VERSEES BANK FOR REGULARIZATION OF LATE PAYMENT IS BEYOND THE PO WER ITA 2714/DL/09 ACIT VS. M/S MAGSONS EXPORTS 2 DELEGATED BY RBI, THE COMPETENT AUTHORITY, AS PER C IRCULAR NO. 20 DATED 28 JANUARY 2002 IN THIS MATTER. 3. THE AUDITORS, IN FORM NO. 10CCAC , HAD MADE THE FOLLOWING OBSERVATIONS: THE EXPORT TURNOVER INCLUDES RS. 1,20,52,120.00 BE ING EXPORT PROCEEDS NOT REALIZED TILL 20.09.99. ASSESSEE IS IN PROCESS OF OBTAINING PERMISSION FROM COMPETENT AUTHORITY FOR E XTENSION OF TIME AND IS HOPEFUL THAT THE PAYMENTS WILL BE RE ALIZED WITHIN THE TIME TO BE ALLOWED BY THE COMPETENT AUTHORITY. 4. THE AO REQUIRED THE ASSESSEE TO EXPLAIN THE REAS ON FOR NON-REALIZATION OF EXPORT PROFITS WITHIN THE TIME ALLOWED UNDER THE ACT. THE ASSESSEE WAS ALSO ASKED TO FURNISH THE ORDER GRANTING EXTENSION FOR THE SAID PURPOSE BY THE COMPETENT AUTHORITY. THE ASSESSEE WAS ALSO TO F URNISH THE BANK REALIZATION CERTIFICATE TO THE EFFECT THAT ENTIRE E XPORT PROCEEDS HAD BEEN RECEIVED WITHIN THE ALLOWABLE TIME. THE ASSESSEE HA VING FAILED TO COMPLY BY FURNISHING THE REQUISITE CERTIFICATE FROM THE COMPE TENT AUTHORITY, THE AO EXCLUDED THE CORRESPONDING FOREIGN CONVERTIBLE EXCH ANGE OF RS. 1,20,52,120/-, REALIZED AFTER THE DUE DATE, IN THE EXPORT TURNOVER FOR COMPUTATION OF DEDUCTION U/S 80-HHC. 5. IN THE ORDER DATED 2-8-2002, THE LEARNED CIT(A) OBSERVED, INTER ALIA, AS FOLLOWS: (VII) I HAVE CONSIDERED THE SUBMISSIONS MADE. THE ACCOUNTING PERIOD OF THE APPELLATE EXPIRES ON 31.3.1999. AS PE R THE ITA 2714/DL/09 ACIT VS. M/S MAGSONS EXPORTS 3 PROVISIONS OF LAW, BEFORE THE DATE OF 1.6.99, ON WH ICH DATE THE RELEVANT PROVISIONS WERE AMENDED, THE APPELLANT WAS REQUIRED TO GET THE NECESSARY CERTIFICATE FROM THE CONCERNED CIT, IN A CASE WHEN THE SALE PROCEEDS OF SUCH GOODS EXPORTED OUT OF INDIA WERE RECEIVED OR BROUGHT INTO INDIA INCONVERTIBLE F OREIGN EXCHANGE WITHIN A PERIOD OF SIX MONTHS FROM THE EN D OF THE PREVIOUS YEAR I.E. UPTO 30.09.1999, OR WITHIN SUCH FURTHER PERIOD AS THE COMPETENT AUTHORITY MIGHT ALLOW IN THIS BEHA LF. IN THIS CASE, SINCE THE SALE PROCEEDS WERE NOT, RE CEIVED UPTO 30.9.1999, AND IN THE MEAN TIME THE LAW HAD CH ANGED TERMING THE COMPETENT AUTHORITY TO MEAN THE RBHI, A ND NOT THE CIT, THE APPELLANT DID NOT APPLY TO THE CIT AND IT HAD LAWFULLY APPLIED TO RBI FOR THE SAID PURPOSE ON 18.12.99. TH E RETURN WAS FILED ON 27.12.99. THEREFORE, THE APPELLANT HAD APP LIED TO THE RBI