Kansales Exports (India) (M/S) vs Commissioner Of Income Tax & Anr.
1999 Latest Caselaw 407 Del

JUDGMENT

Manmohan Singh, J.

1. We had heard arguments in the writ petition on 11th May, 1999 and after hearing the parties, allowed the writ petition for reasons to be recorded. We now proceed to give reasons for allowing the writ petition.

2. Petitioner has filed this writ petition seeking setting aside of the order dated 28.5.1998, passed by the Commissioner of Income Tax, rejecting petitioner's application dated 26.3.1998 for extension of time under Section 80HHC(2)(a) of the Income Tax Act, 1961.

3. Petitioner firm, an exporter of readyment garments, had exported goods to M/s. Dolbees, London, during the financial year 1995-96. For the exports made in the said financial year, a sum of Pounds 40,965 remained outstanding from M/s. Dolbees, London. Petitioner firm had moved an application dated 14.10.1996, seeking extension of time for realisation of the convertible foreign exchange. This request for extension of time was acceded to by the Commissioner of Income Tax vide order dated 18/19.12.1996 and the petitioner was granted time upto 30.6.1997 in terms of Section 80HHC(2)(a) of the Income Tax Act, 1961.

4. Petitioner firm could realise only part of the amount upto 30.6.1997 and the balance outstanding of Sterling Pounds 28,965 came to be realised by the petitioner firm only on 2.12.1997. The petitioner firm moved an application dated 26.3.1998, for extension of time. In the application itself, petitioner indicated that the entire outstanding amount had been realised and deposited in the Bank and formal extension of time, be granted to the petitioner. The learned Commissioner of Income Tax passed the impugned order, rejecting the application dated 26.3.1998, holding that the assessee did not deserve any further extension so no sufficient cause had been made out for the same.

5. The main factor which weighed with the Commissioner of Income Tax was that the assessee did not bother to file the application for further extension of time for a period of nearly nine months, i.e. till 26.3.1998 even though the payments were stated to have been received on 2.12.1997. Besides telephone bills evidencing overseas calls to the importer were ignored on the reasoning that it was not verifiable that calls were made for realising payments before 30.6.1997.

6. We have heard learned Counsel for the parties and considered the matter. Learned Counsel for the respondent has urged before us that the petitioner had failed to show any justification for the delay in filing the application and the order did not suffer from any error or jurisdiction and the Court need not go into the merits of the matter in exercise of the jurisdiction under Article 226 of the Constitution of India. Learned Counsel for the respondent, in view of the decision of this Court in Civil Writ Petition No.1689/93, titled Vikram Overseas Pvt. Ltd. v. Commissioner of Income Tax did not dispute that the Commissioner of Income Tax has the power and jurisdiction to grant extension of time under Section 80HHC(2)(a) with retrospective effect.

7. We find from the record and the documents produced before us that the importer, viz., M/s. Dolbees, London, was facing financial stringency due to recession in the market and had sought time for making the payment. It has also been brought on record that partner of the petitioner firm made regular follow-up for realisation of the export proceeds, which included telephone calls and a personal visit to London on 1.9.1997. Petitioner claims that due to earnest endeavours it was able to realise the outstanding payment by 2.12.1997. Petitioner has produced on record copies of the telephone bills as well as the passport of its partner.

8. Having considered the matter, we are of the view that petitioner has made out sufficient cause for being granted extension of time. The CIT has taken a rather hypertechnical view in the matter. Keeping in mind that export proceeds have been realised and the fact that petitioner has placed on record sufficient material to demonstrate that he was following up the matter regularly, relief to the petitioner should not be denied only on the ground that petitioner had delayed making of the application. The impugned order, rejecting petitioner's application for extension of time, deserves to be set aside and is, accordingly set aside. Petitioner's application before the Commissioner of Income Tax seeking extension of time till 2.12.1998 shall be allowed.