Claim of export turnover if foreign exchange not realised in specified period u/s 80HHC tantamount to deemed concealment of income

Brief of the Case

ITAT Mumbai held In the case of Emblem Fashion Wear Exports Pvt. Ltd. vs. ITO that the assessee did not obtain approval, either pre or post facto, from the competent authority, as required by law. Also the assessee did not apply for any extension of time. The payment in each case stands received much after the lapse of the six month period i.e., from as low as two years from the date of raising the bills, to a maximum of six years. No explanation for the inordinate delay has been furnished by the assessee. Further, the payments have not been received by the date of the filing the return, and which does not state the fact that no approval stands received or is even awaited. Hence, the assessee, in clear contravention of law, claims deduction u/s.80-HHC by considering it as a part of the export turnover. Accordingly, to the extent the assessee has claimed the impugned turnover as export turnover, there is furnishing of inaccurate particulars of income, and to the extent the assessee has no explanation for the said turnover as qualifying as export turnover and, therefore, there is deemed concealment of particulars of income in terms of Explanation 1 to section 271(1)(c).

Facts of the Case

The assessee filed its return of income for the year on 01.12.2013 at nil income, claiming deduction u/s. 80-HHC at Rs.13,78,338/-, restricting it, though, to the amount of income available prior to such deduction, i.e., Rs.6,00,162/-. Examining the same in the verification proceedings under the Act, the assessee’s claim was considered as deficient by the Assessing Officer (A.O.) on two scores: the assessee could not support its claim of export in relation to two invoices issued to M/s. Andrews Sports Club Inc. USA. for an aggregate of Rs.24,21,160/- and non receipt of export proceeds (i.e., in convertible foreign exchange) within six months from the end of the relevant previous year. No instruction from Reserve Bank of India (RBI) had in fact been applied for. The assessee having found favour with the Tribunal, i.e., in the quantum proceedings, on the first issue, the only thing that survives for the purpose of levy of penalty u/s. 271(1) (c) is the penalty qua the disallowance on the second issue.

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