THE COMMISSIONER OF INCOME TAX vs. M.S.SHOES EAST LTD.

lb $-14 to 17 * IN TIIE I{IGH COI]RT OF DELHI AT NEW DELHI Reserved on:,30't' August, 2012 Date of Decision: 2&n September, 2012 % + tT41394t2009 COMMISSIONER OF INCOME TAX .... Appellant VERSUS NfiS. M.S. INTERNATIONAL LTD. .... Respondent + ITA2t0t2007 + tT[l47t2007 COMMISSIONER OF INCOME TAX .... Appellant VERSUS M.S. SHOES EAST LTD. .... Respondent + tTA575t2007 COMMISSIONER OF INCOME TAX .... Appellant VERSUS PEARL INTERCONTINENTAL LTD. .... Respondent Present: Mr. Kamal Sawhney, Sr. Standing Counsel for Revenue in ITA Nos. 999/20 0 6, 210 12007, 57 5 12007 and | 47 12007 . Mr. Sanjeev Sabharwal, Sr. Standing Counsel with Mr. Puneet Gupta, Jr. Standing Counsel with Ms. Gayatri Verma, Adv. in ITA No.139412009. Mr. Pavan Sachdev4 respondent in person in all matters. ITA Nos. 139412009, 21012007, 57 5 12007 & 1 47 12007 Page I of2 Signing Date:07.09.2024 17:11:16 Certify that the digital and physical file have been compared and the digital data is as per the physical file and no page is missing. Signature Not Verified

\7 CORAM: MR. JUSTICE S. RAVINDRA BHAT MR. JUSTICE R.V. EASWAR 1. Whether Reporters of local papers may be allowed to see the judgment? 2. To be referred to the Reporters or not? 3. Whether the judgment should be reported in the Digest? R.V. EASWAR. J.: For order see ITA No.999/2009. SEPTEMBER 28, 2012 hs Irt l.v\ -r-r. (n.v:EASwAR) JUDGE Il*l*$rrt (s. RAVINDRA BHAT) JUDGE ITA Nos. 139412009, 21012007, 57 5 12007 & | 47 12007 Page2 of2

% $-13 to 17 * IN THE HIGH COURT OF DELHI AT NEW DELHI d Reserved on:.30tt' August, 2012 Date of Decision: 28t" September,.20I2 .... Respondent + rTA99912006 + ITAl394l2009 COMMISSIONER OF INCOME TAX ... Appellant VERSUS iWS. M.S. INTERNATIONAL LTD. .... Respondent + ITA2r0l2007 + ITAt47l2007 COMMISSIONER OF INCOME TAX .... Appellant VERSUS M.S. SHOES EAST LTD. +. ITA57512007 . COMMISSIONER OF INCOME TAX .... Appellant VERSUS PEARL INTERCONTINENTAL LTD. .... Respondent Present: Mr. Karnal Sawhney, Sr. Standing Counsel for Revenue in ITA Nos.999/20 06,21012007 , 57 512007 and 14712007 . Mr. Sanjeev Sabharwal, Sr. Standing Counsel with IUr. Puneet Gupta, Jr. Standing Counsel with Ms. Gayatri Verma, Adv. in ITA No.139412009. Mr'. Pavan Sachdeva, respondent in person in all matters. rt r ITA gggt2006,21012007,57512007,139412009 &14712007 Page l of 15 : \

