9911796707
TMI Blog1992 (2) TMI 152X X X X Extracts X X X X X X X X Extracts X X X X ..... the basis of its application dated 11-11-1982 for the said purposes. This approval had been granted by the prescribed Authority, Calcutta (Competent Authority) consisting of the Chief Commissioner (Admn.), the Commissioner of Income-tax West Bengal-I and Secretary Agriculture (West Bengal).Thereafter there was a letter dated 29-9-1984 from SID to the assessee giving details of the rural development programmes. The assessee remitted Rs. 15,00 000 by account payee drafts on 16-10-1984 and 10-10-1984 (details appear in para 4 of the assessment order,) along with covering letters, by way of donation to SID. The accounting period relevant for the assessment year 1985-86 ended on 24-10-1984. There was a search at the premises of SID on 18-11-1986, During the search the statement of Shri Krishna Kumar Sukhani, its secretary was recorded the same day. Statements of the assessee's two partners S/Shri Kedarnath Agarwal and Narendra Kumar Agarwal were also recorded. The prescribed authority purported to withdraw SID approval retrospectively with effect from 13-12-1982 i.e., the very inception of the approval on the ground that SID had violated the conditions subject to which approval had been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not the concern of the assessee to find out as to how the funds were utilised. It was denied that any funds were received back by the assessee firm. It was also argued that notwithstanding the withdrawal of the approval by the Competent Authority on 3-3-1987, the assessee was entitled to the deduction under section 35CCA. It was also said that the approval granted on 17-12-1982 could not be withdrawn retrospectively and that the doctrine of promissory estoppel came to aid of the assessee-firm. Firstly, the learned CIT(A) wondered why the assessee firm made contribution to SID at Calcutta when Hari Gramin Vikas Trust engaged in a similar activity at home and which was closely associated with the assessee's partners was available. Secondly, he observed that there could not be a direct evidence but only circumstantial evidence about the money flowing back to the assessee-firm. Thirdly, he observed that even if the above aspect was ignored, the assessee could not claim deduction under section 35CCA since the approval granted by the Prescribed Authority had been withdrawn with effect from 13-12-1982. Fourthly, he held that the power of the Prescribed Authority to withdraw the approval ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the decisions referred to above have been heard and duly considered. Under section 35CCA an assessee would be entitled to claim deduction of the amount of expenditure by way of payment of any sum to an association or institution, which has as its object the undertaking of any programme of rural development, to be used for carrying out any programme of rural development approved by the Prescribed Authority. Such expenditure must have been incurred during the previous year relevant to the assessment year for which the claim is made. In order to enable the assessee to claim the aforesaid deduction, the assessee has to furnish a Certificate from such association or institution to the effect that the programme of rural development has been approved by the Prescribed Authority. Section 35CCA(2) provides that no Certificate shall be issued by any association or institution unless it has obtained from the Prescribed Authority authorisation in writing to issue certificates of such nature. We have, therefore, to see if in the facts and circumstances of the present case these requirements were satisfied by the assessee. It appears that SID had made an application dated 11-11-1982 for necess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es. (i) The institution shall maintain a separate Bank Account for its Rural Development Programme. Yours faithfully, Sd/-- Income-tax Officer, Assessment, For Chairman of the State Level Committee, West Bengal and Commissioner of Income-tax, West Bengal-I, Calcutta. " The said approval was for the period from 13-12-1982 to 12-12-1985 subject to certain conditions specified thereunder. It appears that SID wrote a letter dated 29-9-1984 to the assessee (copy at page 36) to the effect that it was a social service organisation and engaged in Comprehensive Rural Development in 27 villages of Ramnagar and Katabari Anchals, P.S. Onda, Dist. Bankura, West Bengal and registered under section 35CCA of I.T. Act. It was mentioned in that letter that SID had so far invested over Rs. 60 lakhs for the uplift of the weaker section of the society in the project area and also created an asset of over Rs. 50 lakhs in buildings, machineries and other agro-custom equipments. Lastly it was said that SID was short of funds and was requesting the assessee to donate some funds for that good cause. Thereafter the assessee sent 4 (four) account payee demand drafts to SID. They were all dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which were complete at the time the amendment/cancellation/withdrawal came into force. A notification cannot be rescinded retrospectively though a curative notification can have retrospective effect and the error is corrected from the very beginning. Also any amendment to a statute affecting the legal rights of an individual must be presumed to be prospective unless it is made expressly or impliedly retrospective. Retrospective operation is not to be given to a statute so as to impair in existing right or obligation otherwise than as to matters of procedure. A perusal of section 35CCA shows that no power is conferred therein on the Prescribed Authority to issue or cancel a Notification retrospectively. Therefore, the first point which requires to be noticed is that since the Prescribed Authority sought to withdraw its approval only on 3-3-87 (copy at page 2 of assessee's paper book-III). It could not be given retrospective effect from 13-12-1982 but could only operate prospectively i.e. from 3-3-1987 onwards if there was no other impediment to challenge its validity even in regard to the prospective withdrawal of the approval. In the case of Seksaria Biswan Sugar Factory Ltd., Bom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee was entitled to show that its claim could not be defeated by the retrospective withdrawal of the earlier approval even if other donors had kept quiet or acquiesced in and even if SID had not challenged the action of the Prescribed Authority. Here one more point which requires to be disgressed is that on behalf of the assessee it had been argued that it had not been afforded any opportunity before the approval was withdrawn. So far as this aspect is concerned, we would only say that the assessee was not directly in the picture as regards approval and that this point could be raised only at the instance of SID. So far as the ITO is concerned, he no doubt, did give opportunity to the assessee to show cause why deduction be not denied as claimed. 22.The assessee had invoked the doctrine of promissory estoppel in its favour. This principle has been evolved by equity to avoid injustice. The true principle of promissory estoppel is that where one party has, by words or conduct made to the other a clear and unequivocal promise which is intended to create legal relations or effect a legal relationship to arise in future, knowing or intending that it would be acted upon by the other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... doctrine of promissory estoppel could not be invoked on its behalf. 23. No doubt, the original approval granted by the Prescribed Authority (State Level Committee) on 17-12-1982 was a conditional one. But during the currency of the said approval it does not appear that any breach of those conditions were noticed on the part of the SID or its explanations taken in regard thereto. Actions appear to have been triggered off after the search dated 18-11-1986 which took place at the premises of SID whereafter statement of Shri K.K. Sukhani was recorded under section 132(4). It is not known if the Prescribed Authority granted approval to the SID for further period after 12-12-1985. There is no evidence on the record is to what was done if SID did not submit its accounts which were due by 30-6-1983, 30-6-1984 and 30-6-1985. It also does not appear if in terms of the approval granted on 17-12-1982 any representative of the Prescribed Authority made any inspection where the approved programmes were being carried out. Even the statement of Shri Sukhani is not that any monies paid by the assessee were paid back to it. The assessee did not have the right or opportunity to cross-examine Shri S ..... X X X X Extracts X X X X X X X X Extracts X X X X
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