AS PER CHANGED POSITION IN LAW TO GET THE NECES SARY CERTIFICATE. ON THE OTHER HAND, THE AO HAD HARDLY G IVEN ANY REASONABLE TIME TO THE APPELLANT TO FILE THIS CERTI FICATE BEFORE HIM. THE APPELLANT WAS ASKED TO FILE THE SAID CERTI FICATE ON 31.3.2002 WHICH WAS SUNDAY AND THIS BEING SO, THE A O WAS NOT JUSTIFIED IN NOT INCLUDING THE SUM OF RS. 1,20,52,1 20/- IN THE EXPORT TURNOVER FOR THE COMPUTATION OF DEDUCTION U/ S 80HHC. THE ASSTT. ORDER WAS MADE ON 31.3.02 ITSELF. THE CE RTIFICATE WHICH IS SAID TO HAVE BEEN ISSUED BY THE INDIAN OVE RSEAS BANK VIDE LETTER DATED 15.3.02 CERTIFIES THAT THE EXPORT BILLS SHOWN AS PER ANNEXURE TO THE SAID LETTER HAD BEEN REALIZED O N THE DATES SHOWN AGAINST EACH AND THAT THE BILLS SHOWN, IN THE ANNEXURE STAND FULLY PAID IN THE RECORDS AND REGULARIZED. AS PER THE SAID ANNEXURE, THE SAID AMOUNT OF RS. 1,20,52,120/- HAS BEEN SHOWN, TO HAVE BEEN REALIZED IN BETWEEN DATES FROM 6.10.99 TO 24.2.2000. IN THIS WAY SINCE THIS IS SO, THE AO IS DIRECTED TO INCLUDE THE SAID SUM OF RS. 1,20,52,120/- IN THE EX PORT TURNOVER FOR THE COMPUTATION OF DEDUCTION U/S 80HHC THE APPE LLANT WOULD THUS BE ENTITLED TO THE LAWFU8L RELIEF. 6. ON APPEAL TO THE TRIBUNAL, THE TRIBUNAL SET ASID E THE MATTER TO THE FILE OF THE CIT(A) BY OBSERVING THAT THE ADDITIONAL EVI DENCE ENTERTAINED BY THE ITA 2714/DL/09 ACIT VS. M/S MAGSONS EXPORTS 4 CIT(A) HAD NOT BEEN CONFRONTED TO THE AO AND THAT T HE SAME BE DONE AFTER ALLOWING AN OPPORTUNITY TO THE AO TO REBUT THE SAME . 7. VIDE IMPUGNED ORDER DATED 30-3-2009, THE LEARNED CIT(A) ALLOWED THE REGULARIZATION OF THE SALE PROCEEDS AMOUNTING T O RS. 1,20,52,120/- ON THE BASIS OF THE CERTIFICATE ISSUED BY THE INDIAN OVERS EES BANK FOR REGULARIZATION OF LATE PAYMENT. 8. THE GRIEVANCE OF THE DEPARTMENT, AS SUBMITTED BY THE LEARNED DR, IS THAT THE LEARNED CIT(A) ERRED IN ALLOWING THE REGUL ARIZATION OF SALE PROCEEDS RECEIVED AFTER THE ALLOWED PERIOD, AS THE APPLICAT ION FOR EXTENSION OF PERIOD WAS SUBMITTED AFTER THE EXPIRY OF 6 MONTHS FROM TH E END OF THE FINANCIAL YEAR IN WHICH THE SALES WERE MADE, AND THAT THE CER TIFICATE ISSUED BY THE INDIAN OVERSEAS BANK FOR REGULARIZATION OF LATE PAY MENT WAS BEYOND THE POWER DELEGATED BY THE RBI, AS PER CBDT CIRCULAR NO . 20 DATED 28-1-2002. 