1998 (2) TMI 87 - HC - Income Tax

Court grants writ challenging Commissioner's order under Income-tax Act. Extension request valid beyond six months.

The court allowed the writ application challenging the Commissioner's order under section 80HHC(2) of the Income-tax Act for the assessment year 1995-96. ... Exports, Delay, Sale Proceeds, Six Months Issues:Challenge to order under section 80HHC(2) of the Income-tax Act for assessment year 1995-96; Rejection of prayer for extension of time for realisation of export proceeds; Violation of natural justice; Interpretation of section 80HHC(2) regarding time limitation for extension application; Requirement of application before expiry of six months from end of previous year or before filing return; Entitlement to deduction under section 80HHC; Submission of accountant's report; Examination of all aspects by Commissioner; Necessity of application for extension.Analysis:The judgment concerns a writ application challenging an order by the Commissioner of Income-tax under section 80HHC(2) of the Income-tax Act for the assessment year 1995-96. The Commissioner rejected the petitioner's prayer for an extension of time for realisation of export proceeds, citing the application was filed after the six-month deadline from the end of the previous year. The petitioner argued that the order was illegal and violated natural justice as the Commissioner did not consider whether the delay was beyond the assessee's control. The petitioner relied on past instances where the Commissioner granted extensions and cited legal precedents supporting the view that the application could be made even after the six-month period. The petitioner contended that section 80HHC(2) does not specify a time limit for the extension application, and authorities cannot arbitrarily fix one.The petitioner highlighted that most export proceeds were realized within the required time frame, with the remaining invoices settled shortly after. The Commissioner's order deemed the extension request belated, made after the return filing and processing. The petitioner argued that under section 80HHC(2)(a), no application to the Commissioner is necessary, and the claim should be made in the return. The matter of extension should be addressed during assessment proceedings upon reference by the Assessing Officer. The petitioner referenced the Allahabad High Court's decision supporting this interpretation. The judgment also discussed the requirement of an accountant's report for claiming deductions under section 80HHC.The Judge considered legal precedents, including the Supreme Court's observations on extending time limits in tax matters. The judgment endorsed the view that the right to deduction under section 80HHC remains available within six months but may be suspended if circumstances beyond the assessee's control prevent compliance. The Commissioner or Chief Commissioner must exercise discretion to grant a further period if satisfied with the reasons for delay. The Judge ruled that no application is necessary before the six-month period expires or before filing the return. The Commissioner was directed to reconsider the matter on merits after providing a hearing to the petitioner within a specified timeframe. The writ application was allowed without costs, and parties were instructed to act on a signed copy of the order.