Javeed Ahmed, Bangalore v. DCIT, Bangalore

ITA 1229/BANG/2009 | 2003-2004
Pronouncement Date: 17-09-2010 | Result: Partly Allowed

Appeal Details

RSA Number 122921114 RSA 2009
Bench Bangalore
Appeal Number ITA 1229/BANG/2009
Duration Of Justice 8 month(s) 23 day(s)
Appellant Javeed Ahmed, Bangalore
Respondent DCIT, Bangalore
Appeal Type Income Tax Appeal
Pronouncement Date 17-09-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted B
Tribunal Order Date 17-09-2010
Date Of Final Hearing 07-09-2010
Next Hearing Date 07-09-2010
Assessment Year 2003-2004
Appeal Filed On 24-12-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH B BEFORE SMT. P. MADHAVI DEVI JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY ACCOUNTANT MEMBER ITA NO.1229(BNG)/09 (ASSESSMENT YEAR : 2003-04) SHRI JAVEED AHMED H. SIDDAIAH ROAD BANGALORE. VS. DY. COMMISSIONER OF INCOME TAX CIRCLE 9(1) BANGALORE. APPELLANT. RESPONDENT. APPELLANT BY : SHRI S. GANESH RAO ADVOCATE. RESPONDENT BY : SHRI A.K. GANESH RAO ADDL. CIT. O R D E R PER SMT. P. MADHAVI DEVI J.M. : THIS APPEAL IS FILED BY THE ASSESSEE FOR THE ASSES SMENT YEAR 2003-04. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : 1. THE ORDERS OF THE AUTHORITIES BELOW ARE OPPOSED TO LAW AND FACTS OF THE CASE. 2. THE LEARNED AO ERRED IN ADDING A SUM OF RS.3 0 8 236 UNDER SECTION 68 OF THE INCOME TAX ACT WHICH REPRESENTED TRANSFER E NTRIES TO APPELLANTS CAPITAL ACCOUNT FROM THE FOLLOWING PARTIES : A) AYESHA RS.40 700 B) FAIZA BAIG RS.65 000 C) S. AHMED RS.89 500 D) SABIA RS.76 200 E) SYEDA AGHA RS.36 836 RS.3 08 236 CONFIRMATION LETTERS FROM THE ABOVE PARTIES ARE ENC LOSED AND THEY ARE GENUINE PARTIES AND HENCE THIS ADDITION OFRS.3 08 2 36 ADDED BY THE AO AND CONFIRMED BY THE CIT(A) MAY BE DELETED. THEY H AD ALSO BEEN FILED BEFORE THE CIT(A). 3. THE LEARNED AO ERRED IN RESTRICTED THE 80HHC DED UCTION TO ONLY RS.1 92 194 AS AGAINST THE CLAIM OF RS.12 60 971 AN D THE LEARNED CIT(A) IS NOT JUSTIFIED IN CONFIRMING THE SUM OF RS.6 76 698 ON THIS ACCOUNT ON THE ITA NO.1229(BNG)/09 - 2 - GROUND THAT THE ENTIRE EXPORT SALE PROCEEDS HAD NOT BEEN RECEIVED IN INDIA WITHIN THE TIME LIMIT OR EXTENDED TIME AS ENVISAGED IN SECTION 80HHC(2)(A) READ WITH EXPLN.1 THERETO. BALANCE SU M OF RS.6 76 698 WAS ALSO RECEIVED ON 18.3.2004. 4. THE AUTHORITIES BELOW SHOULD HAVE NOTICED THAT APPELLANT HAD MADE ALL GENUINE EFFORTS IN GETTING THE TIME EXTENDED WITH H IS BANKERS TO RECEIVE THE SALE PROCEEDS IN INDIA AND IN VIEW OF THE FOLL OWING DECISIONS THE ENTIRE CLAIM OF DEDUCTION TO THE EXTENT OFRS.12 60 480 SHOULD HAVE BEEN ALLOWED :- A) 240 ITR 108 DELHI HIGH COURT. B) 250 ITR 596 RAJ. HIGH COURT. 5. FOR THESE AND SUCH OTHER GROUNDS WHICH MAY BE URGED AT THE TIME OF HEARING IT IS PRAYED THAT RELIEFS AS PRAYED FOR ABO VE MAY BE ALLOWED. 2. GROUND NO.1 BEING GENERAL IN NATURE NEEDS NO ADJ UDICATION. 3. AS REGARDS GROUND NO.2 AT THE TIME OF HEARI NG THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE DOES NOT WISH TO PRESS FOR THE SAME. THIS GROUND IS ACCORDINGLY REJECTED AS WITHDRAWN. 