9. THE LEARNED COUNSEL FOR THE ASSESSEE, ON THE OTH ER HAND, HAS PLACED STRONG RELIANCE ON THE IMPUGNED ORDER. IT HAS BEEN CONTENDED THAT THE APPLICATION WAS MADE BY THE ASSESSEE WELL WITHIN TI ME ON 30-9-1999; THAT, MOREOVER, NO SUCH CONTENTION WAS EVER EARLIER RAISE D BY THE DEPARTMENT; THAT, ALTERNATIVELY, WITHOUT PREJUDICE, EVEN IF IT BE TAK EN THAT THE APPLICATION WAS FILED BEYOND TIME, IN KEEPING WITH KAUSALES EXPORT S (INDIA) V. CIT (240 ITR 108 (DEL.), WHEREIN SUCH APPLICATION WAS FILED 6 MONTHS AFTER THE CLOSE ITA 2714/DL/09 ACIT VS. M/S MAGSONS EXPORTS 5 OF THE RELEVANT PREVIOUS YEAR, THERE WAS SUFFICIENT CAUSE FOR GRANTING OF EXTENSION OF TIME; AND THAT FURTHER, AS PER VIKRAM OVERSEAS (P) LTD. VS. CIT (122 ITR 253) (DEL.), THE COMMISSIONER WAS TO DISPO SE OF THE APPLICATION IN ACCORDANCE WITH LAW, EVEN THOUGH THE SAME WERE BELA TED. THE LEARNED COUNSEL HAS FURTHER CONTENDED THAT APROPOS GROUND NO. 2, NO SUCH ISSUE WAS EVER EARLIER RAISED BY THE DEPARTMENT; THAT THE TR IBUNAL REMITTED THE MATTER TO THE CIT(A), WHERE THE CIT(A) DULY HEARD THE AO; THAT EVEN THERE THE AO NEVER RAISED ANY OBJECTION TO THE POSITION THAT IOB WAS INDEED AUTHORIZED TO ISSUE THE CERTIFICATE IN QUESTION; THAT OTHERWISE T OO, UNDER CBDT CIRCULAR NO. 20 (SUPRA), THE IOB, AS AUTHORIZED DEALER, IS EMP OWERED TO EXTEND THE TIME FOR REALIZATION OF EXPORT PROCEEDS BEYOND 6 MONTHS FROM THE DATE OF EXPORTS IN ALL GENUINE CASES OF DELAY, AS REGARDS THE EXPOR T DOCUMENTS HANDLED BY THE BANK. 10. HAVING HEARD THE PARTIES AND HAVING PERUSED THE MATERIAL ON RECORD, WE DO NOT FIND ANY MERIT IN THE GROUND SOUGHT TO BE RAISED BY THE DEPARTMENT. AS CORRECTLY CONTENDED ON BEHALF OF THE ASSESSEE, NEITHER OF THESE ISSUES WAS EVER RAISED IN THE EARLIER PROCEED INGS. APROPOS THE ADDITIONAL EVIDENCE, ON REMAND FROM THE TRIBUNAL, THE CIT(A) CALLED FOR A REMAND REPORT FROM THE AO. IT WAS AFTER CONSIDERING THE REMAND REPORT, ALONG WITH THE OTHER MATERIAL THAT THE IMPUGNED ORD ER WAS PASSED. THE ITA 2714/DL/09 ACIT VS. M/S MAGSONS EXPORTS 6 APPLICATION IS SHOWN TO HAVE BEEN FILED ON 30-9-199 9, A COPY THEREOF IS AVAILABLE AT PAGE 34 OF THE ASSESSEES PAPER BOOK. THIS IS NOT STATED TO BE BEYOND TIME. THE DATE NOTED BY THE CIT(A) IN HIS OR DER AS 18-12-1999 APPEARS TO BE A TYPOGRAPHICAL MISTAKE, ON WHICH NOT HING TURNS. 