- (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. 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. 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.
(3.) HEARD learned counsel for the parties. 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 He further submits that the certificate of approval issued by the Department to the society in 1982 has been withdrawn.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.;