J.L. Khaturia Vs. Union of India and ors. - Court Judgment

Rajesh Balia, J.

1. Heard learned counsel for the parties.

2. The petitioner challenges the order passed by the Commissioner of Income-tax on September 17, 1999, rejecting the application made by the petitioner under Section 80HHC(2)(a) of the Income-tax Act, 1961, for extending the period to bring the sale proceeds of the goods exported to Riyadh (Saudi Arabia) in foreign currency and deposit it in the bank in terms of the provisions of Section 80HHC to avail of the benefit thereunder in respect of such exports and consequential order, annexure 5, dated September 27, 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 assessment year 1998-99.

3. The facts of the case relevant for the present purposes are that the petitioner exported goods to Al-ajilal Co. Ltd., on January 16, 1998, vide invoice No. 26 for US $ 4075.5 convertible into Indian currency for Rs. 1,52,831 and to Alfalwa on September 29, 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 the export related and the petitioner moved an application for extension of time. The petitioner, in the first instance, made an application on September 29, 1998, stating that the importer made 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 the same were unresponded and they delayed in sending the payments. It was also pointed out in the application that party No. 1, Al-ajilal Co. Ltd., did make payment of two containers in July, 1998, out of three containers despatched but party No, 2, Alfalwa, to whom only one container was supplied, never replied to theletters of the assessee. The petitioner further made a request that the dispute cannot be overcome without visiting 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 December 31, 1998. Along with this application, the copies of the fax messages, application for permission to extend the period by the 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 December 31, 1998. The assessee made another application for extension of period beyond December 31, 1998, on December 31, 1998 up to March 31, 1999. This followed with another application dated January 4/February 8, 1999, which was received in the office of the Commissioner of Income-tax, Udaipur, on February 8, 1999.

4. In this case, the petitioner further made out apart from the reasons earlier stated in his application that a business visit to UAE countries by an Indian national requires a no objection certificate through a sponsor in the UAE who in turn must submit the passport details to the Immigration Directorate who issues the 'no-objection certificate' and on that basis the embassy issued the visa which is endorsed on arrival of the person at the point of entry. The assessee had persuaded through regular correspondence and telephonic talks, and at last got one party to agree to send the visa but that also could not come before the closing of the Ramzan month and ultimately Al-ajilal Co. Ltd., sent the visa dated December 23, 1998. A copy of the visa and fax message was also enclosed with the application. These reasons were made in support of the application for further extending the period up to March 31, 1999, for bringing the disputed amount in India for the purpose of availing of the benefit under Section 80HHC. This application also remained undisposed of until March 31, 1999. On March 31, 1999, the petitioner informed the Commissioner of Income-tax that the assessee had made an application on September 29, 1998, and December 31, 1998, for extending the period to bring foreign currency in India up to March 31, 1999, and that the due foreign currency of 4075 and 9497 dollars has been received on March 14, 1999, and the same has been deposited in the bank on March 30, 1999. In support of this application, a copy of the draft and bank deposit slips were also annexed. In furtherance of this and in response to the information required by the Commissioner, the petitioner further submitted a detailed explanation, vide his letter dated June 27, 1999, in this case making reference to the earlier applications. The efforts made by the petitioner, the essential requirement of obtaining avisa before entering the territory of the UAE for the purpose of a business visit thereto and the ultimate results of the petitioner's efforts which resulted in visa permission on December 3, 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 January/February, 1999, and, thereafter, the petitioner was accorded permission to visit Riyadh. The assessee visited the UAE in March which was evidenced by the boarding pass of the concerned airlines and that on personal visit the dispute was resolved and the amounf was brought into India as aforesaid, after all. This material had already come on record, the Commissioner, vide the 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 the 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 Section 80HHC(2)(a) of the Act.

5. Coming to this conclusion, the focal point of the reason given by the Commissioner is that as per the petitioner's own assertion the 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 compliant 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 part of such losses. With this complaint, the Commissioner jumps 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.

