Rajasthan H.C : The petitioner challenges the order passed by the CIT on 17th Sept., 1999, rejecting the application made by the petitioner under s. 80HHC(2)(a)

High Court Of Rajasthan

J.L. Khaturia vs. Union Of India & Ors.

Section 80HHC(2)(a)

Asst. year 1998-99

Rajesh Balia, J.

Civil Writ Petn. No. 4472 of 1999

22nd March, 2001

Counsel Appeared

Vineet Kothari, for the Petitioner : L.M. Lodha, for the Respondent

JUDGMENT

RAJESH BALIA, J. :

Heard learned counsel for the parties. The petitioner challenges the order passed by the CIT on 17th Sept., 1999, rejecting the application made by the petitioner under s. 80HHC(2)(a) of the IT Act for extending the period to bring the sale proceeds of the goods exported to Riyadh (Saudi Arabia) in foreign currency and deposit in the bank in terms of the provisions of s. 80HHC to avail the benefit thereunder in respect of the such exports and consequential order Annx. 5 dt. 27th Sept., 1999, by which the amount of the export receipts received after six months has been added in the return income of the assessee for the asst. yr. 1998-99.

The facts of the case relevant for the present purposes are that the petitioner exported goods to M/s Al-ajial Co. Ltd. on 16th Jan., 1998 vide Invoice No. 26 US $ 4075.5 convertible into Indian currency for Rs. 1,52,831 and to M/s Alfalwa on 29th Sept., 1998, vide Invoice No. 31 for US $ 9496.76 convertible into Indian currency at Rs.

3,51,380 totalling in Indian currency at Rs. 5,04,211. The question relates to non-receipt of the aforesaid amount in India within six months from the end of the financial year to which export related and the petitioner moved an application for extension of time. The petitioner, in the first instance, made an application on 29th Sept., 1998, stating that the importer made the complaints for the goods exported as regards colour, spots and quality and retained the payments, the assessee made tremendous efforts to recover the amount in time by giving various fax messages and on telephone even offered discount in rates to the importers but same were unresponded and they delayed in sending the payments. It was also pointed out in the application that the party No. 1 M/s Alajial Co. Ltd. did make payment of two containers in July, 1998, out of three containers despatched but the party No. 2 M/s Alfalwa, to whom only one container was supplied, never replied the letter of the assessee. The petitioner further made a request that the dispute cannot be overcome without visiting at Riyadh and inspection of material, and therefore, requested to send visa but both the importers did not respond to the request. In these circumstances, the petitioner pleaded that the assessee is completely unable to bring the sale proceeds of the export till the matter is settled which is possible only by his personal visit to Riyadh. He, therefore, requested for extension of period for bringing the due sale proceeds to India until 31st Dec., 1998. Along with this application, the copies of the fax messages, application for permission to extend the period by Reserve Bank of India and the reminder letters issued, were also enclosed. Those documents in total accounted for 18 documents. However, this application remained pending and was not disposed of before 31st Dec., 1998. The assessee made another application for extension of period beyond 31st Dec., 1998 on 31st Dec., 1998, upto 31st March, 1999. This followed with another application dt. 4th Jan.,/8th Feb., 1999, which was received in the office of the CIT, Udaipur on 8th Feb.,1999.

In this case, the petitioner further made out apart from the reasons earlier stated in his application that the business visit to UAE countries by the Indian national requires a no objection certificate through a sponsor in UAE who in turn submit the passport details to the Immigration Directorate who issues the ‘no objection certificate’ and on that basis the embassy issue the visa which is endorsed on arrival of a person at the point of entry. The assessee had persuaded through regular correspondence and telephonic talks, and at last got one party agreed to send visa but that also could not come before the closing of Ramzan month and ultimately M/s Al-ajial Co. Ltd. sent the visa dt. 23rd Dec., 1998. A copy of the visa and fax message was also enclosed with the application. These reasons were made in support of application for further extending the period upto 31st March, 1999 for bringing the disputed amount in India for the purpose of availing benefit under s. 80HHC. This application also remained undisposed of until 31st March, 1999. On 31st March, 1999, the petitioner informed the CIT that the assessee had made an application on 29th Sept., 1998, and 31st Dec., 1998, for extending the period to bring foreign currency in India upto 31st March, 1999, and that the due foreign currency of 4,075 and 9,497 dollars has been received on 14th March, 1999 and the same has been deposited in the bank on 30th March, 1999. In support of this application, copy of the draft and bank deposit slips were also annexed. In furtherance of this and in response to the information required by the CIT, the petitioner further submitted a detailed explanation vide his letter dt. 27th June, 1999, in this case making reference to the earlier applications. The efforts made by the petitioner, the essential requirement of obtaining visa before entering the territory of UAE for the purpose of business visit thereto and the ultimate results of the petitioner’s efforts which resulted in visa permission on 3rd Dec., 1998, and the visit ultimately fructified only in March, 1999. It was specifically stated in the application that the visa enquiry was completed in the month of Jan./Feb. 1999 and thereafter the petitioner was accorded permission to visit Riyadh. The assessee visited UAE in March which was evidenced by the boarding pass of the concerned airlines and that on personal visit dispute was resolved and the amount was brought in India as aforesaid, after all. This material had already come on record, the CIT vide impugned order Annexure 3 rejected the aforesaid applications by holding that the delay which occurred is not on account of the reasons beyond the control of assessee, the assessee evaded to respond to the complaints of the importer within a reasonable time for which six months time was sufficient as provided under s. 80HHC(2)(a) of the Act.

