JUDGMENT A.P. Misra, J.
1. Heard learned counsel for the petitioner and also learned standing counsel for the Revenue.
2. In view of the exchange of affidavits in accordance with the rules of the court, the present writ petition is being disposed of finally at the stage of admission.
3. The petitioner seeks quashing of the order dated January 20, 1994, passed by the Commissioner of Income-tax, annexure "9" to the writ petition and also to direct the said authority to pass fresh orders in accordance with law. It also seeks staying the assessment proceedings for the assessment year 1991-92.
4. According to the case set up in the writ petition, the petitioner is a 100 per cent. export-oriented unit and is a private limited company dealing in the manufacture and export of leather goods. For the assessment year 1991-92, the petitioner made an application for extension of time on December 27, 1991, under Section 80HHC(2)(a) of the Income-tax Act, 1961, before the Commissioner of Income-tax. The total export shown by the petitioner was Rs. 1,50,71,347 out of which the export bills worth of Rs. 62,98,893 remained outstanding on March 31, 1991. A further figure which is relevant for the purpose of this writ petition is Rs. 29,96,816 which remained outstanding on October 1, 1991, that is to say after more than six months of the close of the accounting year. It is significant that up to November 29, 1991, an amount of Rs. 14,34,016 was realised by the petitioner leaving the balance of Rs. 15,62,800. Thereafter two other amounts were received, namely, Rs. 1,74,000 and Rs. 63,000 on July 21, 1992, and October 13, 1992, respectively. Further, other two amounts, namely, Rs. 5,25,300 received on April 29, 1994, and Rs. 8,00,500 received on April 29, 1994, were also taken into account.
5. Before entering into the merits, at the very outset, learned counsel for the petitioner has stated, as stated earlier, before the Commissioner of Income-tax, that for the last two balance amount of Rs. 13,25,800, the petitioner does not press for deduction under Section 80HHC. This leaves us the balance amount received by the petitioner beyond the period of six months as aforesaid. The short question involved is whether the impugned order suffers from any illegality and is liable to be quashed or not. In order to appreciate this relevant Section 80HHC(2)(a), the same is quoted as under :
"(2)(a) This section applies to all goods or merchandise, other than those specified in Clause (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 Commissioner or Commissioner 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 Commissioner or Commissioner may allow in this behalf."
6. The petitioner's case is one which falls under Sub-section (2)(a). The only question raised is whether the petitioner is entitled to be allowed in computing the total income, a deduction out of the profit from the export of such goods or merchandise if the sale proceeds are received beyond six months on the facts and circumstances of this case.
7. In the impugned order, the finding recorded is :
While it may be true that the foreign exchange has been ultimately received in India, the objective of relief under Section 80HHC and the restrictive clauses that the amount should be received within six months from the end of the accounting period has to be implemented strictly. If the intention of the legislation was to provide relief in respect of all the amounts received at any time, such a restrictive clause would not have been enacted. The delay beyond six months has to be established by the assessee as for justifiable reasons. This having not been done in this case, extension of time is not granted beyond September 30, 1990. "
8. There is no difficulty to uphold the reasoning of the Commissioner to the extent it records that the relief is not to be granted in respect of the amount received at any time. However, this has to be examined on the basis of the facts of each case. Under Clause (a) where the Commissioner of Income-tax is satisfied that the assessee, for reasons which are beyond his control could not receive the sale proceeds of such goods or merchandise in convertible foreign exchange within the period of six months from the end of the previous year (sic). Of course, the burden is on the assessee to show that he could not receive such amount within the aforesaid period and the delay was on account of facts which were beyond, his control.
9. The satisfaction of the Commissioner once arrived at could not be challenged for scrutiny in these proceedings like that of an appellate court.
But the satisfaction or non-satisfaction recorded must disclose reasons for judicial scrutiny whether there is application of mind or not or there is any omission to consider material facts on record or the satisfaction recorded is arbitrary or not. Under this clause, reasons to be recorded are for recording his satisfaction but would inherently also apply while rejecting such claim of an assessee. This exercise of power being quasi-judicial in nature has to stand up to the test of scrutiny of a higher authority of court howsoever limited it may be.
10. We find from the very first application moved by the petitioner dated December 27, 1991, annexure-1 to the writ petition discloses the following reasons :
(a) During March to June, 1990, there was delay in air-lifting the shipment of goods from the Delhi airport due to non-availability of aircraft and as such goods could not reach the destination in time according to needs of the buyers. This resulted in piling up stock of goods at the end of buyers and ultimately resulting in the delay in payment of bills.
(b) There is still market recession in Europe where all our buyers are located. This has further delayed the realisation of bills."
11. Apart from the aforesaid facts it is also disclosed that out of the balance amount for payment Rs. 29,96,816, Rs. 14,34,016 were realised by November 29, 1991, which is admittedly within a period of less than two months beyond the period of the aforesaid six months. This is referable to the first three bills mentioned above out of the balance amount of Rs. 29,96,816.
12. The other two bills pertain to the amounts of Rs. 63,000 and Rs. 1,74,000. However, the payment of this has been received only on October 23, 1992, and July 21, 1992, which admittedly is subsequent to the date of making of the aforesaid application. Regarding these two payments, there was also a communication by the petitioner through application dated December 31, 1992, to the Commissioner of Income-tax which is annexure-5 to the petition.
13. Looking to the facts and circumstances, it does disclose that facts did exist disclosing the reasons for delayed receipt of the sale proceeds. Whether this would constitute a satisfaction is another matter. But we find the finding recorded by the Commissioner that the delay beyond six months has to be established by the assessee for justifiable reasons and this having been done in this case, is a finding without proper application of mind. It is for the Commissioner to record his reasons howsoever short before disbelieving the said reason to show application of mind. In the impugned order no reason has been disclosed nor any indication of application of mind on the facts as pleaded by the assessee. We find that the Commissioner in rejecting the claim has not recorded any reason nor indicated the application of mind on the facts pleaded. It has to be kept in mind this provision is in effect also in the line of incentives to increase export and this incentive would be lost if its application is much too restrictive. That is why the Commissioner has, for recording satisfaction, to keep in mind whether delayed receipt of sale proceeds was beyond the control of the assessee and he was unable to do so within the said period of six months.
14. Hence, the impugned order except to the extent for an amount of Rs. 13,25,800, which is not pressed as aforesaid, is not sustainable. Accordingly, we quash the impugned order dated January 29, 1994 (annexure-9 to the petition) to the aforesaid extent and direct the Commissioner of Income-tax, Central, Kanpur, to decide afresh the application of the assessee in the light of the observations made by us in accordance with law.
15. In the result, the present writ petition is partly allowed. Costs on parties.
16. Certified copy of this judgment be issued to counsel for the petitioner on payment of usual charges within one week.