PONNERI URBAN CO-OP CREDIT SOCIETY LIMITED J J 64,TIRUVALLUR vs. ADIT, CPC, BANGALORE

This appeal filed by the assessee is directed against the order of the ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre [NFAC], Delhi, dated 01.12.2022 relevant to the assessment year 2019-2020.

Facts are, in brief, that the assessee is a credit cooperative society engaged in the business of extending credit facilities to its members. The 2 assessee filed its return of income for the year under consideration on 25.09.2020 admitting NIL income after claiming deduction under section 80P of the Income Tax Act, 1961 [“Act” in short]. The Assessing Officer, CPC, Bangalore noticed that the assessee has not filed audit report along with return and issued notice to the assessee to rectify the defect. However, the assessee has not responded. The Assessing Officer, CPC, Bangalore passed assessment order under section 143(1) of the Act dated 21.12.2021 by denying the claim of deduction under section 80P of the Act and the total income was assessed at ₹.63,90,264/-.

The assessee carried the matter in appeal before the ld. CIT(A) and submitted that once it is noticed that the return filed by the assessee is defective, the Assessing Officer, CPC, Bangalore ought not to have acted upon and therefore, the order passed by the Assessing Officer is not valid. By considering the submissions of the assessee, the ld. CIT(A) has noted that though the return was treated as an invalid return, the provisions of the Act shall apply as if the assessee has failed to furnish the return, which means, the benefit of deduction has to be withdrawn as the audit report was not furnished along with the return of income. Accordingly, the ld. CIT(A) upheld the order passed by the Assessing Officer.

On being aggrieved, the assessee is in appeal before the Tribunal. Before us, the ld. Counsel for the assessee has reiterated the submissions, which he has made before the ld. CIT(A).

On the other hand, the ld. DR strongly supported the order passed by the authorities below.

We have heard both the sides, perused the materials available on record and gone through the orders of authorities below. In this case, the assessee filed its return of income by claiming deduction under section 80P of the Act without filing audit report along with the return of income. The Assessing Officer, CPC, Bangalore found that the return filed without audit report is defective and directed the assessee to rectify the defect i.e, to file audit report. The assessee has not rectified the defect. Thus, by denying the claim of deduction under section 80P of the Act, the Assessing Officer, CPC, Bangalore passed the assessment order under section 143(1) of the Act dated 21.12.2021. The argument of the assessee before the ld. CIT(A) and even before us is that when the Assessing Officer, CPC, Bangalore came to a conclusion that the return filed by the assessee is defective, he ought not to have acted upon and the denial of benefit of deduction under section 80P of the Act is invalid. By considering the entire facts and circumstances of the case and also 4 the submissions of the assessee, we are of the opinion that to claim benefit under section 80P of the Act, the assessee has to file audit report. In this case, the assessee has failed to file the audit report and for that reason, the Assessing Officer, CPC, Bangalore denied the claim of deduction under section 80P of the Act. In our opinion, one more opportunity shall be given to the assessee to file the audit report before the Assessing Officer, CPC, Bangalore and accordingly, we set aside the order passed by the ld. CIT(A) and remit the matter back to the file of the Assessing Officer for affording one more opportunity to the assessee to furnish the audit report and decide the matter afresh in accordance with law. The assessee is also directed to file the audit report before the Assessing Officer, CPC, Bangalore for his consideration.