Coming to this conclusion, the focal point of the reason given by the CIT is that as per petitioner’s own assertion importer had immediately informed the assessee on receipt of the containers about the discrepancy in the quality of the material sent with the selected or approved samples and made a complaint that this will lead them to apply huge discount for making it acceptable to their clients and they demanded how the petitioner can compensate at least for the part of such losses. With this complaint, the CIT jumps up to the conclusion that no evidence has been placed before him to show that the assessee took immediate steps to settle the dispute instead repeated requests were made for payments.

From the perusal of the three applications and the order under challenge, the order in question is singularly silent about the repeated pleas made by the assessee that he having made efforts could realise part of the amount before making application on 29th Sept., 1998, in respect of two containers from one of the consignees but he could not realise the foreign currency through correspondence and negotiations directly on phones and that it needed a personal visit to Riyadh for settling the dispute by negotiating face to face. He has nowhere admitted that the goods sent by him was not of the specified quality or he sent the goods qualitatively different then the approved samples. He has also made specific ground in the application about the difficulties involved in visiting the country of export viz. Saudi Arabia which provides specific procedure for obtaining migration visa through a sponsor from UAE alone and since the response to sponsor the petitioner only came in the month of December, 1998, he could not visit that country for personal visit and settle the dispute. He also made it clear that so soon the sponsor was there, he initiated the proceedings for obtaining visa which could only come to him in February, 1999. It cannot be said that the time taken in giving permission after holding enquiry by the competent authority were dependent on any volition on the part of the petitioner. It was totally dependent on third party’s, efforts and the decision-making authority over which the petitioner had no control. He has visited the importers soon after getting visa and got the quarrels settled. He visited UAE in March and in fact obtained payment and brought it in India and deposited in bank before 31st March, 1999.

All these facts have been blissfully ignored by the CIT by focussing on the complaint lodged by an importer about the quality of the goods despatched by the petitioner. It is not even the finding of the CIT that the goods sent by the petitioner were really not of the specifications nor he could have reached this finding. If it is admitted that the dispute has arisen between the parties, it is not expected or presumed that complaint made by the buyer is necessarily right or genuine. One cannot start with presumption that Indian exporter is always in wrong, which impression is betrayed by the order of the CIT on jumping to conclusion that on raising the dispute the petitioner ought to have immediately settled the dispute as if he had no right to dispute the allegations made in the complaint or convince the buyer about the quality of goods despatched by him. It is natural in these circumstances that some time does take place before parties could reach an amicable settlement by negotiation or get the dispute settled through appropriate remedial forum. Which turn the event ultimately takes place is anybody’s guess. Nor one can predict that if the party don’t taken recourse to legal remedies immediately he is not acting with prompt despatch and commercial expediency. In such international trade and commerce, the recovery when such dispute arises is not easy at hand which could be solved immediately. Judicial notice of the fact can be taken that visit from one country to another country particularly in the middle east countries is not free passage and one has to undergo required procedure before entering the other country. About the procedure of obtaining visa and entering the country in question, the petitioner has laid before the authority, the entire procedure required for such entry which is not found to be erroneous. One fails to understand if for settling out the dispute correspondence has failed, the petitioner has only to resort to personal visit for it. For fructifying that personal visit he was dependent on finding the sponsorer and sponsorer having agreed only in the month of December.,1998, he had lost no time in pursuing the matter to visit the country of import and settle the dispute and bring the amount in India. Therefore, non- application of mind to the relevant material which was before the CIT is writ large.

