Commissioner of Income Tax Del v. M.S.Shoes East Ltd

\Y $-14 to 17 * IN TI{E HIGH COURT OF DELHI AT N-EW DELHI Reserved on:.30'h August, 2012 % Date of Decision: 28t" September, 2012 + tT|t394t2009 COMMISSIONER OF INCOME TAX .... Appellant VERSUS iv{/S. M.S. INTERNATIONAL LTD. .... Respondent + tTA2I0t2007 + tTAL47t2007 COMMISSIONER OF INCOME TAX .... Appeltant VERSUS M.S. SHOES EAST LTD. .... Respondent + tT4575t2007 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, 21 0 12007, 57 5 12007 and | 47 12007 . Mr. Sanjeev Sabharwal, Sr. Standing Counsel with Nft. 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. 139 4 12009, 210 12007, 57 5 n007 & | 47 12007 Page I of2 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. \( CORAM: MR. JUSTICE S. RAVINDRA BHAT MR. JUSTICE R.V. EASWAR

¶1Whether Reporters of local papers may be allowed to see the judgment?

¶2To be referred to the Reporters or not?

¶3Whether the judgment should be reported in the Digest? R.V. EASWAR, J.: For order see ITA No.999/2009. ,lfllr\ lfVl *t-<--t (R.v:EASwAR) JTIDGE SEPTEMBER28,2012 hs ITA Nos. 139 412009, 21012007, 57 5 12007 & | 47 12007 (s. RAVnIDRA BHAT) JT'DGE Page2 of? \1 $-13 to 17 * IN THE HIGH COURT OF DELHI AT NEW DELHI Reserved on:. 30't' August, 2012 % Date of Decision: 28tt' September, 2012 r-ITA99912006 + ITAl394l2009 ' COMMISSIONER OF INCOME TAX ... Appellant VERSUS I\{/S. M.S. INTERNATIONAL LTD. .... Respondent + ITA2t0l2007 + TTAL47|2007 COMMISSIONER OF INCOME TAX ..'- Appellant VERSUS M.S. SHOES EAST LTD. .... Respondent I + ITAs75l2007 :, COMMISSIONER OF INCOME TAX .... Appellant VERSUS PEARL INTERCO-NTINENTAL LTD. .... Respondent Present: Mr. Kamal Sawhney, Sr. Standing Counsel for Revenue in ITA Nos.999/2006,21012007 , 57512007 pnd 14712007 . Mr. Sanjeev Sabharwal, Sr. Standing Counsel with M'. Puneet Gupta, Jr. Standing Counsel with Ms. Gayatri Vetma, Adv. in ITA No.139412009. Mr. Pavan Sachdeva, respondent in person in all rnatters. lT A 999 I 2006, 2r0 D007, s7 s 12007, | 39 4 | 2009 & | 47 12007 Page I ofl5 \ \ _ _.+\- I 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.Tobe referred to the Reporters or not? )

¶3Whether the 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 leferred to as 'the Act'). The ITA Nos.99912006, 139412009,21012007 and 57512007, though th6y relate to three different assessees, involve a common question, narnely, 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.14712007 involves the question of penalty imposed on the assessee under Section 271(l)(c) of the Act and the question of law is whether the Tribunal was right in cancelling the penalty. This appeal is consequentiai to the fate.of ITA No.210/2007.