4. AS REGARDS GROUND NOS.3 & 4 THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HAS CLAIMED DEDUCTION OF RS.12 60 971 UNDER SECTION 80HHC. ON VERIFICATION OF THE ASSESSEES TRANSACTION WITH CANARA BANK THE ASSESS ING OFFICER FOUND THAT THE EXPORT PROCEEDS HAD NOT BEEN REPATRIATED IN FULL WITHIN TH E EXTENDED PERIOD ALLOWED BY THE BANK. IN RESPONSE TO A REFERENCE MADE TO THE CANAR A BANK IT WAS FOUND TO HAVE REALIZED THE EXPORT PROCEEDS ONLY TO THE EXTENT OF $ 34 496 OUT OF $ 79 574.85; WHEN THE ASSESSEE WAS ASKED TO EXPLAIN WHY THE DIFF ERENCE OF AMOUNT SHOULD NOT BE DISALLOWED THE ASSESSEE SOUGHT TIME FOR GETTING EX TENSION OF TIME FROM THE RESERVE BANK OF INDIA. THE ASSESSING OFFICER HAS HELD THAT THIS MOVE WAS AN AFTER-THOUGHT OF ITA NO.1229(BNG)/09 - 3 - THE ASSESSEE. HE RESTRICTED THE DEDUCTION UNDER SE CTION 80HHC TO RS.1 92 194 INSTEAD OF THE CLAIM FOR DEDUCTION MADE BY THE ASSESSEE AT RS.12 69 971 AND THE DISALLOWANCE MADE WAS OF RS.10 77 777. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) STATING THAT THE TIME WAS GRANTED BY THE APPROPRIAT E COMPETENT AUTHORITY I.E. CANARA BANK UPTO 31.1.2004 AND BY SUCH DATE THE ASSESSEE H AD RECEIVED PART OF THE AMOUNT AND THE BALANCE OF RS.6 76 698 WAS ALSO RECEIVED ON 18.3.2004 AND THE ASSESSEE HAS MADE AN APPLICATION FOR CONDONATION OF DELAY FOR EX TENSION OF TIME. THE CIT(A) HELD THAT CANARA BANK IS THE COMPETENT AUTHORITY AUTHOR IZED BY RBI TO REGULATE PAYMENTS AND DEALINGS IN FOREIGN EXCHANGE AND AS SUCH EXTENS ION GRANTED BY IT SATISFIES THE CONDITIONS LAID DOWN IN SECTION 80HHE(2)(A) OF THE INCOME TAX ACT 1961. HOWEVER FOR THE AMOUNT OF RS.6 76 698 WHICH WAS RECEIVED BE YOND THE EXTENDED PERIOD HE DIRECTED THE AO TO RECOMPUTE THE DEDUCTION UNDER SE CTION 80HHC BY EXCLUDING THE SAID AMOUNT OF RS.6 76 698. HE THUS PARTLY ALLOWE D THE ASSESSEES APPEAL. AGGRIEVED THE ASSESSEE IS IN SECOND APPEAL BEFORE US. 5. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT EVEN THOUGH CANARA BANK HAS GRANTED TIME UPTO 31.1.2004 FOR RECEIPT OF THE EXPORT PROCEEDS IN FOREIGN EXCHANGE THE ASSESSEE HAD BEEN MAKING EFFORTS FOR RECOVERY OF THE BALANCE OF AMOUNT AND THE SAME HAD BEEN RECEIVED ON 18.3.2004 AS CERT IFIED BY CANARA BANK IN ITS LETTER DT.2.3.2006. HE SUBMITTED THAT THE ASSESSEE HAS MA DE AN APPLICATION FOR FURTHER EXTENSION OF TIME TO CANARA BANK OF THE RESPECTIVE BRANCH. HE FURTHER SUBMITTED THAT THE ASSESSEE HAS MADE SINCERE AND GENUINE EFFORTS T O RECOVER THE EXPORT PROCEEDS AND ITA NO.1229(BNG)/09 - 4 - THE SLIGHT DELAY IN RECEIPT OF THE SAME SHOULD BE C ONDONED. IN SUPPORT OF HIS CONTENTION HE RELIED ON THE DECISION OF B BENCH OF ITAT BANGALORE IN THE CASE OF 2394 2395 & 2396/BANG/2004 DT.11.2005 (KESHAV EXPO RTS PVT. LTD. VS. ITO) AND FOLLOWING TWO OTHER DECISIONS: I) KAUSALES EXPORTS (INDIA) VS. CIT & ANOTHER (240 ITR 108) (DEL) II) J.L. KHATURIA VS. UNION OF INDIA AND ANOTHER (250 I TR 596) (RAJ) 6. THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE PROFITS CANNOT BE CONSIDERED FOR THE DEDUCTION UNDER SECTION 80HHC UNLESS UNTIL THEY HAVE BEEN RECEIVED OR BROUGHT INTO INDIA BY THE ASSESSEE IN CONVERTIBLE F OREIGN EXCHANGE WITHIN A PERIOD OF SIX MONTHS FROM THE END OF THE PREVIOUS YEAR OR WIT HIN SUCH FURTHER PERIOD AS ALLOWED BY THE COMPETENT AUTHORITY I.E. BY RBI. THUS ACCO RDING TO HIM THE CIT(A) HAS CORRECTLY GRANTED THE DEDUCTION OF THE AMOUNTS RECE IVED UPTO 31.1.2004 ONLY AS ALLOWED BY THE COMPETENT AUTHORITY I.E. CANARA BANK . 7. HAVING HEARD BOTH THE PARTI ES AND HAVING CONSIDERED THEIR RIVAL CONTENTIONS WE FIND THAT THERE IS NO DISPUTE AS RE GARDS THE AMOUNTS RECEIVED BY THE ASSESSEE AS CERTIFIED BY THE CANARA BANK IN ITS LET TER DT.2.3.2006. THE ONLY DISPUTE IS WITH REGARD TO ALLOWABILITY OF EXPORT SALE PROCEEDS OF RS.6 76 698 WHICH WAS RECEIVED ON 18.3.2004 I.E. BEYOND THE TIME ALLOWED BY THE CO MPETENT AUTHORITY. THE DECISION RELIED UPON BY THE LEARNED COUNSEL FOR THE ASSESSEE SUPPORTS THE ASSESSEES CONTENTION THAT SLIGHT DELAY IN RECEIPT OF THE EXPORT PROCEEDS WHERE THERE IS MATERIAL ON RECORD TO SHOW THAT GENUINE EFFORTS HAVE BEEN MADE FOR REA LIZATION OF THE EXPORT PROCEEDS ITA NO.1229(BNG)/09 - 5 - SHOULD BE CONSIDERED AND THAT THE ASSESSEE IS ENTIT LED TO SEEK EXTENSION OF TIME FOR THE SAME. IN THE CASE OF KAUSALES EXPORTS (INDIA) (SUPRA) HONBLE DELHI HIGH COURT RECORDED A FINDING THAT THE IMPORTER WAS FACING FIN ANCIAL STRINGENCY DUE TO RECESSION IN THE MARKET AND IT SOUGHT TIME FOR MAKING PAYMENT AN D IT WAS ALSO BROUGHT ON RECORD THAT PARTNER OF THE FIRM MADE REGULAR FOLLOW UP FOR REALIZATION OF EXPORT PROCEEDS AND THEREFORE THE PETITIONER HAD MADE OUT SUFFICIENT CA USE FOR BEING GRANTED EXTENSION OF TIME. HOWEVER WE FIND THAT IT IS A CASE OF REJEC TION OF PETITION OF APPLICATION FOR THE EXTENSION OF TIME BY THE CIT(A) WHICH IS CHALLENGED IN A WRIT PETITION BEFORE THE HONBLE HIGH COURT. IN THE CASE OF J.L. KATARIA (S UPRA) THE HONBLE RAJASTHAN HIGH COURT HAS RECORDED A FINDING THAT THE REASON FOR TH E DELAY IN RECEIPT OF EXPORT PROCEEDS WAS DUE TO VARIOUS REASONS BEYOND THE CONT ROL OF THE ASSESSEE AND HAS HELD THAT THE COMMISSIONER WAS BOUND TO GIVE TIME FOR EX TENSION OF PERIOD AS PRAYED FOR BY THE ASSESSEE. IN THE CASE OF KESHAV EXPORTS PVT. L TD (SUPRA) DECISION THE TRIBUNAL ALSO CONSIDERED THE CASE OF ASSESSEE WHO RECEIVED P ART OF CONVERTIBLE FOREIGN EXCHANGE BEYOND THE PERIOD OF SIX MONTHS AND RECORD ED A FINDING THAT THE ASSESSEE HAS MADE NECESSARY APPLICATION TO THE COMPETENT AUT HORITY I.E. RBI AFTER RECEIPT OF THE SALE PROCEEDS IN CONVERTIBLE FOREIGN EXCHANGE A ND THEY HAVE ALSO FILED NECESSARY FORMS AS PER THE FOREIGN EXCHANGE MANAGEMENT ACT AN D THE RBI HAS TAKEN THESE FORMS ON RECORD AND THAT THOUGH SPECIFIC SANCTION H AS NOT BEEN ACCORDED BY WRITTEN COMMUNICATION YET THE FACT REMAINS THAT THE RBI TA KEN COGNIZANCE OF DELAYED RECEIPT OF CONVERTIBLE FOREIGN EXCHANGE AND THIS AMOUNTS TO TACIT APPROVAL FROM THE COMPETENT ITA NO.1229(BNG)/09 - 6 - AUTHORITY. THE TRIBUNAL THEREFORE DIRECTED THE ASSESSING OFFICER TO INCLUDE IN THE EXPORT TURN OVER SUCH PART OF THE SALE PROCEEDS RE CEIVED IN CONVERTIBLE FOREIGN EXCHANGE THOUGH BELATEDLY AND CONSIDER THE SAME AS EXPORT TURNOVER OF THE RESPECTIVE YEARS IN WHICH THE GOODS WERE EXPORTED. 