7. However, it is contended by the learned counsel for the Revenue that the Court ought not look for the reasons and the insist on finding the material that existed to support those reasons because reasons were not required to be given for rejection of the application for extension of time by the application under s. 80HHC(2). The reasons were required to be recorded in writing only in case the time is extended and as the rejection of the application was in absolute discretion of the CIT, the order of rejection is not amenable to judicial review ordinarily. I am unable to accept this contention. Sub-s. (2)(a) of s. 80HHC reads as under : “(2)(a) This section applies to all goods or merchandise, other than those specified in cl. (b), if the sale proceeds of such goods or merchandise exported out of India are received in, or brought into, India by the assessee other than the supporting manufacturer in convertible foreign exchange, within a period of six months from the end of the previous year or where the Chief CIT or CIT is satisfied for reasons to be recorded in writing that the assessee is, for reasons beyond his control, unable to do so within the said period of six months, within such further period as the Chief CIT or CIT may allow in this behalf.”

A perusal of the provision goes to show that what is required for extending the period is that the CIT be satisfied that the assessee for reason beyond his control was unable to bring the sale proceeds in convertible foreign exchange in India of the goods or merchandise exported for the said period of six months or within such period as the Chief CIT or CIT may allow in this behalf. The essence of the provision is that the satisfaction of the CIT that the assessee has for reasons beyond his control was unable to bring the sale proceeds of the goods or merchandise exported outside. India in convertible foreign exchange within a period of six months from the end of previous financial year. Obviously, this decision about the existence of particular condition is not a subjective satisfaction inasmuch as the burden of satisfying CIT rests on the assessee and, therefore, the placing of material before the CIT by the assessee and the application of mind by the CIT to that material objectively and record his satisfaction about the case made out by the applicant shows in no unmistakable term that the CIT is to act objectively on the basis of the material placed before him about the reasons for which the assessee has failed to bring within India the sale proceeds of the goods or merchandise exported outside India within the time allowed in that section and that satisfaction must find expression in writing but it cannot be said that if the material has been placed before the CIT he could without looking at it could reject the same without assigning reasons and if such a case is made out, the Court would be precluded from exercising its power of judicial review.

Even the most discretionary power vested in the authority has to be exercised in a reasonable manner for the purpose for which the power has been vested. As the CIT has been given power to extend the period on being satisfied about the existence of reasons beyond control of the assessee which has prevented him from bringing the sale proceeds of the given merchandise in convertible foreign exchange within India, such discretion is coupled with a duty to exercise in favour of the assessee if condition for exercise of such power is shown to exist. The failure to exercise such discretion even if such conditions are shown to exist on the spacious ground of discretion being vested in the CIT, does not fit-in in basic rule of law of this land viz. duty to act fairly in all its spheres by the State functionaries in all its activities which would include to take decisions by taking into consideration the existing material and reach to its conclusion and exercise such powers for the purpose for which it has been vested if condition for exercise of such power has been made out. In that process, if an authority ignores the material which has been brought before it for its consideration and reaches his conclusion on non-germane grounds, the order is amenable to be corrected in exercise of powers of this Court through judicial review. Reference in this connection made to the principle tersely stated by the apex Court in Barium Chemicals Ltd. & Anr. vs. Company Law Board AIR 1967 SC 295: “An action not based on circumstances suggesting an inference of enumerated kind will not be valid…………… No doubt the formation of opinion is subjective but existence of circumstances relevant to inference as the sine que non for action must be demonstrable. If the action is questioned on the ground that no circumstances leading to information of any kind contemplated by the section exist, the action might be exposed to interference, unless existence of the circumstances is made out.”

The above principle was stated in a case where taking of an action was held to be subject to subjective satisfaction. However, the present case stands on a better footing inasmuch as, the satisfaction of the CIT on existence of ‘reason beyond the control of the assessee’ cannot be said to be an objective satisfaction as discussed above, but has to be reached objectively as a quasi judicial authority.