1c1 CORAM: MR. JUSTICE S. RAVINDRA BHAT MR. JUSTICE R.V. EASWAR 1. Whether Reporters of local papers may be allowed to see the judgment? 2. To be refered to the Reporters or not? ) 3. Whether flre judgment should be reported in the Digest? Y R.V. EASWAR. J.: Since all the appeals involve a common issued and were heard together, they are disposed of by a common judgment. The appeals have been filed by the CIT under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as 'the Act'). The ITA Nos.99912006, 139412009,21012007 and 57512007, though they relate to three different assessees, involve a common question, namely, whether the assessee was rightly held by the Income Tax Appellate Tribunal (hereinafter refered to as 'the Tribunal') to be entitled to the deduction under Section 80HHC of the Act. ITA No.I47/2007 involves the question of penalty imposed on the assessee under Section 271(1)(c) of the Acd and the question of law is whether the Tribunal was right in cancelling flre penalty: This appeal is consequential to the fate of ITA No.210/2007. 2. The ITA No.999l2006 is taken as the lead matter. The appeal relates to the assessment year 1993-94. The respondent-assessee is a public limited company by irame M.S. International Ltd., (hereinafter referred to as 'MSIL' or 'the assessee'). The brief facts giving rise to the appeal may be noted. The assessee was incorporated on 06.06.1991. Its business was to manufacture and export synthetic rubber sole sheets. In respect of the assessment year 1993-94, relevant to the previous year ended dn 31.03.1993, which is practically first year of its operation, it filed a return of income on 30.12.1993 declaring a total income of 72,5701-. In the return, the assessee claimed deduction of <6,48,92,549/- under Section 80HHC. Included in this was a deduction of {6,05,43 ,627/- in respect of export of synthetic rubber sole sheets to iWs. tT A 999 1200 6, 21 0 12007, 57 5 12007, 139 4 | 2009 & 1 47 12007 Page2 of15 r

7n Taj Al Khaleej General Trading Company of Dubai (hereinafter referred to as 'Taj' of 'TAKGT'). It would appear that there was a search under Section 132 of the.Act of the assessee group of companies on 29.06.1994 on the basis of infonnation that the assessee is indulging in over pricing its exports and in order to honour the export commitment substandard goods were being purchased from the domestic market and exported; and in league with the importer, money taken out of India throu gh hawala route was being brought in as export proceeds. It is not clear from the assessment order as to whether, and if so, what were the documents or materials seized during the search, but suffice to note that in the coruse of the assessment proceedings the assessing offrcer communicated with the Directorate of Revenue Intelligence (DRI) in response to which a letter dated 0I.12.1995 was received. Along with the letter, a statement dated 28.12.1994 was also received by the assessing offtcer, which was that of one Sheikh Suad Bin Abdullah Rashid Al Nuaimi, President of the Economic Depaftment, PO Box No.870, Ajmen, U.A.E. The letter is reproduced in the assessment order and therefore is not reproduced here. Suffice to note that thb Sheikh stated that he was a partner of Taj and that he has never heard of MSIL from whom his firm was supposed to have imported synthetic rubber sole sheets, that he has never met or heard of Pavan Sachdeva, one of the Directors of MSIL and that the order said to have placed by Taj with MSIL by letter dated 18.01.1993 for 10 consignments of 53077 rubber sheets for a total cost of US $ 10,615,380 was not actually a letter written by Taj, that the letter did not contain any specifications which was quite unusual for an order of irnport, that he has seen a list of 155 shipping consigrunents. sent by MSIL between 16.03.1993 and 11,03.1994 for a total FOB value of US $ 10,615,392, that he was not aware of any such shipping consignment imported by Taj into Dubai and that the name of Taj has been misused in the documents. On the basis of this letter, the assessing officer wrotg to MSIL and sought its explanation. The assessee by letter dated 27.I1.1995 submitted that the export orders received from Taj were subrnitted in original with the appliqation for license submitted to the Directorate 1T A 999 I 200 6, 210 12007, 57 5 12007, r39 4 | 2009 & | 47 12007 Page 3 of 15

nl General of Foreign Trade (DGFT), that the synthetic rubber sole sheets were in fact exported to Taj and the entire sale proceeds were realised through Bank of Baroda from the banker of Taj in Dubai. 3. The assessing officer was not satisfied with the assessee's reply. It would appear that the assessee had also submitted replies to the DRI vide its letters dated 23.08.1995 and 0l .12.1995.- The assessee also submitted a letter to the assessing officer on 04.03.1996 attaching a photocopy of another statement of the Sheilch iir which tlre Sheikh had withdrawn his earlier statement dated 28.12.1994. The assessing officer was not prepared to accept the retraction of the Sheikh for the reasons that it was undated, that it was not sworn to before an Oath Commissioner, that the original was not available, that the statement was not collected tluough any government agency, etc. In its earlier letter dated 27.11.1995, the assessee had stated to the assessing officer that the Sheil<h was upset with the asgessee's refusal to give certain amount of discount and that was the reason for his giving a statement on 28.12.1994 denying the imports. All flrese submissions of the assessee were brushed aside by the assessing officer for the reasons stated above and also because he suspected that the second statement, retracting his earlier statement, was issued at the behest of the assessee. It would also appear that the Assessing Officer had conducted some inquiries through the enforcement directorate regarding the genuineness of Taj in Dubai and the letter issued by the Sheikh on 28.12.1994. According to the information received by letter dated 08.01.1996 from the Consulate General of India, Dubai the following was the position: - i) IWs. Taj Al Khaleej General Trading Co. Dubai was not existing at the time of verification i.e. June 1994. ii) However during the period namely Jan. 1993 a finn in the name of Taj Al Khaleej General Trading Co. was existing in Dubai. rr A 999 I 2006, 2 l0 12007, 57 s 12007, 139 4 | 2009 & | 47 12007 Page 4 of 15