6. From a 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 the application on September 29, 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 were not of the specified quality or that he sent goods qualitatively different from the approved samples. He has also made specific ground in the application about the difficulties involved in visiting the country of import, viz., Saudi Arabia, which provides specific procedure for obtaining migration visa through a sponsor from the 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 a personal visit and settle the dispute. He also made it clear that no sooner than the sponsor was there, he initiated the proceedings for obtaining the visa which could only come tohim 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 the third party's efforts and the decision-making authority over which the petitioner had no control. He has visited the importers soon after getting the visa and got the quarrels settled. He visited the UAE in March and in fact obtained the payment and brought it into India and deposited it in the bank before March 31, 1999.

7. All these facts have been blissfully ignored by the Commissioner 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 Commissioner that the goods sent by the petitioner were really not of the specifications nor could he have reached this finding. If it is admitted that the dispute has arisen between the parties, it is not expected or presumed that the complaint made by the buyer is necessarily right or genuine. One cannot start with the presumption that the Indian exporter is always wrong, which impression is betrayed by the order of the Commissioner of Income-tax on jumping to the 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 the parties could reach an amicable settlement by negotiation or get the dispute settled through the appropriate remedial forum. Which turn events ultimately take is anybody's guess, Nor can one predict that if the party did not take 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 a 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 for obtaining the visa and entering the country in question, the petitioner had 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 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 sponsor and the sponsor 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 into India. Therefore, non-application of mind to the relevant material which was before the Commissioner is writ large.

8. However, it is contended by learned counsel for the Revenue that the court ought not to look for the reasons and 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 Section 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 the absolute discretion of the Commissioner, the order of rejection is not amenable to judicial review ordinarily.

9. I am unable to accept this contention. Sub-section (2)(a) of Section 80HHC reads 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.'

10. A perusal of the provision goes to show that what is required for extending the period is that the Commissioner be satisfied that the assessee for reasons beyond his control was unable to bring the sale proceeds in convertible foreign exchange into India of the goods or merchandise exported for the said period of six months or within such period as the Chief Commissioner or Commissioner may allow in this behalf. The essence of the provision is the satisfaction of the Commissioner that the assessee 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 the previous financial year. Obviously, this decision about the existence of a particular condition is not a subjective satisfaction inasmuch as the burden of satisfying the Commissioner rests on the assessee and, therefore, the placing of material before the Commissioner by the assessee and the application of mind by the Commissioner to that material objectively and record his satisfaction about the case made out by the applicant shows in no unmistakable terms that the Commissioner 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 Commissioner he could without looking at it reject the same without assigning reasons and if such a case ismade out, the court would be precluded from exercising its power of judicial review.

11. 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 Commissioner has been given power to extend the period on being satisfied about the existence of reasons beyond the control of the assessee which 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 it in favour of the assessee if conditions for exercise of such power are shown to exist. The failure to exercise such discretion even if such conditions are shown to exist on the specious ground of discretion being vested in the Commissioner, does not fit in in the 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 taking decisions by taking into consideration the existing material and reaching conclusion and exercising such powers for the purpose for which they have been vested if conditions for exercise of such power have 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 is made to the principle tersely stated by the apex court in Barium Chemicals Ltd, v. CLB : [1967]1SCR898 :

'An action, not based on circumstances suggesting an inference of the enumerated kind, will not be valid ... No doubt the formation of opinion is subjective but the existence of circumstances relevant to the inference as the sine qua non for action must be demonstrable. If the action is questioned on the ground that no circumstances leading to an inference of the kind contemplated by the section exist, the action might be exposed to interference unless the existence of the circumstances is made out.'

12. The above principle was stated in a case where taking of an action was held to be subjected to subjective satisfaction. However, the present case stands on a better footing inasmuch as, the satisfaction of the Commissioner on existence of 'reasons beyond the control of the assessee' cannot be said to be an subjective satisfaction, as discussed above, but has to be reached objectively as a quasi-judicial authority.

13. As seen from the provisions, the Commissioner is vested with the power to extend the period within which an exporter seeking benefit of Section 80HHC is to bring the amount of foreign exchange in India in convertible Indian currency. This power is conferred on the Commissioner for the benefit of persons claiming the benefit under Section 80HHC, and correspondingly confers right of benefit in the claimant of such benefit even on fulfilling the conditions in the extended period, on showing theexistence of circumstances beyond his control, which prevented him from bringing the concerned foreign exchange into India within the time prescribed, oh being satisfied that the assessee was prevented by reasons beyond his control to bring the currency into India within such time. In the context of such provisions the power is coupled with the duty to exercise such power when conditions for its exercise are shown to exist by the person for whose benefit such power has been vested in any authority.