As seen from the provisions, the CIT is vested with power to extend period within which an exporter seeking benefit of s. 80HHC is to bring the amount of foreign exchange in India in convertible Indian currency. This power is conferred on the CIT for the benefit of person claiming benefit under s. 80HHC, and correspondingly confers right of benefit in the claimant of such benefit even on fulfilling the condition in extended period, on showing existence of circumstances beyond his control, which prevented him from bringing the concerned foreign exchange in India within the time prescribed, on being satisfied that the assessee was prevented by reasons beyond his control to bring the currency in India within such time. In the context of such provisions the power is coupled with duty to exercise such power when condition for its exercise is shown to exist by the person for whose benefit such power has been vested in any authority. This principle was stated as early as in late 19th century by Lord Cairns in Julius vs. Lord Bishop of Oxford (1874-80) All ER 43. “There may be something in the nature of thing empowered to be done, something in the object for which it is to be done, something in the conditions under which it is to be done, something in the title of the person or persons for whose benefit the power is to be exercised, which may couple the power with a duty, and make it the duty of the person in whom the power is reposed to exercise that power when called upon to do so.” He further said : “Where a power is deposited with a public officer for the purpose of being used for the benefit of persons specifically pointed out with regard to whom the definition is supplied by the legislature of the conditions upon which they are entitled to call for its exercise, that power ought to be exercised and that power ought to be exercised and the Court will require it to be exercised.”

In the same case Lord Blackburn stated: “The enabling words are construed as compulsory whenever the object of the power is to effectuate a legal right.”

The above principle was approved by the Supreme Court in L. Hirday Narain vs. CIT (1970) 78 ITR 26 (SC) : AIR 1971 SC 33 : TC 42R.589 In O.L. vs. Dharati Dhan AIR 1977 SC 740 Bag J. said. “if the conditions in which the power is to be exercised in particular cases are also specified by a statute then, on the fulfilment of these conditions, the power became annexed with duty to exercise it in that manner.” Apparently provision contained in s. 80HHC is for the benefit of an assessee and confers upon him a right to claim deductions in respect of his income from export on fulfilment of certain conditions. One such condition is that foreign exchange under such export must be brought within India in convertible Indian currency within six months of the end of relevant financial year. However, to effectuate this right to claim deduction by fulfilling prescribed condition, power was deposited with CIT to extend such period on the condition that he is satisfied about existence of reasons beyond the control of the assessee resulting in his failure to bring the foreign exchange in Indian currency in India within that time. Thus, power is conferred on the CIT to effectuate a legal right vesting in assessee for his benefit and condition on which such power can be exercised by the CIT is also stated in the statute. In these circumstances, the exercise of power is annexed with due to be so exercised on being shown that condition for its exercise exists. Such satisfaction in the context is not subjective but objective and has to be determined quasi-judicially. To conclusion that on existence of showing reasons beyond control of the assessee, which prevented him from bringing in India, the amount of foreign exchange in convertible Indian currency within the time-limit prescribed, the CIT is bound to extend the period is further supported by decisions of Allahabad High Court in Azad Tobacco Factory (P) Ltd. vs. CIT & Ors. (1997) 140 CTR (All) 476 : (1997) 225 ITR 1002 (All) : TC S25.2576 and of Calcutta High Court in Geekay Exim (India) Ltd. vs. CIT (1999) 153 CTR (Cal) 417 : (1998) 234 ITR 560 (Cal) : TC S25.2577. The two decisions also reflect that on expiry of period under s. 80HHC(2) the right to claim deduction is not lost, but it remains only in suspended animus and can be availed subject to establishing such failure due to cause beyond his control by the assessee. In Azad Tabacco Factory’s case the Allahabad High Court said : “The time-limit mentioned in s. 80HHC(2)(a) is not a limitation for claiming deduction but it is the right to claim deduction which is available if the sale proceeds are received within a period of six months. But there might be cases where on account of no fault on the part of the assessee, he could not receive or be able to bring into India the sale proceeds within the said period. Contemplating such situation, the legislature in its wisdom had provided for suspension which can also be termed as relaxation of the said period subject to the satisfaction of the Chief CIT or CIT on the condition that the assessee was unable to receive in or bring into India the sale proceeds within the period of six months as aforesaid for reasons beyond his control. The Chief CIT or CIT has been invested with the power to decide the period of such suspension or relaxation if he is satisfied that the assessee was unable to do so for reasons beyond his control. A plain reading of the said section gives an impression that the discretion is confined to the question of satisfaction by the Chief CIT or CIT but not with the power to allow the period of suspension or relaxation. The CIT, if satisfied, that the condition is fulfilled, is bound to allow the period which remained suspended due to the inability of the assessee to receive in or bring into India the sale proceeds for reasons beyond his control. There is no discretion in the matter of allowing the period of suspension if the Chief CIT or CIT is satisfied that the condition for suspension of the period was fulfilled.” Like view was expressed by Calcutta High Court in Geekay Exim’s case (supra). The Court said : “In my opinion, the right to deduction under s. 80HHC is a right given to the assessee which can easily be available within a period of six months as contemplated therein. But the said right appears to remain suspended if the assessee is unable to have it for reasons beyond his control. In such circumstances the CIT or the Chief CIT was bound to exercise the power for allowing a further period to the assessee if he is satisfied that the assessee was unable to receive in or bring into India the sale proceeds within the period of six months for reasons beyond his control. If he is satisfied about the existence of such a condition he has to exercise the discretion in favour of the assessee.” Moreover, it is to be seen that object of enacting s. 80HHC was to augment foreign exchange earning and to make it effective. For the object with which it was enacted, the benefit was subjected to receipt of such foreign exchange earning in India. The prescribing period of limitation within which the foreign exchange earning is to be brought in India is also only to effectuate the object that foreign exchange earnings may not be unduly held up outside country once the deduction is allowed or claimed or to keep it outstanding indefinitely to claim the deductions only at opportune time as a measure of reducing tax liability with that object alone. Therefore, the interpretation on s. 80HHC(2) must be such as it advances the object rather than defeat it. The question of existence of reason beyond the control of the assessee must find its consideration in that light only, viz. whether the delay in bringing the foreign exchange is delayed due to bona fide reason or by design. It is to be remembered that, notwithstanding the fact that foreign exchange has been earned in any year, allowability of deduction for that year depends only on receipt of such foreign exchange in India, and until such income is brought in India the right to claim deduction remain in suspended animus. The question of such existence of reason really can only be examined on receipt of such income in India, to be adjudged in the light of circumstances attending thereto. There cannot be any peremptory extension of period; because even if such extension is granted in advance, it cannot enure for the benefit of assessee, until the foreign exchange is in fact brought in India and that no extension of period beyond the date of actual receipt of amount in India in convertible foreign exchange is envisaged. To illustrate, in a given case where the period of six months under s. 80HHC(2) expires on 30th June, 2000, and the CIT in the background of reasons shown to him extends the period upto 31st Dec., 2000. Yet if the amount is not received by 31st Dec., 2000, the extension itself will not entitle the assessee to claim deduction until he brings the amount in India. Nor expiry of such period will defeat his right, if he is able to show existence of reason beyond his control which caused failure in bringing such amount in India. On the other hand, if in fact the amount has received in control of the assessee to be brought in India on 31st July, he cannot because of the peremptory extension of period delay its bringing in