I )t/ iil) The Prop. of the firm was sheikh Suad Bin Abdullah Rashid Al Nuaimi. rv) When contacted Sh. Sheikh Suad Bin Abdullah Rashid Al Nuaimi confrmed the issuance of the letter dated 28-12.94- v) Sheiklr Nuaimi informed that the contents of the letter dated 28.12.94 are correct and that he issued the same as per the advice tendered by his legal consultant. 4. In the light of the aforesaid facts the assessing officer held that there were no exports made by the assessee to Taj and no deduction under Section 80HHC was allowable. He accordingly denied the. deduction. However, the amount of <6,05,43,627/- was treated as income of the assessee under the head "income from other sources" since the money had actually been received by the assessee. Thus the total income of the assessee was computed at t6,05,46,1971- which consisted of the returned income of 72,5701- and the addition of {6,05,43 ,627/- as "income from other sources". 5. The assessee appealed to the CIT (Appeals) who heard both the assessee as well as assessing ofFrcer and passed an order on 19.03.1997. Before the CIT (Appeals) the assessee adduced additional evidence under Rule 464 of the Income Tax Rules, 1962 to show remittances received from Taj through banking channels, for purchase of raw material and manufacture of goods as also evidence to show that the goods were shipped to Dubai. The additional evidence was admitted by the CIT (Appeals) who eventually held that since the assessment was made on the basis of a single statement of the Sheikh who had retracted the staternent and since the second statement of the Sheiklr fited by MSIL was not tested by cross-examination, the case was required to be remanded to the assessing offtcer to be examined and fi'amed afresh. He accordingly remitted the matter to the assessing officer. tT A 999 t 200 6, 21 0 12007, 57 5 12007, r39 412009 &. | 47 12007 Page 5 of l5

I )) 6. In giving effect to the order of the CIT (Appeals), the assessing ofhcer on 10.02.1999,granted an opportunity to MSIL to produce the Sheildr.and also issued sunmons to him under Section 131. He had also sent ietters to the Sheikh on 24.02.1997 and 25.03.1997 which remained unanswered by the Sheikh. The Sheikh also did not appeal pursirant to the summons issued under Section 131 and, therefore, he could not be examined or cross-examined either by the assessing officer or by the assessee. On 05.03.1999 the assessee submitted the documents in its'possession to show that the exports were genuine. The assessing offlcer, however, in the fresh order of assessment passed on 31.03.1999 under Section 143(3) read with Section 250 of the Abt, again held that the exports to Taj were not bona fide, that the deduction under Section 80HHC was not allowable and that the export proceeds have to be considered as "income from other sources". 7. Against the fresh assessment order the assessee frled an appeal to the CIT (Appeals) who passed an order on 21.11.2001. In brief, he held that in view of the inquiries conducted, it was evident that the exports made by MSIL were not genuine and bonafide and, therefore, the assessing officer was justified in not allowing deduction under Section 80 HHC and in assessing the amount under the head "income from other sources". 8. The assessee, aggrieved by the above order of the CIT (Appeals), prefened a further appeal to the Tribunal which, on a consideration of the entire conspectus of the facts and the evidence, held as follows: - (i) The income tax authorities had disallowed the assessee's claim only on the basis of the statement of the Sheikh made on28.72.1994 and had ignored the documentary evidence adduced by the assessee showing export sale of <1I.47 crores. The assessing officer had also held that the expenses on electricity and water amounted only to <57,9811- and wages amounted only to tTA 999/2006,21012007 , s7 512007 , 139412009 & 14712007 Page 6 of 15

