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Income Tax Appellate Tribunal, “SMC” “C’’ BENCH: BANGALORE
Before: SHRI CHANDRA POOJARI
This appeal by the assessee is directed against order of the NFAC, Delhi dated 14.12.2022 for the assessment year 2017-18.
The assessee has raised following grounds of appeal:
1. The orders of the authorities below in so far as they are against the appellant are opposed to law, equity, weight of evidence, probabilities, facts and circumstances of the case.
2. The learned CIT[A] is not justified in upholding the assessment made u/s. 144 of the Act on the ground that the appellant had not filed a valid return of income electronically and that the manual return of income filed on 30/10/2017 was an invalid return and thus, it was to be held that the M/s. Primary Agricultur Credit Co-operative Society, Nallur
Page 2 of 7 appellant has not filed any return of income for the year under appeal under the facts and in the circumstances of the appellant's case.
3. The learned CIT[A] is not justified in upholding the income assessed of Rs.12,19,295/- by denying the deduction claimed u/s. 80P of the Act and making a further addition u/s. 68 of the Act, under the facts and in the circumstances of the appellant's case.
4. The learned CIT[A] is not justified in sustaining the denial of deduction claimed by the appellant u/s 80P of the Act of Rs. 11,11,987/- by invoking the provisions of section 80A[5] of the Act, under the facts and in the circumstances of the appellant's case
5. The learned CIT[A] is not justified in sustaining the addition of Rs. 1,07,308/- as unexplained cash credit u/s 68 rws 115BBE of the Act under the facts and in the circumstances of the appellant's case 6. For the above and other grounds that may be urged at the time of hearing of the appeal, your appellant humbly prays that the appeal may be allowed and Justice rendered and the appellant may be awarded costs in prosecuting the appeal and also order for the refund of the institution fees as part of the costs.
The facts of the case are that the assessee is a primary agricultural society. The assessee filed return of income for assessment year 2017-18 manually on 30.10.2017, though the assessee was required to file return of income electronically. The assessee has explained before the lower authorities that this was the mistake of the tax practitioner and sought condonation of the same. The assessee in its return of income shown net profit of Rs.11,11,987/-. After claiming the deduction u/s 80P of the Income Tax Act, 1961 (herein after “the Act” for short) the income of the assessee was nil. Accordingly, return of income was filed. The case was selected for scrutiny. As per information available with the AO on AIMS module of ITBA, that during the period of demonetization from 9.11.2016 to 31.12.2016, the assessee had made cash deposit into bank accounts in specified currency notes i.e. Rs.500/- and Rs.1000/- notes:-
M/s. Primary Agricultur Credit Co-operative Society, Nallur Page 3 of 7 Bank branch Account No. Amount Vijaya bank 115701011000972 Rs.4,00,000/- Davangere Dist 694000688843 Rs.23,36,800/- Central Co-op. bank 3.1 Accordingly, the assessment has been framed u/s 144 of the Act determining the income at Rs.12,19,295/-. While framing the assessment the AO made addition u/s 68 r.w.s. 115BBE of the Act at Rs.1,07,308/- and also denied exemption u/s 80P of the Act on the reason that assessee has not filed the return of income within due date electronically to claim deduction u/s 80P of the Act. Against the ex-parte order of the AO, the assessee went in appeal before NFAC. The NFAC confirmed the action of the AO. Hence, the assessee is in appeal before us.
I heard the rival submissions and perused the materials available on record. Admittedly, in this case, the assessee has filed the return of income manually on 30.10.2017. The AO has issued notice u/s 142(1) of the Act on 27.11.2017 requesting the assessee to file return of income for assessment year 2017-18. The assessee failed to comply this notice issued u/s 142(1) of the Act. The AO has observed that assessee has not filed regular return of income electronically for assessment year 2017-18. He proceeded to consider the information available on AIMS module of ITBA and denied the deduction u/s 80P of the Act claimed by the assessee and made addition u/s 68 r.w.s. 115BBE of the Act at Rs.1,07,308/-. The claim of assessee u/s 80P of the Act was denied under the reason that assessee has not filed return of income within the due date electronically. Now the contention of the assessee’s counsel is that AO has not considered the return filed by the assessee manually on 30.10.2017 though it was before him. According to the ld. A.R., it cannot be overlooked since it was the mistake of assessee’s counsel and the assessee is a computer illiterate and not having knowledge
M/s. Primary Agricultur Credit Co-operative Society, Nallur Page 4 of 7 about the notice issued electronically and the assessee’s practitioner also did not inform the assessee about the notice issued u/s 142(1) of the Act. He submitted that filing manual return is a procedure irregularity and AO ought to have issued notice u/s 139(9) of the Act to correct the mistake committed by assessee. Instead of this AO ignored the return of income and made assessment u/s 144 of the Act which shall be quashed.
