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Issues Involved:
1. Claim of deduction under section 35CCA. 2. Retrospective withdrawal of approval by the Prescribed Authority. 3. Doctrine of promissory estoppel. 4. Opportunity to cross-examine and procedural fairness. 5. Validity of the withdrawal of approval. Detailed Analysis: 1. Claim of Deduction under Section 35CCA The assessee claimed a deduction under section 35CCA for a donation made to the Society for Integral Development (SID), which had approval from the Prescribed Authority for rural development programs. The assessee remitted Rs. 15,00,000 to SID, which was acknowledged by SID through various letters confirming the receipt and utilization of funds for approved rural development programs. The Assessing Officer (AO) rejected the deduction on the grounds that SID was allegedly involved in fraudulent activities, including not maintaining proper books of accounts and returning donations to contributors after deducting a commission. 2. Retrospective Withdrawal of Approval by the Prescribed Authority The Prescribed Authority withdrew SID's approval retrospectively from the inception date (13-12-1982) due to non-compliance with the conditions of approval. The AO informed the assessee that the deduction under section 35CCA could not be allowed due to this retrospective withdrawal. The assessee challenged this decision, arguing that the approval could not be withdrawn retrospectively and that it was entitled to the deduction based on the approval that was valid during the period the donation was made. 3. Doctrine of Promissory Estoppel The assessee invoked the doctrine of promissory estoppel, arguing that it relied on the Prescribed Authority's approval when making the donation. The principle of promissory estoppel prevents the withdrawal of a promise if the promisee has acted upon it to their detriment. The Tribunal agreed with the assessee, stating that the withdrawal of approval with retrospective effect would cause undue hardship to the assessee, who had acted in good faith based on the approval. 4. Opportunity to Cross-examine and Procedural Fairness The assessee contended that it was not given an opportunity to cross-examine Shri Krishna Kumar Sukhani, whose statement was used against it. The Tribunal noted that the assessee was not directly involved in the approval process, and the opportunity to cross-examine should have been afforded to SID. However, the AO did provide the assessee an opportunity to show cause why the deduction should not be denied. 5. Validity of the Withdrawal of Approval The Tribunal analyzed whether the Prescribed Authority had the power to withdraw approval retrospectively. It concluded that in the absence of express words or appropriate language indicating retrospectivity, the withdrawal could only be prospective. The Tribunal cited several precedents, including the Bombay High Court's decision in Seksaria Biswan Sugar Factory Ltd. and the Gauhati Bench's decision in Jalannagar Tea Estate (P.) Ltd., which held that retrospective withdrawal of approval was not valid. As the approval period had expired by the time the withdrawal was issued, the Tribunal held that the withdrawal could not affect the assessee's claim for the relevant assessment year. Conclusion The Tribunal ruled in favor of the assessee, allowing the deduction under section 35CCA for the assessment year in question. The assessee had met the requirements of section 35CCA, and the approval of SID subsisted during the relevant period. The retrospective withdrawal of approval was deemed invalid, and the doctrine of promissory estoppel was successfully invoked to prevent the denial of the deduction.
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