14. This principle was stated as early as in the late 19th century by Lord Cairns in Frederic Guilder Julius v. Bishop of Oxford (Lord) [1874] 1 All ER 43 ; [1880] 5 AC 214 :

'There may be something in the'nature of the 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.'

15. He further said (page 225) :

'Where a power is deposited with a public officer for the purpose of being used for the benefit of persons who are specifically pointed out, and with regard to whom a 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 the court will require it to be exercised.'

16. In the same case Lord Blackburn stated (page 244) :

'The enabling words are construed as compulsory whenever the object of the power is to effectuate a legal right.'

17. The above principle was approved by the Supreme Court in L. Hirday Narain v. ITO : [1970]78ITR26(SC) .

18. In Official Liquidator v. Dharti Dhan P. Ltd. : [1977]2SCR964 , Beg C. J. said (page 426) :

'If the conditions in which the power is to be exercised in particular case are also specified by a statute then, on the fulfilment of those conditions, the power conferred becomes annexed with a duty to exercise it in that manner.'

19. Apparently, the provision contained in Section 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 the relevant financial year. However, to effectuate this right to claim deduction by fulfilling the prescribed conditiqns, power was deposited with the Commissioner to extend such period on the condition that he is satisfied about the existence of reasons beyond the control of the assessee resulting in his failure to bring the foreign exchange in Indian currencyinto India within that time. Thus, power is conferred on the Commissioner to effectuate a legal right vesting in the assessee for his benefit and the conditions on which such power can be exercised by the Commissioner are also stated in the statute. In these circumstances, the exercise of power is annexed with the duty to be so exercised on being shown that conditions for its exercise exist. Such satisfaction in the context is not subjective but objective and has to be determined quasi-judicially.

20. The conclusion that on existence of showing reasons beyond the control of the assessee, which prevented him from bringing into India, the amount of foreign exchange in convertible Indian currency within the time limit prescribed, the Commissioner is bound to extend the period is further supported by the decisions of the Allahabad High Court in Azad Tobacco Factory (P.) Ltd. v. CIT : [1997]225ITR1002(All) and of the Calcutta High Court in Geekay Exim (India) Ltd. v. CIT : [1998]234ITR560(Cal) . The two decisions also reflect that on the expiry of a period under Section 80HHC(2) the right to claim deduction is not lost, but it remains only in suspended animus and can be availed of subject to establishing such failure due to cause beyond his control by the assessee.

21. In Azad Tobacco Factory (P.) Ltd.'s case : [1997]225ITR1002(All) , the Allahabad High Court said (page 1005) :

'The time limit mentioned in Section 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 Commissioner or Commissioner 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 Commissioner or Commissioner 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 Commissioner or Commissioner but not with the power to allow the period of suspension or relaxation. The Commissioner, if satisfied, that the conditions are 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 Commissioner or Commissioner is satisfied that the condition for suspension of the period was fulfilled.'

22. Like view was expressed by the Calcutta High Court in Geekay Exim (India) Ltd.'s case : [1998]234ITR560(Cal) . The court said (page 565) :

'In my opinion, the right to deduction under Section 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 Commissioner or the Chief Commissioner 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.'

23. Moreover, it is to be seen that the object of enacting Section 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 into India is also only to effectuate the object that foreign exchange earnings may not be unduly held up outside the country once the deduction is allowed or claimed or to keep it outstanding indefinitely to claim the deductions only at an opportune time as a measure of reducing tax liability with that object alone. Therefore, the interpretation of Section 80HHC(2) must be such as advances the object rather than defeat it. The question of existence of reasons 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, the 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 remains 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 the 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 the assessee, until the foreign exchange is in fact brought into 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 Section 80HHC(2) expires on June 30, 2000, and the Commissioner of Income-tax in the background of reasons shown to him extends the period up to December 31, 2000. Yet, if the amount is riot received by December 31, 2000, the extension itself will not entitle the assessee to claim deduction until he brings the amount in India. Nor expiry of such period willdefeat his right, if he is able to show existence of reasons beyond his control which caused failure in bringing such amount in India. On the other hand, if in fact the amount has been received in control of the assessee to be brought into India on July 31, he cannot because of the peremptory extension of period, delay its bringing into India for no reason and claim the benefit of extension up to December 31, 2000. Permitting that would be flying in the face of the provision and its object.