<14,4001- from which goods of the value of tl I to 12 crores cannot be manufactured. In coming to this conclusion, the assessing officer has ignored the evidence adduced by the assessee that it was getting flre work done through job work undertaken by its sister concerns. (ii) Since the assessee was getting the job done through sister concerns, the . fact that it possessed machinery of only <2,72,2491- was irrelevant. ' (iii) The assessee did not claim at any point that the entire goods.were manufactured by it. (iv) Neither the assessee nor the assessing officer could succeed in producing the Sheikh for further examination on his statements. However, the assessee has been able to lead sufficient documentary evidence to show that the exports were genuine. This included the following: - "1. Ortginal Bank Certificate fronz ANZ Grindlays Bank Dubai, UAE showing bills received by'the bank and drawn on M.S. Tai AI Khaleej General Trading Coy. By the assessee after being paid by the . bank. 2. Export orders confirmed by M.S. Taj Al Khaleej. 3. Original statement showing uedit limitfor M.S. Tai Al Khaleei by "Export Credit Gaurantee Corporation of Indta" a Govt. of India Undertaking. 4. Particulars of exports duly endorsed by Customs authorities in the "Duty Entitlement Exemption Certificate" (DEEC Book). 5. Bank certificate for export realization. 6. Exchange control declarationfrom RBL 7. Exchange control declarationfrom RBI. 8. Attested Customs shipping bill certifying exports." rT A 9 99 I 2006, 21 0 12007, 57 5 12007, 139 4 | 2009 &. 1 47 12007 Page 7 of 15 o l'

,/ D{ I (v) The assessee was also able to adduce the following further documents in support of its claim before the CIT (Appeals): - "(l) Courier receipt of communication dispatched by TAKGT to ITO. (2) Applicationfor VISA of Pawarn Sachdeva. (3) A letter fi'orn TAKGT to the Consulate General, Indian Embassy, Dubai. (4) Letter from TAKGT to MS Internationhl Ltd., Delhi giving details of order placed by them' (5) Invoice No.92R-912 dated 17.9.92 of Ms Fuji Chemicals Developntent Do. (sic.) Ltd., Tolgto for import of 16.8 MT of Synthetic Rubber. (6) BilI of lading No.A6-65245A dated 28-9-92 issued by Ev er gr e en Jap an C o rp or at ion. (7) BilI of entry for Home copsumption No.243l/92-93 dated 29.10.92. (s) BtlI No.11402 dt. 9.11.92 of luI/s. N.G. Bhanushali & Co. clearing agents regarding clearing of goods from Bontbay Port. (9) Gooils receipt (GR) copy No.5889 and 5B9I dated 7.11.92 of IvI/s Haryana Golden Transport for dispatch of goodsf'om Bombay to Delhi. (10) Transport bilt No.HGT/DLII/392 dt. I6.iI-92 and HGT/DLI-I/389 dt. 16.1 1.92 of A,I/s Haryana Golden Transport. (11) Octroi Receipts. (12) Invoice No.MI/I0 dated 16.10.92 drawn in favour of ArI/s Vikhuda Overseas Corporation for export of 3800 Synthetic rubber Sheets., GR. No.AB 479852. (13) Bill of lading dated 23.12.92 issued by Mitsui O.S.K. Lines ltd. against invoice No.M 1/10. .T\ rr A 999 12006, 2t 0 I 2007, s7 5 12007, r39 4 | 2009 & | 47 12007 Page 8 of 15