¶2The ITA No.999/2006 is taken as the lead matter. The appeal relates to the assessrnent year 1993-94. The respondent-assessee is a public limited company by name 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 offlre assessrnent year 1993-94, relevant to the previous year ended on 31.03.1993, which is practically first year of its operation, it filed a return of income on30.I2.1993 declaring a total income of72,5701-. In the return, the assessee clzrirned deduction of 76,48,92,5491-under Section 80HHC. Included in this was a deduction of {6,05,43 ,6271-in respect of export of synthetic rubber sole sheets to IWs. rT A 999 t 2006, 2t0 1 2007, 57 5 12007, 139 4 1 2009 & 1 47 12007 I ! 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 information that the .assessee is indulging in over plicing 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 through hau,ala 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 officer communicated with the Directorate of Revenue Intelligence (DRI) in response to which a letter dated 0I.I2.lgg5 was received. Along with the letter, a statement dated 28.12.1994 was also received by the assessing officer, which was that of one Sheil<tr Suad Bin Abdullah Rashid Al Nuaimi, President of the Economic Department, PO Box No.870, Ajmen, U.A.E. The letter is reproduced in the assessment order and therefore is not reproduced h6re. Suffice to note that the Sheikh stated that he was a parhrer of Taj and that he has never heard of MSIL from whom his firm was supposed to irave imBorted 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 consignments 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 impofted 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 27.11.1995 submitted that the export orders received from Taj were submitted in original with the application for license submitted to the Directorate rT A 9 99 t2006, 21 Q 12007, 57 5 12007, r39 4 12009 & 1 47 12007 1y 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. i g.. 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 01.12.1995.. The assessee also submitted a letter to the assessing officer on 04.03.1996 attaclnng a photocopy of another statement of the Sheiktr in which the Sheikh had withdrawn his earlier statement dated 28.I2.1gg4. The assessing offiter 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, flrat the statement was not collected through any govenrment agency, etc. In its earlier letter dated 27 .11.1995, the assessee had stated . to the assessing officer that the Sheikh was upset with the assessee's rbfusal to give certain amount of discount and that was the reason for his giving a statement on

28.12.1994 denying the imports. A11 these submissions of the assessee were brushed '.. aside by the assessing offrcer 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 OfFrcer had conducted some inquiries through the enforcement directorate regarding the genuineness of Taj in Dubai and the letter issued by the Shdikh 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) lWs. Taj Al Khaleej General Trading Co. Dubai was not existing at the time of verification i.e. June t994.

ii) However during the period nalely Jan. 1993 a firm in the name of Taj Al Khaleej General Trading Co. was existing in Dubai. rT A 999t2006, 21012007, 57 s 12007, 139412009 &. 147 12007 Page 4 of l5 v,

iii) The Prop. of the firm was Sheikh Suad Bin Abdullah Rashid Al Nualmr.

iv) When contacted Sh. Sheikh Suad Bin Abdullah Rashid Al Nuaimi confirmed the issuance of the letter dated 28.12.94.

v) Sheikh 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.

¶4In 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 80I{HC was aliowable. FIe accordingly 'denied the. deduction. However, the amount of <6,05,43,6271-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 {6,05,46,1971-which consisted of the returned incorne of72,5701-and the addition of T6,05,43 ,6271-as "income from other sources".

¶5The assessee appealed to the CIT (Appeals) who heard both the assessee as well as assessing officer and passed an order on 19.03.1997. Before the CIT (Appeals) the assessee adduced additional evidence under Rule 46A of the Income Tax Rules, 7962to show remittances received from Taj through banking chamels, 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 Sheil*r who had retracted the statement and since the second statement of the Sheikh filed by MSIL was not tested by cross-examination, the case was required to be remanded to the assessing offircer to be examined and framed afresh. He accordingly remitted the matter to the assessing officer. rT A 999 12006, 21 0 1 2007, s7 5 12007, r39 41 2009 & r 47 12007

¶6In giving effect to the order of flre CIT (Appeals), the assessing officer on

10.02.1999 granted an opportumty to MSIL to produce the Sheikh.and also issued sunmons to him under Section 131. He had also sent letters to the Sheikh on

24.02.1997 and 25.03.1997 which remained unanswered by the Sheikh. The Sheikh also did not appear pursuant to the srunmons 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 officer, however, in the fresh order of assessment passed on 31.03.1999 under Section 143(3) read with Section 250 of the Act, 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".

¶7Against the fresh assessment,order the assessee filed an appeal to the CIT (Appeals) who passed an order on 21.1 1 .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".

¶8The assessee, aggrieved by the above order of the CIT (Appeals), preferred 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 on28.12.1994 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 tr A 999 1200 6, 210 12007, 57 5 12Q07, 1 39 4 I 2009 & 1 47 12007 7T <14,400/- from which goods of the value of T11 to 12 clores cannot be manufactured. Itr coming to this conclusion, the assessing officer has ignored the evidence adduced by the assesdee that it was getting the work done through job work undertaken by its sister concerns. (iD Since the assessee was getting the job done through sister concerns, the fact that it possessed machinery of only <2,72,2491-was irrelevant. ' (iiD The assessee did not claim at any point that the entire goods.were manufactured by it.