24. Therefore, the application of mind on the part of the Commissioner ought to be, once the limit of six months period has expired, to consider whether the assessee could reasonably have brought the said foreign exchange into India earlier than the date he has brought it in India. May be day-to-day computing the period is not envisaged, but after the expiry of six months whether the money has been brought within a 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 circumstances which may militate against the bona fides 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 an opportune time,

25. The expression 'beyond the control of the assessee' in Section 80HHC(2) in its context in its ordinary natural sense means failure in bringing the foreign exchange into India without any fault by the assessee.

26. In Bibby-Cheshire. v. Golden Wonder ltd. [1972] 3 All ER 738 (QB), the court was considering the meaning of the term under Section 26(1) 'some other cause beyond defendant's control', a defence permitted on a charge under Section 26(1) of the Weights and Measures Act, 1963, for underweighing the goods. The respondent in this 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 (page 743):

'We have to consider the words 'some other cause beyond his control'. It is established here that there was in use a machine, whatever may be said of it, which was of 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, and evidence also accepted that it was the best machine available at the time when this offence was committed . . . on the findings of fact expressed in the case . . . within the words 'some other cause beyond his control'.'

27. In another case Ambatielos v. Anton Jurgens Margarine Works [1923] AC 175 ; [1922] All ER 543 (HL) the very same question arose in a claim of demurrages against a charterer of a 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 labourers, not members of the dock workers union giving the call to strike, by paying exhorbitant wages, was repelled. The 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 (page 186) :-

'It. appears to me that the common feature which these various things enumerated have, is that they constitute causes beyond the control of the charterer, and that these caused detention of the vessel. That seems to me the real substantial feature in common, and if there is a class it is the class of things which will have this effect upon the vessel of detaining it without the charterers being in fault.'

28. Seen in the above light, the fact, that the dispute has arisen between the parties on the quality of goods, has been accepted by the Commissioner. Once that conclusion is reached, it cannot but be accepted that the payment has been retained by the consignee in the UAE as leverage against the petitioner for settlement of the 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 the money into India for reasons which are within his control. This conclusion can be reached only if the petitioner has failed to make reasonable efforts with promptitude to settle the dispute and realise the money or it can be said that the raising of the dispute itself was sham or a 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 the dispute one must take only a fixed time frame in trying to settle the dispute. Every party to the 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 fail to bring desired results. How much time this process takes cannot be predicated with any mathematical precision, as seems to have been presumed by the Commissioner. The only reason which prevailed with the Commissioner in rejecting the application is not supported from the existing material at all.

29. 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 a discount in the amount payable to him to the disputant buyer. This has also been made out in the very first application that unless a 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 an immediate face to face discussion on account of the procedure for seeking entry to the country of export and the condition of getting a sponsor from the country of import 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 a visa for himself and visited the country of import in March, 1999, and brought the money into India before the close of year after he had made further application for extension of time until the expected period of settlement, which in the circumstances also proved legitimate and justified.

30. 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 import. In fact, the money has been brought and deposited in March, 1999, and this fact has also not been considered by the Commissioner of Income-tax 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, dated September 17, 1999, having not been founded on existing material and as the discretion has been exercised by ignoring the undisputed material which has been brought on record by the assessee showing that reasons beyond his control existed which prevented him from bring the money into India before March, 1999. Thus conditions requisite of exercise of power by the Commissioner, having been shown to exist, the Commissioner was bound to exercise discretion for extending the period as prayed for by the assessee up to March 31, 1999. On his failure to exercise such power, in the words of Earl Cairns, the court will require it to be so exercised.

31. As a result, the order dated September 17, 1999 (annexure 4), deserves to be quashed and is hereby quashed. Since annexure 5 is solely based on annexure 4, so far as it relate to additions made in pursuance of an order under Section 80HHC the same must also fall to ground.

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