2001 (3) TMI 69 - HC - Income Tax

Court quashes order rejecting time extension application under Income-tax Act, emphasizes fair consideration.

The court quashed the Commissioner's order rejecting the application for extension of time under Section 80HHC(2)(a) of the Income-tax Act, 1961, and the ... Export, Special Deduction Issues Involved:1. Rejection of application for extension of time under Section 80HHC(2)(a) of the Income-tax Act, 1961.2. Addition of export receipts received after six months to the return income of the assessee.Issue-wise Detailed Analysis:1. Rejection of application for extension of time under Section 80HHC(2)(a) of the Income-tax Act, 1961:The petitioner challenged the Commissioner's order dated September 17, 1999, which rejected the application for extending the period to bring the sale proceeds of goods exported to Riyadh in foreign currency. The petitioner exported goods on January 16, 1998, and September 29, 1998, but did not receive the proceeds within six months. The petitioner cited disputes over goods' quality, efforts to recover payments, and the need for a personal visit to Riyadh to settle the dispute as reasons for the delay. The Commissioner rejected the application, stating the delay was not beyond the assessee's control, as the petitioner did not respond promptly to the importer's complaints.The court found that the Commissioner ignored significant material, such as the petitioner's efforts to resolve the dispute, the procedural requirements for obtaining a visa, and the fact that the petitioner ultimately brought the proceeds to India in March 1999. The court emphasized that the Commissioner's discretion must be exercised reasonably and objectively, considering the material placed before him. The court stated that the Commissioner must act fairly and cannot reject the application without considering the relevant facts and circumstances.2. Addition of export receipts received after six months to the return income of the assessee:The consequential order dated September 27, 1999, added the export receipts received after six months to the assessee's return income for the assessment year 1998-99. The court quashed this order, as it was based solely on the Commissioner's rejection of the application for extension of time. The court directed the respondents to make a fresh order in accordance with the law, considering the observations made in the judgment.Conclusion:The court quashed the Commissioner's order dated September 17, 1999, and the consequential order dated September 27, 1999. The court directed the respondents to reconsider the petitioner's application for extension of time under Section 80HHC(2)(a) of the Income-tax Act, 1961, in light of the observations made in the judgment. The court emphasized the need for the Commissioner to act fairly and reasonably, considering all relevant material and circumstances.