)rb (14) Custonts shipping BiII No.5974 dated 17.12.92. (15) Invoice No,MI/68 dated 21.1.93 for export of 1400 Synthetic Rubber Sheets. GR No.AB 3951 16. (16) Bill of {ading No.APLU 00441197i dated 29.3.93 issued by American President Lines Ltd. (17) Customs Shipping BiIl No.9452 dated 22.1.93. (IS) Duty Exmption Entitlement Certificate Book. Issued and maintained by Deptt. of Revenue (Customs), Govt. of India Bearing Serial No.055526, containing particulars of DEEC, value of the imports Licence fl.20 crores (Advance Licence), Assessee's Commitment to export goods of that value, particulars of exports made" (vi) In addition to the above the assessee also produced evidence to show flrat the remittances for the export sale were received from Dubai'tluough banking channels which has been overlooked by the assessing offtcer. ("iD The income tax authorities have.ignored the fact that the assesseb had exported similar goods to other foreign buyers which have not been doubted by thern. Further, the Sheildr had stated that Taj was not only importing from MSIL but also fi'om its sister concerns. 9. With regard to the statements of the Sheikh, the Tribunal found that in the first statement dated 28.12.1994, he had denied making any purchases fi'om MSIL. This was sought to be explained by the assessee before the Triburial on the glound that it was given at the behest of IWs. Gujarat Apar Polymer Ltd., a business rival which had complained to the Ministry of Commerce on the basis of which inquiries were initiated .,!V th" government and this had.put pressure on the Sheikh who wanted to dissociate himself from the assessee. It was only when the difficulties were removed that the tT A 999 I 2006, 21 0 12007, 57 5 12007, 139 4 I 2009 &. r 47 12007 Page 9 of 15

&T Sheikh came forward to make a statement retracting his earlier statement. The Tribunal has noted the assessee;s submission in para 11 of its order as follows: - "Il. According to the assessee, the statement dated 28.12.94 by the Sheikh denying the purchases from the assessee was made on the basis of a complaint lodged by the hostile business rival of the assessee company, namely IuI/s. Gujarat Apar Polymers ltd. with the Minister of Commerce and on the strength of that contplaint enquiries were initiated by the Government and, therefore, under pressure the Sheilch made that statement to avoid serious trouble. However, when these complications were removed, the Sheikh'agreed to make statement lo bring out the true facts denying his previous statement stating the circumstances under which that statement was made and fully accepting the export sales ntade to him by the assessee company Along with his statement an annexure was also appended detailing the documentary evidence to support the factum of intports made by the firm of the Sheikh from the assessee company The assessee also claims that the copy of this statement was also directly faxed by the Sheikh to the AO and also enclosing the entire documentary evidence fonvarded it by sending another copy through courier to the AO. The Sheikh also filed an ffidavit, which has been authenticated by Ministry of Foreign ffiirs Shariah as well as by Dubai Chamber of Contmerce and Industry. In this ffidavit. Sheikh Rasheed has clearly admitted that all the orders sent by the assessee and tts other companies were placed by TAKGT and that the ossessee and is other group cornpanies have not aII misused the name of TAKGT company. In this very ffidavit, the Sheikhfurther slated that all the orders were placed by the representative of his company, TAKGT, in Dubai and that he was aware of all the imports of every kind done by TAKGT front the assessee's group. Further, in the affidavit, the sheikh explained that the statement dated 28.12.94 was made by hint on the deceit practiced by the representatives of fuI/s. Guiarat Apart Polymer Ltd. and its la'wyer and that the statement does not have any authenticity at all. The Shetkh further admitted that the telephone number and the P.O. ntmber given on the order form placed with M.S. group were being used by TAKGT. Further that no dues against any bills were to be paid and that all the payntents have already been made from his accounts in A & Z Gribndlays Bank, Deira, Dubai. There was a coy of another declaration from Sheikh Rasheed which was dated and also authenticated by Dubai Chamber of Commerce and Industry, which repeats the same story to the ffict that the orders IT A 999 12006, 21 0 12007, s7 s D007, 139 4 12009 & | 47 12007 Page l0 ofl5