(iv) Neither the assessee nor the assessing ofFtcer could .succeed in producing the Sheikh for fruther examination on his statements. However, the assessee has been able to lead sufhcient docurnentary evidence to show that" the exports were genuine. This included the following: - "1. Original Bank Certificate from ANZ Grindlays Bank, Dubai, UAE showing bills received by the bank and drawn on M.S. Tai Al Khaleej General Trading Coy. By the assessee after being paid by the bank'

¶2Export orders confirmed by M.S. Tai Al Khaleei.

¶3Original statement showing credit limit for M.S. Tai AI l(haleej by "Export credit Gaurantee corporation of India" a Govt. of India Undertaking.

¶4Particulars of exports duly endorsed by Customs authorities in the "Duty Entittement Exemption Certificate" (DEEC Book).

¶5Bank certificate for export realization.

¶6Exchange control declarationfrom RBI-

¶7Exchange control declarationfrom RBI.

¶8Attested Custorms shipping bill certifying exports." tT A 999 t2006, 21 0 12007, 57 5 n007, 1 39 4 | 2009 &. | 47 n007 Page 7 of I5 1*

(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 td ITO.

(2) Applicationfor VISA of Pmuan Sachdeva.

(3) A letter from TAKGT to the Consulate General, Indian Entbassy, 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 IUI/s Fuji Chemtcals Developntent Do. (sic.) Ltd., TolEo for import of

16.8 MT of SYnthetic Rubber.

(6) Bill of lading No.A6-65245A dated 28-9-92 issued by Ev er gr e en Jap an C orP or ation.

(7) Bill of gntry for Home conswnption No.2431/92-93 dated 29.10.92.

(S) BilI No.11402 dt, 9.11.92 of IUI/s. N'G' Bhanushali & Co. clearing agents regarding clearing of goods from Bombay Port.

(9) Goods receipt (GR) copy No.5889 and 5891 dated

7.tl.g2 of lut/s Haryana Golden Transport for dispatch of goodsfi'om Bombay to Delhi. : (10) Transpori bitl No.HGT/DLW3/2 dt. 16'11-92 and HGT/DLW3B9 dt. 16.;/1.92 of A,t/s Haryana GoldenTransport,

(11) Octroi Receipts.

(12) Invoice No.MI/I0 dated 16'10'92'drawn in favour of Iuf/s Vikhuda Overseas Corporation. for export of jB00 Synthetic rubber Sheets., GR. No.AB 479852' .(13) Bilt of lading dated 23.12.92 issued bv Mitsui O.S.K Lines ltd. against invoice No.M 1/10. tr A g9g 12006, 2 | o 12007, s7 5 12007, 139 412009 &. | 47 12007 LT

(14) Custonts shipping Bill No.5974 dated 17.12.92. (1, Invoice No.MI/68 dpted 21.1.93 for export of 1400 Synthetic Rubber Sheets. GRNo.AB 3"95116.

(16) BilI of 'lading No.APLU 004411973 dated 29.3'93 issued by American President Ltnes Ltd.

(17) Customs Shipping Bill No.9452 dated 22.1.93.

(18) Duty Exynption 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." (vD In addition to the above the assessee also produced evidence to show that the remittances for the export sale were received from Dubai'through banking channels which has been overlooked by the assessing officer. ("iD The incorre tax authorities have.ignored the fact that the assessee had exported similar goods to other foreign buyers which have not been doubted by them. Further, the Sheikh had stated that Taj was'not only importing from MSIL but also from its sister concems.