India for no reason and claim the benefit of extention upto 31st Dec., 2000. Permitting that would be flying in the face of the provision and its object. Therefore, application of mind on the part of the CIT ought to be, once limit of six months period has expired, to consider whether the assessee could reasonably brought the said foreign exchange in India earlier than the date he has brought in India. May be day-to-day computing the period is not envisaged, but after expiry of 6 months whether the money has been brought within reasonable time when it became possible for the assessee to bring the foreign exchange in India. In other words, the relevant consideration may include considering the circumstance which may militate against bona fide of the assessee to vouch against deliberate delay in bringing the foreign exchange in India to suit the assessee in reducing the incidence of tax at opportune time.

The expression “beyond the control of assessee” in s. 80HHC(2) in its context in its ordinary natural sense mean failure in bringing the foreign exchange in India is without any fault by the assessee.

17. In Bibby Cheshire vs. Golden Wonder Ltd. (1972) 3 All ER 738 (QB), the Court was considering the meaning of the term under s. 27(1) ‘some other cause beyond defendant’s control’, a defence permitted on a charge under s.

26(1) of Weights and Measures Act, 1963, for underweighing the goods. The respondents in the case was a manufacturer of potato chips producing 20 million bags of crisps per week, making it impossible to weigh the bags manually. That necessitated use of machines. The respondent employed the best available weighing machine available for the object of weighing the bags. It was established by evidence that no machine is sufficiently accurate to produce no underweight. The manufacturer had also put certain manual weighing machine system. In these circumstances the Court repelled the contention that error due to machine fault cannot be considered some other reason beyond the control of the accused. “We have to consider the words ‘some other cause beyond his control’. It is established here that there was a machine, whatever may be said of it, which was a kind which would not be expected in the ordinary course of its functioning to go wrong beyond the very slight figures of error that I have indicated, the evidence also accepted that it was the best machine available at the time when this offence was committed…….. on finding of fact expressed in the case within the words some other cause beyond his control.”