, placed with M.S. Group were genuine. It means that the Sheikh in his subsequent declaratton and the ffidmit, the genuineness of which has also been accepted and communicated to the Additional Director General Foreign Trade by tlTe Consulate General of India in their letter dated 12.5.97 placed at, pages 58 & 59 of the paper book of the assessee, mentioned that the letter dated 28.12.94 was not registered, whereas, his subsequent affidavits were registered and in the ffidavit dated 13.1.97 his signature have been legalized by Dubai Chamber of Commerce and Industry, which has also been enclosed by UAJ Ministry of foreign ffiirs and os the ffidavit dt. 13.1.97 has been legalized by Dubai Chamber of Commerce and Industry, which has , also been enclosed by UAI Ministry of foreign Affairs and as the ffidavit dt. Ii.1.97 has been legalized it may have to be considered as ' authentic." 10. With reference to the aforesaid submissions of the assessee, the Tribunal opirred as follows: - "We ore of the opinion that in case the AO was relying upon the statement of the Sheikh dated 28.12.94 the opportunity should also have been afforded to the assessee to cross examine the Sheikh and in the absence of same no reliance could also be placed on such statement. Further, the second statement ntade by the Sheikh, fully retracting from the earlier statement made by him also of course cannot be safely relied upon because the AO is deprived front the opportunity of cross examining the Sheikh as he did not choose to appear for this purpose. As regards the ffidavit of the Sheikh in support of his retraction f'om the statement made earlier dated 28.12.94, admitting the export purchases madefi'om the assessee and the payments being ntade through banking channels as claimed by the assessee, the Consulate General of India's ffice in the letter to additional Director of Foreign Trade has confirnrcd the genuineness of the ffidavit of the Sheikh, onwhich the signature of the Sheikhwere legalized the affidavit was registered by the Dubai Chamber of Commerce & Industry and has also been endorsed by the UAE Ministry of Foreign Affairs. In these facts it may not be safe to rely upon the unauthenticated statement made by the Sheikh, but, at the same time is would also not be fair on the part of tax authorities re the affidavit, for contradicting which neither is been ntade nor any evidence has been brought the department. Fact remains that when 1T A 999 12006, 2r0 12007, 57 s | 2007, | 39 4 I 2009 & A7 n007 Page Il of15

.t the assessee from the documentary evidence is able to prove the export sales made by it to the Sheikh's company TAKGT, Dubai, and having received the amount of {6,05,43,627/- as remittance for the same, through banking channel of Dubai in the Indian Bank the export sales made by the assessee cannot be disbelieved on the solitary statement of the Sheikh.made earlier on 28.12.94, when the sanxe was subsequently retracted by the Sheikh himself in a duly authenticated affidavit." t . 11. After examining.the documentary evidence placed by the assessee the Tribunal held that there was nlo basis to disbelieve the entire documentary evidence merely because of the statement of the Sheikh made on28.12.1994. The Tribunal finally held that the tax authorities were not justified in treating the export sale made by the assessee to Taj, Dubai as non-genuine and in refusing flre deduction claimed under Section 80HHC. The Tribunal also deleted the addition of the amount of <6,05,43,627I- as "income from other sources". 12. Similar orders were passed in the case of MSIL for the assessment yeu 1994- 95. In the case of M.S. Shoes East Ltd. and the case of Pearl Intercontinental Ltd. also the Tribunal took the same view. It may be noted that in these cases also the assessees had claimed the deduction under Section 80HHC in respect of the exports made to Taj which were disbelieved. The export proceeds were assessed as "income from other sources". In the case of M.S. Shoes East Ltd., the assessing officer also imposed a penalty of {59,58,588/- under Section 271(1)(c) of the Act for concealment of income. The penalty was cancelled by the Tribunal since it had deleted the addition madb under the head "income fi'om other sources" and also allowed the assessee's claim for deduction under Section S0HHC. 13. The contention of the standing counsel for the Revenue is that the finding of the Tribunal in all the cases is perverse as it has overlooked the first staternent of the Sheikh made on28.12.I994 and,has given,-drr" weightage to the reiraction and to the rr A 999 1200 6, 2r0 /2007, s7 5 12Q07, t39 4 | 2009 & 1 47 /2A07 Page 12 of15