4.1 On the other hand, ld. D.R. submitted that filing of return manually have no validity and it cannot be given any credence and therefore, no deduction u/s 80P of the Act could be granted to the assessee and he placed reliance on the judgement of Kerala High Court in the case of Kuthuparamba Range Kalluchethu Vyavasaya Thozhilali Sahakarana Sangham Ltd. v. CIT (2018) 257 Taxman 151 (Ker) (HC)
4.2 In my opinion, in this case, before the Hon’ble Kerala High Court, there was no filing of return of income manually, as such the High Court held that filing of return is mandatory to a Co-operative Society to claim deduction u/s 80P of the Act. However, in the present case, there is no dispute that the assessee has filed return of income for the assessment year 2017-18, which was overlooked by the AO only on the reason that assessee has not filed return of income electronically within the due date. In my opinion, this issue came for consideration before the Bombay bench of the Tribunal in the case of Luxury Goods Retail Pvt. Ltd. In for the assessment year 2011-12. The Tribunal vide order dated 5.5.2017 held as under:- “7. We have head both the parties, perused the orders of the authorities below and the decisions relied on. The undisputed facts in this case are that the Assessee filed return of income manually on 30.11.2011 that is within the due date specified u/s 139(1) of the Act. On the very same day, the Assessee also intimated the Assessing Officer as to why it could not file the return electronically and the return filed manually be taken on record. In response to the notice u/s 142, the Assessee filed return on M/s. Primary Agricultur Credit Co-operative Society, Nallur Page 5 of 7 11.10.2012. The Assessing Officer acting upon this electronic return denied the set off of carry forward of losses to the Assessee on the ground that the Assessee did not file the return of income electronically within the due date specified under the provisions of Section 139(1) of the Act. The Ld. CIT (Appeals) agreed with the view of the Assessing Officer. Now the question before us to be addressed is as to whether original return filed manually can be treated as a valid return or not. No doubt, the requirement is that the Assessees should file returns electronically within the due date specified u/s 139(1) in order to be eligible for set off and carry forward losses. The mandatory requirement of law for set off and carry forward of losses is that the return should be filed within the due date under the provisions of Section 139(1) of the Act. Here the Assessee filed return of income under 139(1) manually instead of filing the return electronically. The reasons as to why the Assessee could not file the return electronically was also given. In such circumstances, we are of the considered view that simply because the Assessee could not file the return electronically within the provisions of section 139(1), the benefit of set off and carry forward of losses cannot be denied for the reason that the Assessee did file return of income manually within the due date specified u/s 139(1) of the Act. The claim for set off and carry forward of losses cannot be denied on a too technical reasons on the ground that the electronic return filed by the Assessee is belated when the Assessee filed return of income manually within the due date specified u/s 139(1) of the Act.
The provisions of section 292B also comes to the rescue of the Assessee in as much as the return filed cannot be invalid merely by the reason of any mistake, defect or omission in such return of income when in substance and effect if such return is in conformity with or according to the intent and purpose of this Act. The return filed manually may at best be said to be a defective return and not an invalid return. The third member of the Mumbai Bench held that the return filed separately by the four cells of the Assessee declaring total loss claimed by the Assessee did comply in substance and in effect within the intent and purpose of the Act and in view of the provisions of Section 292B and the defect is not material in the light of the provisions of Section 292B. While holding so, it was observed as under :
“15. The issue for our consideration is whether the assessee is entitled to carry forward the loss incurred by it in the business of trading in shares by the four cells/units established by the assessee in India. ln this connection it would be relevant to refer the provisions of section 80 which is non obstante provision. According to this section, no loss which has not been determined in pursuance of a return filed in accordance with the provisions of sub-section (3) of section 139 shall be carried forward and set off under sub-section(l)of section 72 or subsection (2) of section 73 or sub-section (1) or sub-section (3) of section 74 or sub- section (3) of section 74A. This clearly shows that the loss determined by the Assessing Officer cannot be carried forward and set off under the above provisions unless the return has been filed in accordance with the provisions of sub-section (3) of Section 139.”
M/s. Primary Agricultur Credit Co-operative Society, Nallur Page 6 of 7 9. Therefore, in view of what is discussed above and keeping in view the said decision, we hold that the return filed by the Assessee manually within the due date specified u/s 139(1) is a valid return. Since we are holding that the return filed manually is a valid return, the Assessing Officer shall act upon this return and recompute the income/losses of the Assessee in accordance with law after giving adequate opportunity of being heard to the Assessee.
In the result, the appeal of the Assessee is allowed.”
4.3 In view of the above order of the Tribunal, taking a consistent view on this subjected issue, I am of the opinion that since the assessee has filed the return of income manually on 30.10.2017 and since this is the procedural irregularity and hence, it is valid return of income and the AO shall act upon this return of income and recompute the income of the assessee in accordance with law after giving adequate opportunity of hearing to the assessee and decide afresh. Accordingly, this issue in dispute is remitted to file of AO for fresh consideration to the file of AO for fresh consideration as discussed above to redetermine the income of the assessee.
With regard to addition of Rs.1,07,308/- u/s 115BBE of the Act, this addition has been made on the reason that assessee has not furnished the name and address of the account holders, i.e. farmers, their PAN numbers and confirmation from them. In my opinion, the AO has passed the ex-parte order u/s 144 of the Act and assessee has also not been given fair opportunity of hearing by NFAC. Hence, in the interest of justice, I remit this issue to the file of AO for fresh consideration with direction to the assessee to explain the deposit of Rs.1,07,308/- in respect of specified notes.
M/s. Primary Agricultur Credit Co-operative Society, Nallur Page 7 of 7 6. In the result, the appeal of the assessee is partly allowed for statistical purposes.
Order pronounced in the open court on 18th Apr, 2023