10.1. MOREOVER, EVEN OTHERWISE, NO HARM HAS BEEN CA USED TO THE REVENUE. RATHER, IT IS A CASE OF INWARD REMITTANCE OF FOREIG N EXCHANGE. FURTHER, IT IS INCORRECT TO SUGGEST THAT IOB IS NOT THE COMPETENT AUTHORITY FOR THE PURPOSE OF ISSUING THE CERTIFICATE IN QUESTION, NOR WAS THI S ISSUE, AGAIN, EVER RAISED IN ANY EARLIER PROCEEDINGS. AS PER CBDT CIRCULAR NO. 20 (SUPRA), AS AUTHORIZED DEALER, IOB STANDS EMPOWERED AS REGARD S THE EXPORT DOCUMENTS HANDLED BY THEM. TO THAT EXTENT THE TIME FOR REALIZ ATION OF THE EXPORT PROFITS BEYOND 6 MONTHS FROM THE DATE OF THE EXPORT, IN ALL GENUINE CASES OF DELAY. 10.2. MOREOVER, AS RIGHTLY NOTED BY THE LEARNED CIT (A), IN TERMS OF SEC. 155(13) OF THE INCOME-TAX ACT, BROUGHT ON STATUTE W .E.F. 1-6-1999 BY THE FINANCE ACT, 1999, THE AO OUGHT TO HAVE RECTIFIED T HE ASSESSMENT ORDER ON THE QUESTION OF DELAYED RECEIPTS OF THE EXPORTS PRO CEEDS WHEN THE APPROVAL OF THE COMPETENT AUTHORITY WAS OBTAINED AND CONVEYE D TO THE AO. IN THIS REGARD, CBDT CIRCULAR NO. 779 DATED 14-9-1999, PARA 35 (COPY AT PAGE 32 OF THE ASSESSEES PAPER BOOK), STATES AS FOLLOWS: A) TILL 01/06/1999 APPROVAL OF THE CHIEF COMMISSIO NER OR THE COMMISSIONER HAD TO BEE OBTAINED FOR EXTENSION OF TIME IN THE CASES WHERE EXPORT PROCEEDS WERE NOT RECEIVED WITHIN SIX MONTHS FROM THE EXPIRY OF PREVI OUS YEAR. B) SUCH A PROVISION OFTEN RESULTS IN AVOIDABLE DE LAY. HENCE, IT HAS BEEN DONE AWAY WITH BECAUSE THE RBI IN ITA 2714/DL/09 ACIT VS. M/S MAGSONS EXPORTS 7 ANY CASE MONITORS SUCH REMITTANCES AND ACCORDS APPR OVAL IN CASES OF DELAY. C) HENCE WHERE SUCH APPROVAL IS GIVEN BY RBI OR ANY OTHER AUTHORITY EMPOWERED BY IT IN THIS REGARD SUCH APPRO VAL SHOULD SUFFICE , THE ONLY REQUIREMENT BEING THAT A CERTIFICATE IS FURNISHED IN THIS REGARD. D) THE ABOVE AMENDMENT WILL APPLY TO ALL REMITTANCE S RECEIVED AFTER 01/06/1999. E) A NEW SUB SECTION(13) HAS BEEN INSERTED INSECTIO N155 TO PROVIDE THAT THE AO MAY AMEND THE ASSESSMENT ORDER WHEN THE DELAYED EXPORT RECEIPTS ARE BROUGHT INTO I NDIA IN CONVERTIBLE FOREIGN EXCHANGE WITH THE APPROVAL OF RBI OR THE AUTHORIZED COMPETENT AUTHORITY AS THE CASE M AY BE. 10.3. HAVING ALL CONSIDERED, WE FIND NOTHING WRONG WITH THE ORDER OF CIT(A), WHICH IS WELL REASONED AND ON ALL FOURS. WE HEREBY UPHOLD THE SAID ORDER, REJECTING THE GROUNDS TAKEN BY THE DEPARTMEN T. 11. IN THE RESULT, THE APPEAL BY THE REVENUE IS D ISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 30 TH NOVEMBER 2009. ( G.E. VEERABHADRAPPA ) ( A.D. JAIN ) VICE PRESIDNT JUDICIAL MEMBER DATED: 30 TH NOVEMBER 2009. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) ITA 2714/DL/09 ACIT VS. M/S MAGSONS EXPORTS 8 5. DR