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Income Tax Appellate Tribunal, ‘B’ BENCH: CHENNAI
Before: SHRI MANOJ KUMAR AGGARWAL & SHRI MANOMOHAN DAS
PER MANOMOHAN DAS, J.M: 1. Aforesaid appeal by assessee for Assessment Year (AY) 2018-19 arises out of the order of learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC) Delhi [CIT(A)] dated 25-08-2021 in the matter of an intimation issued by Centralized Processing Centre, Bengaluru (CPC) under section 143(1) of the Income Tax Act, 1961 (hereinafter “the Act”) on 31-05-2019. At the time of hearing, none appeared for assessee and accordingly, the appeal was proceeded with :- 2 -: the able assistance of Ld. Sr. DR who pleaded for confirmation of the impugned order. The sole substantive issue in the appeal is denial of deduction u/s 80P(2)(a) in terms of the provisions of Sec.80AC.
The registry has noted a delay of 264 days in the appeal, the condonation of which has been sought by the assessee. Considering the fact that the substantial delay fall within the lockdown situation arising out of Covide-19 Pandemic, we condone the delay and admit the appeal for adjudication on merits.
The sole grievance of the assessee is denial of deduction under section 80P of the Act while processing the return u/s 143(1) on the ground that the return of income was not filed within due date as specified under section 139(1) of the Act. The due date for filing of the return in the present case was 30-09-2018 whereas the return was filed by the assessee on 31-12-2018. Upon further appeal, Ld. CIT(A) confirmed the adjustment by invoking the provisions of Sec.80AC which provide that such deduction would not be allowable to the assessee from AY 2018-19 unless the return was filed by due date. Aggrieved, the assessee is in further appeal before us.
We concur with the findings that as per mandate of Sec.80AC, the assessee was obligated to file the return by due date to claim impugned deduction. However, at the same time, we find that the power to make such an adjustment u/s 143(1) has been granted under the statute only :- 3 -: w.e.f. 01.04.2021. Therefore, such an adjustment could not be made by CPC while processing the return u/s 143(1). We have taken this view in the case of Salem District Child Welfare Org. Asst. TCS Limited vs. Income Tax Officer, Corporate Ward -5(20), Chennai, order dated 26-04-2023 as under: -
2. we concur with the submission of Ld. AR that this issue is covered in assessee’s favor by the cited decision wherein it was held by the co-ordinate bench as under: - “3. The relevant provisions of section 143(1)(a) prescribing processing of return of income (as amended by Finance Act, 2018), as applicable to AY 2018-19, reads as under: “143(1) Where a return has been made under section 139, or in response to a notice under sub-section (1) of section 142, such return shall be processed in the following manner, namely:-- (a) the total income or loss shall be computed after making the following adjustments, namely :-- (i) any arithmetical error in the return; (ii) an incorrect claim, if such incorrect claim is apparent from any information in the return; (iii) disallowance of loss claimed, if return of the previous year for which set off of loss is claimed was furnished beyond the due date specified under sub-section (1) of section 139; (iv) disallowance of expenditure indicated in the audit report but not taken into account in computing the total income in the return; (v) disallowance of deduction claimed under section 10AA, 80-IA, 80-IAB, 8—IB, 80-IC, 80-ID or section 80-IE, if the return is furnished beyond the due date specified under sub-section (1) of section 139; or (vi) addition of income appearing in Form 26AS or Form 16A or Form 16 which has not been included in computing the total income in the return. From the aforesaid it could be seen that, sub-clause (v) covers only specified sections and do not cover section 80P. Hence, no adjustment of deduction claimed under section 80P could have been made while processing the return of income. 4. The sub-clause (v) has been amended by Finance Act, 2021 and the amended sub-clause read as under:- ………. (v) disallowance of deduction claimed under section 10AA or under any of the provisions of Chapter VI-A under the heading “C- Deductions in respect of certain incomes”, if the return is furnished beyond the due date specified under sub-section (1) of section 139; or :- 4 -: ………….. Section 80P fall under Chapter VI-A under the heading “C – Deductions in respect of certain incomes”. The rational for the amendment, as given in the memorandum explaining the provisions in the Finance Bill, 2021 is as under:- Rationalisation of the provision relating to processing of returned income and issuance of notice under sub-section (2) of section 143 of the Act.
The existing provisions of clause (a) of sub-section (1) of section 143 of the Act provides that at the time of processing of return of income made under section 139, or in response to a notice under sub-section (1) of section 142, the total income or loss shall be computed after making the adjustments specified in clauses (i) to (vi) therein. It is proposed to amend the following provisions of sub-section (1) of section 143 of the Act,-
(i) Amend sub-clause (iv) f clause (a) of sub-section (1) of the section 143 of the Act, to allow for the adjustment on account of increase in income indicated in the audit report but not taken into account in computing the total income. (ii) Amend sub-clause (v) of clause (a) of sub-section (a) of the section 143 of the Act so as to give consequential effect to amendment carried out in section 80AC vide Finance Act, 2018. (iii) Amend the provisions of section 143 to reduce the time limit for sending intimation under sub-section (1) of section 143 of the Act from one year to nine months from the end of the financial year in which the return was furnished.
Consequently, it is also proposed to reduce the time limit for issue of notice under sub-section (2) of section 143 of the Act from six months to here months from the end of the financial year in which the return is furnished. These amendments will take effect from 1st April, 2021.
It could thus be seen that the enabling provisions allowing specified adjustment for section 80P under section 143(1)(a) of the Act has been brought on statute only with effect from 01-04-2021 and before that no such adjustment of deduction under section 80P could have been done by the CPC under section 143(1)(a) of the Act even if the return of income was filed beyond due date as specified under section 139(1) of the Act. No doubt, the provisions of section 80AC of the Act mandate denial of deduction u/s 80P of the Act even for AY 2018-19. However, in our considered opinion, without there being corresponding enabling provisions under section 143(1)(a) of the Act, no such adjustment could have been made by CPC for AY 2018-19. The same is amply clear from the memorandum explaining the provisions in the Finance Bill, 2021 as extracted above. Considering the same, we direct the Revenue to grant deduction u/s 80P of the Act :- 5 -: as claimed by the assessee in the return of income. No other ground has been urged before us. 6. The appeal stands partly allowed.” In the absence of any contrary decision on record, we direct revenue to grant impugned deduction to the assessee.
Taking the same view, we direct the revenue to grant the impugned deduction to the assessee. 5. The appeal stands allowed in terms of our above order. Order pronounced on 12th May, 2023.