The Commissioner of Income Tax-II vs. M/s.Gowra Leasing AND Finance Ltd

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 271 / 2008 Commissioner of Income Tax-I, New Central Revenue Building, Statute Circle, Jaipur (Raj.). ----Appellant Versus M/S Silver Mines, Chamaliwala Market, M.I. Road, Jaipur. ----Respondent _____________________________________________________ For Appellant(s) : Mr. Anuroop Singhi with Mr. Aditya Vijay _____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE DR. JUSTICE VIRENDRA KUMAR MATHUR Judgment Per Hon’ble Jhaveri, J. 22/05/2017 1. By way of this appeal, the appellant has challenged the judgment and order of the Tribunal whereby the Tribunal has dismissed the appeal of the department and allowed the appeal of the assessee. 2. This Court while admitting the appeal on 04.05.2009 has framed the following substantial questions of law: “(i) Whether the Tribunal was justified in allowing the relief which was not even prayed by the assessee in its Cross Objections, as the assessee was aggrieved by the order of this CIT(A) to the extent that it has not decided the grounds raised by its regarding various additions, whereas the Tribunal has proceeded much ahead and has deleted those additions? (ii) Whether the Tribunal was justified in holding that in reassessment fishing inquiries cannot be made, whereas it is a settled proposition that once the reassessment proceedings are pending, the

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entire assessment is open and not confined to scope of reasons recorded by the Assessing Officer?” 3. However, the issue is squarely covered by the decision of this Court in the case of S. Kasliwal & Co. vs. The Assistant Commissioner of Income Tax in DB Income Tax Appeal No.53/2004, decided on 20.02.2015 wherein this court in para 4 to 8 has observed as under: “4. The Rajasthan High Court in several decisions, has consistently taken the same view, in Jewels Emporium & Ors. v. Union of India & Ors. (2003) 262 ITR 304 (Raj.), Commissioner of Income Tax v. Jewels Emporium (2003) 131 TAXMAN 266 (Raj.) Commissioner of Income Tax v. Rajendra Kasliwal (2004) 271 ITR 448 (Raj.) Commissioner of Income Tax v. Motilal R. Minda (2001) 250 ITR 831 (Raj.) and Income Tax Officer v. Vaibhav Textiles (2002) 258 ITR 346 (Raj.). The Allahabad High Court has also taken the same view in Marble Men v. Commissioner of Income Tax & Ors. (2005) 272 ITR 81 (All.)) following its earlier judgments. 5. Learned counsel appearing for the Income Tax Department-respondent tried to distinguish the decision, on the ground that the language used in the Explanation (aa) of sub-section (4C) of Section 80HHC of the Income Tax Act. He submits that unless there is proof of the clearance at any Customs Station, as defined under Section 2(13) of the Customs Act, 1962, the exemption was not allowable by the assessing authority. He submits that the burden of proof of clearance at any Customs Station was on the assessee, and that since there were no documents produced recording any clearance at any Customs Station, as defined under Section 2(13) of the Customs Act, 1962, the exemption was not allowable by the assessing authority. He submits that the burden of proof of clearance at any Customs Station was on

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the assessee, and that since there were no documents

produced

recording

any clearance at any Customs Station, the exemption was denied under Section 80HHC of the Income Tax Act. 6. The explanation (aa) of sub-section (4C) of Section 80HHC of the Income Tax Act reads as follows: "(aa) "export out of India" shall not include any transaction by way of sale or otherwise, in a shop, emporium or any other establishment situate in India, not involving clearance at any customs station as defined in the Customs Act, 1962 (52 of 1962)." 7. In the present case, the assessee had produced the 'Sale to Foreign Tourists Voucher', which not only recorded the name and address of the customers (tourist), but also his/her passport number and the declaration given by him that the goods will not be gifted or sold in India. The goods were sold at the counter at the shop/emporium to be taken out of the country,

which

necessarily

involved clearance of baggage, by the customs authorities. No further proof, nor any document in proof of clearance of the goods at the Customs Station by the assessee is required. The declaration in the form of Sale to Foreign Tourist Voucher, for sale made against the convertible foreign exchange with the undertaking that the goods will not be gifted or sold in India, was sufficient proof for export out of India. Unless anything contrary was alleged and proved or any material was found by the department, it was not necessary for the assessee to have produced the documents of clearance of goods sold by him to the foreign tourists at any Customs Station, nor it was feasible. The Explanation (aa) is not a rule of evidence, nor raises any presumption of such sale, which is not for export of goods out of India. It also does not require submission of any proof of clearance at any Customs Station. The explanation is couched in double negative terms. It is a rule of exclusion which excludes only those transactions, which do not involve clearance at any Customs Station. It cannot be read in a manner, as suggested by learned counsel

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appearing for the department that a proof of customs clearance of baggage must be provided to establish the export of goods out of India for the purpose of deduction of profits on such sales under Section 80HHC of the Income Tax Act. 8. The question of law is even otherwise covered by judgment of the Supreme Court in Commissioner of Income Tax v. Silver & Arts Palace (supra), which has been followed by the Rajasthan High Court consistently. The facts and circumstances of the case are not distinguishable to take a different view in the matter. The question is, thus, decided in favour of the assessee and against the department. The Income Tax Appeal is allowed. The Income Tax Department will proceed in accordance with the decision on the question decided in favour of the assessee.”