¶9With. 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 fiom MSIL. This was souglrt to be explained by the assessee before the Tribunal on the ground 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 by the. government and this had put pressure on the Sheikh who wanted to dissociate himself from the assessee. It was only when the difFrculties were removed that the rT A 999 | 2006, 21 0 | 2007, 57 5 n007, r39 4 12009 & A7 n007 Page 9 of15 Sheildr 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 front the assessee was made on the basis of a complaint lodged by the hostile business rival of the assessee company, namely IWs Gujarat Apar Polymers ltd. with the Minister"of Comnterce and on the strength of that complaint enquiries were initiated by the Government and, therefore, under pressure the Sheikh made that statement to avoid serious trouble. However, when these complications were removed, the Sheikh agreed to make statement to bring out the true facts denying his previous statement stating"the circumstances under which that statement waE made and fully accepting the export sales made to him by the assessee conrpany. Alongwith his statement an annexure was also appended detailing the documentary evidence to support the factum of inports ntade 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 forwarded it by sending another copy through courier to the AO. The Sheikh also filed an ffidavit, which has been authenticated by Ministry of Foreign Affairs Sharjah as well as by Dubai Chanfter of Conrmerce and Industry. In this ffidavit. Sheikh Rasheed has clearly admitted that all the orders sent by the assessee and its other companies were placed by TAKGT and that the assessee and is other group companies hqve not all misused the nante 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 inzports of every kind done by TAKGT from the assessee's group. Further, in the ffidavit, the sheikh explained that the statement dated 28.12.94 was made by him on the deceit practiced by the representatives of Ms Gujarat Apart Polynter Ltd. and tts lawyer and that the statement does not have any . authenticity at all. The Sheikh further admitted that the telephone number and the P.O. number 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 tlte payments havq already been made from his accounts in A & Z Gribndlays Banh Deira, Dubai. There waE 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 rT A 999 1 200 6, 21 0 12007, 57 5 12007, 1 39 4 12009 & A7 n007 Page l0 of l5 placed with M.S. Group were genuine. It means that the Sheikh in his subsequent declaration and the ffidavit, the genuineness of u,hich has also been accepted and comntunicated to the Additional Director General Foreign Trade by the Consulate General of India in their Ietter dated 12.5.97 placed at, pages 58 & 59 of the paper boolc of the assessee, mentioned that the letter dated 28.12.94 was not registered, whereas, his subsequent ffidavits were registered and in the affidavit 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 Affuirs and as the affidavit dt. 13,.1.97 has been legalized by Dubai Chamber of Commerce and Industry, which has also been enclosed by UAI Ministry of foryign Affuirs and as the ffidavit dt. 1i.1.97 has been legalized it moy have to be considered as authentic."

¶10With reference to the aforesaid submissions of the assessee, the Tribunal opined as follows: - "We are of the opinion that in case the AO was relying upon the statem.ent of the Sheikh dated 28.12.94 the opportunity should also have been affirded 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 made 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 from the opportunity of cross examining the sheikh as he did not choose to ippuo, 7or tiis purpose. As regards the ffidavit of the Sheikh in support of his retraction from the statement made earlier dated

28.12.94, admitting the export purchases made from the assessee and . the payments being made through banking channels as clainted by the ,assessee, the Consulate General of India's ffice in thg letter to additional Director of Foreign Trade has confirmed the genuineness of the ffidavit of the Sheikh, onwhich the signature of the Sheikhwere Iegalized 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 tinte is would also not be fair on the part of tax authorities re the affidavit, for contradicting which neither is been made nor any evidence has been brought the department. Fact remains that when rrA 99912006,21012007 , s7 512007 , t39412009 & r4712007 Page ll of15 the assessee from the documentary evidence is able to prove the export sales made by it to thetsheikh's company TAKGT, Dubai, and having received the amount bf {6,05,43,627/- as remittance for the sanze, through banking channel of'Dubai in the Indian Bank the export sales made by the assessee bannot be disbelieved on the solitary statement of the Sheikh.made earlier on 28.12.94, when the same was subsequently retracted by the Sheikh himself iyt a duly authenticated affidavit."

¶11After examining the documentary evidence placed by the assessee the Tribunal . held that there was no basis to disbelieve the entire documentary .evidence merely because of the statement of the Sheikh made on28.72.1994. The Tribunal finally held that flre tax authorities were not justified in treating the export sale made by flre assessee to Taj, Dubai as non-genuine and in refusing the deduction claimed under Section 80HHC. The Tribunal also deleted the addition of the amount of <6,05,43,627/- as "income from other sources".

