Section 256(2) of the Income Tax Act
The decision most relied on for Section 256(2) is Commissioner of Income Tax v. Chotatingrai Tea & Ors. (258 ITR 529), cited in 30 of the 149 judgments on BharatTax that turn on this section.
Leading authorities on Section 256(2)
A donor cannot be held responsible for the utilization of their donation by a donee institution once the statutory conditions for claiming a deduction are met. Subsequent withdrawal of approval for the donee institution cannot retrospectively deny the donor the deduction.
An assessee should not suffer due to a mistake committed by the department, and the withdrawal of approval for a donation to a society should have prospective, not retrospective, effect.
The withdrawal of approval for a deduction, such as under Section 35CCA, cannot be given retrospective effect, and any reassessment notice based on such a retrospective cancellation is invalid. An assessee should not suffer due to the department's mistakes, and withdrawal of approval can only be prospective.
An assessee should not suffer due to the department's mistake. If a donation to an approved society is genuine, retrospective withdrawal of approval does not affect the assessee's right to deduction. Withdrawal of approval can only be prospective.
An assessee should not suffer due to a mistake by the department. Withdrawal of approval for a society, even if permissible, must have prospective effect and cannot disentitle an assessee to a deduction for genuine donations made prior to withdrawal.
When approval for a deduction is withdrawn with retrospective effect, the order of the assessing officer cannot be considered erroneous or prejudicial to the interests of the revenue, as the assessee should not suffer for a mistake made by the department. There is no provision for withdrawal of recognition under Section 35(1)(ii) of the Act.
