Court Invalidates Retrospective Withdrawal of Approval for Donation, Emphasizes Legal Principles

The court set aside the notices issued under section 263 of the Income-tax Act for the assessment years 1982-83 and 1983-84, based on the retrospective withdrawal of approval for a donation made to a research center. The court found that rescinding approval retrospectively was not justified, rendering the Commissioner's jurisdiction under section 263 illegal. The court rejected the respondent's argument on availing alternative remedies before the Commissioner and emphasized its power to interfere under article 226 in cases of lack of jurisdiction or incurable infirmity in the notice. The judgment highlighted the importance of legal principles governing retrospective actions and the court's intervention in cases of legal infirmities.

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Issues involved: Challenge to notices issued u/s 263 of the Income-tax Act, 1961 for assessment years 1982-83 and 1983-84 based on retrospective withdrawal of approval for donation made to a research center.

Details of the judgment:

1. Validity of Retrospective Cancellation of Approval:
- Petitioner argued against retrospective cancellation of approval citing relevant case laws.
- Respondents contended Commissioner could decide the issue and interference was not warranted unless lack of jurisdiction.
- Division Bench judgment on rectification under section 154 was cited.
- Court analyzed the conditions for deduction u/s 35(1)(ii) and the effect of subsequent withdrawal of approval.
- Court held that rescinding approval retrospectively was not justified, rendering Commissioner's jurisdiction under section 263 illegal.

2. Alternative Remedy and Court's Jurisdiction:
- Respondent's argument on availing alternative remedy before Commissioner was rejected.
- Court emphasized its power to interfere under article 226 in case of lack of jurisdiction or incurable infirmity in the notice.
- Principles for interference with show-cause notices were applied to notices u/s 263.

3. Comparison with Previous Judgments:
- Reference made to a Bombay High Court case with similar facts where retrospective cancellation of approval was deemed invalid.
- Distinction drawn from a Division Bench judgment on retrospective amendment and rescission of approval.

4. Final Decision:
- Court allowed the writ application, setting aside the notices u/s 263 for assessment years 1982-83 and 1983-84.
- Any proceedings based on the impugned notices were quashed.
- No costs were awarded in the matter.

This judgment highlights the importance of legal principles governing retrospective actions, jurisdiction of authorities, and the court's power to intervene in cases of legal infirmities or lack of jurisdiction.

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