Calcutta High Court
Commissioner Of Income-Tax vs Borbheta Estate Pvt. Ltd. on 6 July, 2001
Equivalent citations: [2001]252ITR379(CAL)
JUDGMENT
1. On an application under Section 256(1) of the Income-tax Act, 1961, the Tribunal has referred the following question, set out at page 2 of the paper book for our opinion :
"Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the Commissioner of Income-tax was not empowered under Section 263 of the Income-tax Act, 1961, to direct the Assessing Officer not to allow Rs. 5,00,000 under Section 35CCA of the Act and in that view cancelling the order made under Section 263 of the Act ?"
2. The relevant assessment year is 1985-86. During the course of assessment the Income-tax Officer noticed that the assessee has paid a sum of Rs. 5 lakhs on April 23, 1986, to the Society for Integral Development, No. 2, Church Lane, Calcutta. The said society issued a certificate to the asses-see dated June 30, 1984, certifying that the programme on rural development, in respect of which the assessee made the contribution, has been approved by the prescribed authority before March 1, 1983. The programme involved work of laying roads and sinking tube wells in rural areas and such work commenced before the said date and that the society had authority to issue such certificate.
3. In the return the assessee claimed deduction of that amount under Section 35CCA(2) of the Income-tax Act, 1961. The claim of the assessee on the basis of the contribution made by the assessee to the society was allowed under Section 35CCA.
4. Subsequently, after scrutiny of the assessment records, the Commissioner of Income-tax issued a show-cause notice for revision of the order under Section 263 of the Act of 1961. After hearing the assessee, the assessment order was set aside with a direction to the Assessing Officer to pass a fresh order and disallow the deduction under Section 35CCA of the said Act as claimed by the assessee. In appeal before the Tribunal, the Tribunal has allowed the appeal of the assessee.
5. Heard learned counsel for the parties.
6. Learned counsel for the Revenue submits that the payment was not genuine, after payment of Rs. 5 lakhs by cheque, the cash has been taken back, after charging commission. Therefore, in such circumstances the assessee is not entitled for deduction under Section 35CCA. He further submits that the certificate of approval issued by the Department to the society in 1982 has been withdrawn. The donation to the society was found bogus and the money received as alleged donation was returned to the donor. The society is merely acting as an agency for supplying certificates under Section 35CCA(2) on commission. The approval was granted to the society in 1982 and in 1987 the approval was withdrawn with retrospective effect. Therefore, Mr. De submits that the Commissioner of Income-tax has rightly set aside the order of the Assessing Officer and the Tribunal has wrongly cancelled the order of the Commissioner of Income-tax passed under Section 263, so far as the amount of donation of Rs. 5 lakhs is concerned.
7. Mr. Khaitan, learned counsel for the assessee, submits that the approval was granted to the society in 1982. The approval has been withdrawn in 1987. The relevant assessment year is 1985-86. When the donation was made to the society, the society had valid approval under Section 35CCA. No material has been produced before the Tribunal to support that the donation to the society was bogus.
8. The facts are not in dispute that the society was approved for the purpose of deduction under Section 35CCA of the Act in 1982. The donation has been made by the assessee to the society in the accounting year relevant to the assessment year 1985-86. The approval to the society has been withdrawn in the year, 1987, with retrospective effect, i.e., from December 13, 1982.
9. The limited controversy before us is when the donation has been given by the assessee to the society, which possesses the valid approval on the date of donation, can claim of the assessee be denied on the ground that subsequently approval has been withdrawn with retrospective effect.
10. Whether the donation was bogus at page 57, the observation of the Commissioner of Income-tax at page 3 of its order has been quoted, The Commissioner of Income-tax has observed that it is found that the donation to the society was bogus, the money received as alleged donation was returned to the donor. The society was merely acting as an agency for supplying certificate under Section 35CCA on commission.
11. For that observation and finding a question was put to learned counsel for the Revenue by the Tribunal at the time of hearing, whether the Commissioner of Income-tax has any basis or any material on record for such observation or finding. The Tribunal has recorded in its order that no evidence or material whatsoever is placed before the Tribunal to justify the statement of the Commissioner of Income-tax that the donation is bogus. The Tribunal is the final fact-finding body and when the finding of fact is that there is no evidence to substantiate the observation made by the Commissioner of Income-tax, that finding cannot be disturbed in reference before this court.
12. In this case when the donation was given to the society, was the society approved by the Department for the purpose of deduction under Section 35CCA of the Act. Assuming that by mistake of the Department, the Department has wrongly approved the society for the purpose of deduction under Section 35CCA, but for mistake of the Department why should the assessee suffer. The claim of the deduction cannot be withdrawn on the basis of withdrawal of the approval to the society by a subsequent order as has been done in this case.
13. In the result, we find no infirmity in the order of the Tribunal.
14. The question referred we answer in the affirmative, that is, in favour of the assessee and against the Revenue.
15. The reference so made stands disposed of accordingly.
16. All parties are to act on a signed xerox copy of this dictated order on the usual undertaking.