:\ ?20 affidavit dated 13.01.1997 which was filed by the assessee in the course of the fresh assessment proceedings. The contention of the assessee, who appeared through its Managing Director, is that the Tribunal has taken the decision on the basis of the evidence adduced before the income tax aulhorities including copious documentary evidence and has not chosen to'go only by the first statement made by the Sheikh. He further pointed out that the Tribunal has referred to all the three statements of the Sheikh and has held, on a proper appreciation of them, that the retraction and ihe affrdavit dated 73.0I.1997 contained the truth and should be believed. It is contended that there is nothing brought on record to show that the findings of the Tribunal are peryerse,. nor was there any inherent improbability in the evidence adduced by the assessee in order that the conclusion of the Tribunal may be criticized as inational. 14. On a fair reading of the order of the Tribunal, we are unable to say that its appreciation of the evidence is contrary to law. We have already adverted to the documentary evidence which was placed before the income tax authorities in both the rounds of the proceedings as also before the Tribunal. The Tribunal has taken note of every item of evidence, including the tluee statements of the Sheikh. It has preferred to rest its decision on the overwhelming documentary evidence adduced by the assessee to prove the exports which included conespondence with the govenrmental authorities, their approvals, etc: None of the docurnentary "vide.t"e has been impeached or sought to be discredited on behalf of the Revenue.' The Tribunal has also taken due notice of the statements of the Sheikh and has prefered to accept the retraction, supported later by the affidavit dated 13.01.1997 sworn to by hirn before the Indian Consulate at Dubai. No material has been brought on record or in the course of the proceedings before the Tribunal to tluow any doubt on the credibility of the affrdavit sworn to before the Indian Consulate in Dubai. The Sheildl was neither .produced by the assessing officer nor by the assessee and he was not subjected to any examination or cross-examination by the income tax authorities. It is in these tT A 999 12006, 21 0 12007, 57 5 12007, 139 412009 & | 47 12007 Page 13 of15

"l 2l circumstances that the Tribunal has chosen to accept the retraction of the Sheikh, supported by the affrdavit. Added to this is the fact that there was copious documentary evidence in support of the exports. The decision taken by the Tribunal is not, in our opinion, vulnerable to the charge that it'has been arrived at by ignoring relevant material or evidence or by taking into account irrelevant evidence or material. The findings of the Tribunal are essentially findings of fact and they cannot be subjected to the criticism of being unreasonable or perverse or irrational. It has been held by the Supreme Court in Sree Meenakshi Mills Ltd. v. CIT, (1957) 31 ITR 28 as follows: - ".....1t has been held on the corresponding provisiorts in the English Income-tax statutes that a finding on a question of fact ts open to attaclc as erroneous in law only if it is not supported by any evidence, or if it is unreasonable and perverse, but that where there is evidence to consider, the decision of the Tribunal is final even though the Court might not, on the materials, have conte to the same conclusion if it had the power to substitute its own judgment. In Great Western Ratlway. Co. v. Bater(l), Lord Atkinson observed: - ' "Their (Comntissioners') determinations of questions of . pure fact are not to be disturbed, any more than are the find.ings of a jury, unless it ihould appear that there was no evidence before them upon which they, as reasonable men, could come to the conclusion to which they have come: and this, even though the Court of Review would on the evidence have conxe to a conclusion entir ely dffir ent fr om theirs." To the same effect arelthe observations of the Supreme court in CITv. Daulat Ram Rawatmull, (1973) 87 IIR 349 - I ".....Before dealing with the facts of this case, we may advert to the , principles which should govern the decisions of the court in such like cases. Findings on questions of pure fact arrived at by the Tribunal are not to be disturbed by the High Court on a reference unless it rr A 999/2006, 21012007 , s7 s12007 , 139412009 & 147 D007 Page 14 of 15

z)/ appears that there was no evidence before the .Tribunal upon yhlch nly, as a reasonable men, could come to the conclusion to which they have come; and this is so, even though the High court would on the evidence have come to a conclusion intirely dffirent from that of ryt Tribunal'Inotherwordssuchafindingcanbereviewedonlyonthe ground that there is no evidenrn io tupport it or that it is perverse""''.' 14. We are, therefore, satisfied that the Tribunal committed no error in holding that the assessees were entitled to the deduction under section 80HHC of the Act in respect of the exporl of goods to Taj and that the assessing officer was not justified in assessing the export proceeds not as business income but as "income from other sources". The substantial questions of law in ITA No'999/20 06, 139412009 ' 210/2006 and 51512007 areanswered in the affinnative, in favour of the assessee and against the Revenue. The Tribunal was also right in cancelling the penalty imposed on the assessee iws. M. s. shoes East Ltd. (ITA No.14712006). All the substantial questions of law are thus answered in favour of the assessee' The appeals of the Revenue are accordingly dismissed with no order as to costs' la 1y'4-.,n -< ', 6n.V. EASwAR) JUDGE (s. RAVINDRA BHAT) JT]DGE SEPTEMBER28,2012 hs LT A igg 12006, 210t2007,'s7 5 l2oo7, 139412009 &' 147 12007 Page 15 of15 t, ( tr I 't