Calcutta High Court
Jai Kumar Kankaria vs Commissioner Of Income-Tax And Ors. on 14 December, 2000
Equivalent citations: [2001]251ITR707(CAL)
Author: Kalyan Jyoti Sengupta
Bench: Kalyan Jyoti Sengupta
JUDGMENT Kalyan Jyoti Sengupta, J.
1. In this matter I do not find on record any affidavit-in-opposition. However, Mr. Shome has shown me a copy of the same. He cannot say as to whether the same has been filed in the Department or not. Dr. Pal upon instruction says that no copy of such affidavit-in-opposition has been served upon the learned advocate-on-record of his client. Anyway, when the copy is made available to the court, it would be prudent for the court to take note of it forgetting the procedural aspect. So, a copy thereof is to be kept on record.
2. In this matter, the point is very simple, as to whether the withdrawal of recognition granted to the Secretary, Society for Integral Development programme, under Section 35CCA of the Income-tax Act, 1961, in the case of donation to the aforesaid institution is permissible with retrospective effect or not.
3. The writ petitioner's case is that pursuant to the approval granted by the income-tax authorities the writ petitioner donated a sum of Rs. 1,00,000 and odd on or about December 7, 1984. The receipt of donation had been granted by the Society for Integral Development which had received an approval for granting a certificate. On production of this certificate, the writ petitioner was allowed deduction to the extent of the aforesaid amount at the time of the assessment for the assessment period 1985-86 relating to the financial year, that is, previous year 1984-85. The Assessing Officer had duly taken note of that certificate and granted deduction of the aforesaid amount of donation. After the assessment order was passed, a notice under Section 263 of the Income-tax Act, 1961, had been issued seeking to reopen the aforesaid assessment done only to the extent of the aforesaid donation amount on the plea that the aforesaid approval had been withdrawn in 1987 with retrospective effect from December 13, 1982.
4. It is to be noted that the approval was valid from December 13, 1982, to December 12, 1985. It appears from the affidavit that notice of withdrawal was issued by a notice dated March 13, 1987, with retrospective effect from December 13, 1982. Therefore, the validity and efficacy of the aforesaid approval had lost its force by the time the same was sought to be withdrawn with retrospective effect.
5. Dr. Pal, appearing in support of this application, relying on a decision delivered by Justice Ruma Pal (as Her Lordship then was) in B. P. Agar-walla and Sons Ltd. v. CIT [1994] 208 ITR 865 (Cal), contends that this order of withdrawal of approval cannot be given retrospective effect. An executive order cannot have any retrospective effect to the utter detriment of and prejudice to the person who has already acted upon it and altered his position. Therefore, the very basis of the issuance of the notice which will be reflected from the impugned notice itself is without jurisdiction and further, illegal. He also contends that in exercise of the writ jurisdiction under article 226 of the Constitution of India the court can pass an appropriate order examining the impugned notice itself and also on the basis of the admitted documents. According to him, the aforesaid proposition of entertaining a writ petition on the aforesaid situation is also held by Justice Pal. He contends therefore that the impugned notice should be set aside.
6. Mr. Shome, appearing for the respondents, submits that actually the approval was withdrawn with retrospective effect because the aforesaid Society had committed breach of the terms of the approval as no account was furnished and, in fact, the purported donation to the aforesaid society is a make believe transaction and nothing but a mechanism to get the donated amount diverted back to the assessee itself and this fact is revealed from the search and seizure conducted by the Income-tax Department. So, on the aforesaid background, in order to correct the wrong thing the approval given earlier was sought to be withdrawn retrospectively.
7. Having heard learned counsel for the parties and considering the materials placed before me, it appears from the affidavit that there is no basis for taking action. The whole point is whether the appropriate official can issue any order of withdrawal retrospectively even in a case of fraud. I do not find any such authority. Rather, I find an authority that the Department concerned cannot withdraw any approval retrospectively. The dona-tion was effected in 1984 and the assessment order was passed in the assessment year 1985-86. The validity of the approval was til! December 1985. It may be a make-believe transaction or may be a true transaction, but this court will not enquire into these facts at this stage. The writ petitioner pursuant to the aforesaid approval, had acted upon it and donation having been made'and the same having been accepted by the Department, all these have been accepted by all concerned. Therefore, it is not open for the Department concerned to reopen on the aforesaid fact within the sweep and purview of Section 263 of the Income-tax Act. The retrospective effect cannot be given while seeking a withdrawal of the approval as it has been rightly pointed out by Dr. Pal and I also find support for the afore-
said proposition from the judgment rendered by Mrs. Justice Pal. I am also of the view that this case does not fall within the purview of Section 263 of the said Act for revision of the order prejudicial to the Revenue. The revisional authority will exercise the aforesaid power under Section 263 only when the order passed by the Assessing Officer is erroneous in so far as it is prejudicial to the interests of the Revenue. The term, "erroneous" will be looked into from the facts and circumstances and the materials which were placed before the Assessing Officer at the time of the assessment. There is no scope under the aforesaid section to reopen an assessment on subsequent event nor any new material.
8. Moreover, I take note of the fact that the approval was sought to be withdrawn in 1987 when the life of the approval had already gone. Therefore, I am of the view that this impugned notice is not liable to be sustained as the very basis and/or the materials are unfounded under the law and this, in my view, is improper exercise of jurisdiction under Section 263 of the said Act.
9. In the circumstances, the application succeeds. The impugned notice is set aside. Interim order already passed stands confirmed.
10. There will be no order as to costs.
11. Let xeroxed copies of this judgment and order, duly signed by the Assistant Registrar of this court, be made available to the parties on urgent basis upon their undertaking to apply for and obtain certified copies thereof on payment of usual charges.