18. In another case Ambatieolos vs. Anton Jurgens (1922) All ER 543 (HL) the very same question arose in a claim of demurrages against a charterer of vessel for delay in unloading the ship at the dock. The charterer took shelter under the clause ‘reason beyond his control’ by pleading delay due to strike of dock workers. The plea that this cannot be treated as reason beyond the control of the charterer because he could have attempted to induce labourer, not, members of dock workers union giving call to strike, by paying exhorbitant wages, was repelled. Plea to construe the expression ejusdem generis to treat the causes beyond the control of the charterer to be of the nature related to some law of nature or man made law, on the basis of illustrative contingencies used in the clause, Viscount Finlay said : “It appears to me that the common feature which those various things enumerated here is that they constitute causes beyond the control of charterers and that such a cause caused detention of the vessel. That seems to me that real substantial feature in common, and if there is a class it is the class of things which will have the effect upon vessel of detaining it without the charterer’s being in fault.”

19. Seen in above light, the fact, that the dispute has arisen between the parties on the quality of goods, has been accepted by the CIT. Once that conclusion is reached, it cannot but be accepted that the payment has been retained by the consignee in UAE as leverage against the petitioner for settlement of dispute. In that event, it is not in the control of the assessee to secure payment of such disputed transaction at his will. It needs efforts to be made for terminating the dispute—either by voluntary settlement or through adjudicating remedial system. Unless the dispute is settled, the petitioner cannot be held liable for not bringing money within India for reasons which are within his control. This conclusion can be reached only if the petitioner has failled to make reasonable efforts with promptitude to settle the dispute and realise the money or it can be said the raising of dispute itself was sham or farce. If a real and bona fide dispute exists, how much time it will take to settle nobody can guess, and over which the disputing party cannot be said to have any control. It cannot be assumed that for settling dispute one must take only a fixed timeframe of time in trying to settle the dispute. Every party to dispute is entitled to take his defence and ordinarily will negotiate with the disputant to get the dispute settled or approach appropriate remedial forums, if such negotiations fails to bring desired results. How much time this process takes cannot be predicated with any mathematical precision, as seem to have been presumed by the CIT. The only reason which prevailed with the CIT in rejecting the application is not supported from the existing material at all.

20. In the present case, there is no dispute about the fact that the dispute had arisen, the assessee entered into correspondence to secure the payment of money so withheld by the buyers. He also offered discount in the amount payable to him to the disputant buyer. This has also been made out in the very first application that unless personal visit to the country to whom export is made, it is not possible to bring the amount to India. He has also pointed out the difficulties in having immediate face to face discussion on account of procedure of seeking entry to the country of export and the condition of getting a sponsorer from the country of export which he could get only in December, 1998. He stated in his first application itself that both the importers had not promptly responded to his entreatment and for negotiated settlement. Soon after he received the signal in the last week of December, 1998, he initiated proceedings for securing visa for himself and visited the country of export in March, 1999 and brought the money in India before the close of year after he had made further application for extension of time until expected period of settlement, which in the circumstances also proved legitimate and justified.

In these circumstances, it is impossible to say that the assessee has not acted with reasonable promptitude in settling the dispute as and when opportunity came to him to settle the said, dispute with his buyers, he negotiated with the party by correspondence and on phone and even visited the country of export. In fact, the money has been brought and deposited in March, 1999 and this fact has also not been considered by the CIT(A) whether the efforts made by the assessee were continuing and were in right earnest. In these circumstances, I am of the opinion that the impugned order Annexure 4, dt. 17th Sept., 1999, having not been founded on existing material and as discretion has been exercised by ignoring the undisputed material which has been brought on record by the assessee showing that the reasons beyond his control existed which prevented him from bringing the money in India before March, 1999. This condition requisite of exercise of power by the CIT, shown to exist, the CIT was bound to exercise discretion for extending the period as prayed by the assessee upto 31st March, 1999. On his failure to exercise such power, in the words of Earl Cairns, the Court will require it to be so exercised.

As a result, the order dt. 17th Sept., 1999, (Annexure 4) deserves to be quashed and is hereby quashed. Since Annexure 5 is solely based on Annexure 4, so far as it relates to additions made in pursuance of order under s. 80HHC the same must also fall to ground.

Accordingly, this writ petition is allowed, Annexure 4 and 5 are quashed and the respondents are directed to make fresh order in accordance with law in light of the observations made above. There shall be no order as to costs.

[Citation : 250 ITR 596]

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