¶12Similar orders were passed in the case of MSIL for the assessment year 1994-

¶95In 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 flre deduction uirder Section 80HHC in respect of the exports made to Taj which were disbelieved. The export proceeds were assessed as "incorne from other sources". In the case of M.S. Shoes East Itd., the assessing officer also imposed a penalty of t59,58,588/- under Section 271(l)(c) of the Act for concealment of income. The penalty was cancelled by the Tribunal since it had deleted flre addition madb under the head "income fi'om other sources" and also allowed the assessee's claim for deduction under Section 80HHC.

¶13The 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 statement of the Sheikh made on28.12.1994 andhas given undue weightage to the retraction and to the rT A 999 | 2006, 2 l0 D007, 57 s /2007, r39 4 | 2009 & 1 47 12007 Page 12 of15 b\ -l'r affrdavit dated 13.0I.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 flre decision on the basis of the evidence adduced before the income tax authorities 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 the affidavit dated 13.0I.I997 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 improbabilif,/ in the evidence adduced by the assessee in order that the conclusion of the Tribunal may be criticized as inational.

¶14On 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 Iounds of the proceedings as also before the Tribunal. The Tribunal has taken note of ievery item of evidence, including the three statements of the Sheikh. It has prefered to rest its decision on the overwhelming documentary evidence adduced by the .assessee to prove the exports which included correspondence with the governmental 'authorities, their approvals, etc. None of the documentary evidence 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 preferred to accept the retraction, supported later by the affrdavit dated 13.0I.1997 sworn to by him before the Indian Consulate at Dubai. No material has been brought on record or in the course of the proceedings before the Tribunal to throw any doubt on the credibility of the affidavit sworn to before the Indian Consulate in Dubai. The Sheikh was neither produced by flre assessing offrcer nor by the assessee and he was not subjected to any examination or cross-examination by the income tax authorities. It is in these rT A 999 I 2006, 2r0 12007, 57 5 12007, 139 41 2009 & | 47 12007 Page l3 ofl5 a4 f-; b2/ circumstances that the Tribunal has chosen to accept the retraction of the Sheikh, supported by the affidavit. 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 reievant material or evidence or by taking into account irrelevant evidence or material. The fildings of the Tribunal are essentially findings of fact and they cannot be subjected to the ctiticism ofbeing 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 provisions in the English Income-tax statutes that a finding on a question of fact is open to attack as etoneous in law onty 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 ntight not, on the materials, have come to the same conclusion if it had the power to substitute its own iudgnent. In Great Western Railway Co. v. Bater(I), LordAtkinson observed: - "Their (Commissioners') determinations of questions of pure fact are not to be disturbed, any more than are the Jindings of a jury, unless it should appear that there . was no evidence before them upon whicfu they, as reasonable nten, could come to the conclusion to which they have come: and this, even though the Court of Review would .on the evidence have come to a conclus ion entir ely dffirent fr om their s." To the same effect are;the observations of the Supreme court in CIT v. Daulat Ram Rawatnzull, (1973) 87 IFR 349 - ".....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 aruived at by the Tribunal are not to be disturbed by the High Court on a reference unless it tT A 999 12006, 21 0 1 2007, s7 s 12007, 139 412009 & r 47 12007 *d-,; t( e9

¶14the appears that there was no evidence before the "Tr-ibunal upon which they, as a reasonable men, could come to the conclusion to which they have come; and this is so, even though the High Cour!would on the evidence have conte to a conclusion intirely dffirent from that of the Tribunal. In other words such a finding can be reviewed only ott the ground that there is no evidence to support it or that it is perverse ""'" We are, therefore, satisfied that the Tribunal committed no effor in holding that assessees were entitled to the deduction under Section 80HHC of the Act in respect of the export 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'999/2006,139412009'21012006 and 57512007 arcanswered 1n the afftrmative, in favour of the assessee and against the Revenue. The Tlibunal was also right in cancelling the penalty imposed on the assessee lws. 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' ..nil ' I t,, W\' "*-? " (R.V.EASWAR) JUDGE (s. RAVTNDRA BrrAT) JUDGE SEPTEMBERa&,2012 hs rc e, ggg tzoo e, 2r 0 n007, 57 5 12007., 139 4 12009 & | 47 I 2007 f\ (- 6s i' 'j'i I -.F-t'