8. COMING TO THE CASE ON HAND IT IS THE AVERMENT OF THE ASSESSEE BEFORE THE CIT(A) THAT THE ASSESSEE HAS MADE AN APPLICATIO N TO THE COMPETENT AUTHORITY FOR EXTENSION OF TIME. SINCE THE ASSESSEE HAS RECEIVED THE SALE PROCEEDS ON 18.3.2004 IT CAN BE ASSUMED THAT THE SAME ARE RECEIVED DUE TO TH E GENUINE EFFORTS MADE BY THE ASSESSEE AND THE COMPETENT AUTHORITY IS DUTY BOUND TO CONSIDER THE SUFFICIENT CAUSE SHOWN BY THE ASSESSEE FOR DELAY IN RECEIPT OF THE P ROCEEDS AND AS HELD BY THE HONBLE HIGH COURT IN THE CASES CITED SUPRA THE EXTENSION OF TIME CANNOT BE DENIED TO THE ASSESSEE. IF THE ASSESSEE HAD MADE AN APPLICATION FOR EXTENSION OF TIME TO THE COMPETENT AUTHORITY IT IS FOR THE COMPETENT AUTHOR ITY TO CONSIDER THE SAME AND GRANT THE EXTENSION OF TIME. AS HELD BY THE TRIBUNAL IN THE CASE OF KESHAV EXPORTS PVT. LTD. (SUPRA) IF THE ASSESSEE HAS MADE AN APPLICATION AN D EVEN IF A SPECIFIC APPROVAL IS NOT GIVEN BUT THE RECEIPTS HAVE BEEN TAKEN ON RECORD I T IS TO BE PRESUMED THAT A TACIT APPROVAL HAS BEEN GIVEN BY THE COMPETENT AUTHORITY BY TAKING COGNIZANCE OF THE CONVERTIBLE FOREIGN EXCHANGE. AS SEEN FROM THE LETT ER DT.2.3.2006 BY CANARA BANK ADDRESSED TO THE ASSESSEE WE FIND THAT THE COMPETE NT AUTHORITY HAS TAKEN COGNIZANCE OF THE CONVERTIBLE FOREIGN EXCHANGE RECEIVED IN RES PECT OF RS.6 76 698 ON 18.3.2004. THEREFORE APPLYING THE RATIONALE OF THE DECISION OF THE CO-ORDINATE BENCH IN THE CASE ITA NO.1229(BNG)/09 - 7 - OF KESHAV EXPORTS PVT. LTD. (SUPRA) WE PRESUME TH AT THE COMPETENT AUTHORITY HAS GIVEN ITS TACIT APPROVAL AND DIRECT THE ASSESSING O FFICER TO INCLUDE IN THE EXPORT TURNOVER SUCH PART OF THE SALE PROCEEDS WHICH ARE RECEIVED IN CONVERTIBLE FOREIGN EXCHANGE THOUGH BELATEDLY AS EXPORT TURN OVER OF TH E RESPECTIVE YEAR OF EXPORT OF GOODS. IN THE RESULT THE APPEAL OF ASSESSEE IS PARTLY ALL OWED. PRONOUNCED IN THE OPEN COURT ON 17 TH SEPT. 2010. SD/- SD/- (A. MOHAN ALANKAMONY) (P. MADHAVI DEVI ) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE DT.17.09.2010. COPY TO : 1. THE ASSESSEE. 2. THE ASSESSING OFFICER. 3. CIT(APPEALS) 4. CIT 5. DEPARTMENTAL REPRESENTATIVE ITAT BANGALORE. 6. GUARD FILE ITAT BANGALORE. 7. GUARD FILE ITAT NEW DELHI. * GPR BY OR DER ASSISTANT R EGISTRAR ITA NO.1229(BNG)/09 - 8 - DATE INITIAL 1. DRAFT DICTATED ON SR. P.S. 2. DRAFT PLACED BEFORE AUTHOR SR. P.S. 3. DRAFT PROPOSED AND PLACED BEFORE THE SECOND MEMBER. JM/AM 4. DRAFT DISCUSSED / APPROVED BY THE SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.P.S. SR. P.S. 6. DATE OF PRONOUNCEMENT SR. P.S. 7. FILE SENT TO THE BENCH CLERK SR. P.S. 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER.