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Income Tax Appellate Tribunal, COCHIN BENCH, COCHIN
Before: Shri Chandra Poojari, AM & Shri George George K, JM
Per George George K, JM :
This appeal at the instance of the assessee is directed against the order of the CIT(A) dated 02.01.2019. The relevant assessment year is 2010-2011.
Though several issues are raised in the grounds, the only issue that was argued by the learned AR was that assessee is entitled to deduction u/s 80P of the I.T.Act inspite of the assessee having not filed the return of income.
The brief facts of the case are as follow: The assessee is a Co-operative Society registered under the Kerala Co-operative Societies Act, 1969. For the assessment year 2010-2011, the assessee did not file any return of income, inspite of notices issued u/s 148 and u/s 142(1) of the I.T.Act. The Assessing Officer obtained audit report from the Joint Director of Co-operative Societies (Audit)
ITA No.215/Coch/2019. 2 M/s.The Mannur SCB Limited. and proposed to complete the assessment u/s 144 of the I.T.Act. The Assessing Officer also proposed to deny deduction u/s 80P of the I.T.Act for the reason that primary object of the assessee was not fulfilled since the disbursement of agricultural loans for the year under consideration was only minuscule compared to the total loan disbursement. The assessee during the course of assessment proceedings had filed a letter stating that it was eligible for deduction u/s 80P of the I.T.Act as it was classified as a Primary Agricultural Credit Society under the Kerala Co-operative Societies Act, 1969.
The Assessing Officer completed the assessment u/s 144 r.w.s. 147 of the I.T.Act vide order dated 12.12.2018. In the said assessment order, deduction u/s 80P was not granted for the reason that the assessee did not file any return of income u/s 139(1) or u/s 139(4) nor in response to the notices issued u/s 148 and 142(1) of the I.T.Act. The Assessing Officer concluded that as per section 80A(5) of the I.T.Act, the assessee is not entitled to any deduction on account of non-filing of the return.
Aggrieved by the order of the Assessing Officer denying the benefit of deduction u/s 80P of the I.T.Act, the assessee preferred the appeal to the first appellate authority. The CIT(A) by following the judgment of the Hon’ble Kerala High Court in the case of Chirakkal Service Co-operative Bank Ltd. & Others (389 ITR 490) and M/s.Kuthuparamba Range Kalluchethu Vyavasaya Thozhilali Sangham Ltd. (ITA No.273
ITA No.215/Coch/2019. 3 M/s.The Mannur SCB Limited. of 2015 dated 20.06.2018), decided the issue against the assessee. The relevant finding of the CIT(A) reads as follow:-
“9. It is seen that in the cases under appeal, no return has every been filed by the appellant-assessee either voluntarily under the provisions of section 139 or in response to Notice u/s 148 and 142(1) issued by the Assessing Officer at any stage. There is no evidence of filing of return by the appellant till date. In the case cited supra (Chirakkal Service Co- operative Bank Ltd. & Others [(2016) 68 Taxmann.com 298 (Kerala)], the Hon’ble High Court has decided the issue in favour of the assessee subject to condition that a return of income has been filed even if it is filed belatedly. It is not the case of the appellant here that the return of income making such claim has been filed even belatedly. Since no return has been filed by the appellant, it cannot claim the benefit of deduction u/s 80P of the I.T.Act by relying on the decision cited supra. The facts of the appellant are similar to the case cited in para 8 in so far as entitlement of claim u/s 80P for non-filing of return is concerned.”
Aggrieved by the order of the CIT(A), the assessee has filed this appeal before the Tribunal. The learned Counsel for the assessee has filed an elaborate written submission. The essence of the written submission is that the judgment of the Hon’ble jurisdictional High Court in the case of M/s.Kuthuparamba Range Kalluchethu Vyavasaya Thozhilali Sangham Ltd. (supra) is sub silentio since the Hon’ble High Court did not take notice of the amendment to section 80AC of the I.T.Act.
The learned Departmental Representative supported the orders of the Income-tax authorities.
We have heard the rival submissions and perused the material on record. The Hon’ble jurisdictional High Court in
ITA No.215/Coch/2019. 4 M/s.The Mannur SCB Limited.
the case of Chirakkal Service Co-operative Bank Ltd. & Others (supra) had considered the following question of law:-
“(B) Whether the Tribunal is justified in denying the exemption under section 80P of the Income-tax Act, 1961, on the mere ground of belated filing of return by the assessee ?
(C) Whether a return filed by the assessee beyond the period stipu lated under section 139(1)/(4) or section 142(1)/148 can be held as non est in law and invalid for the purpose of deciding exemption under section 80P of the Income-tax Act, 1961 ?”
8.1 In adjudicating the above grounds, the Hon’ble High Court has rendered the following findings:-
“18. Questions B and C relate to denial of exemption on ground referable to belated filing of return, that is to say, returns filed beyond the period stipulated under section 139(1) or section 139(4), as the case may be, as well as section 142(1) or section 148, as the case may be. There are no cases among these appeals where returns were not filed. There are cases where claims have been made along with the returns and the returns were filed within time. Still further, there are cases where returns were filed belatedly, that is to say, beyond the period stipulated under sub-section (1) or (4) of section 139 ; and, there are also returns filed after the period with reference to sections 142(1) and 148 of the Income-tax Act.
Section 80A(5) provides that where the assessee fails to make a claim in his return of income for any deduction, inter alia, under any provision of Chapter VI-A under the heading "C.—Deductions in respect of certain incomes", no deduction shall be allowed to him thereunder. Therefore, in cases where no returns have been filed for a particular assessment year, no deductions shall be allowed. This embargo in section 80A(5) would apply, though section 80P is not included in section 80AC. This is so because, the inhibition against allowing deduction is worded in quite similar terms in sections 80A(5) and 80AC, of which section 80A(5) is a provision inserted through the Finance Act 33 of 2009 with effect from April 1, 2013, after the insertion of section 80AC as per the Finance Act of 2006 with effect from April 1, 2006. This clearly evidences the legislative intendment that the inhibition contained in sub-section (5) of section 80A would operate by itself. In cases where returns have been filed, the question of exemptions or deductions referable to section 80P would definitely have to be considered and granted if eligible.
Here, questions would arise as to whether belated returns filed beyond the period stipulated under section 139(1) or section 139(4) as well as following sections 142(1) and 148 proceedings could be considered for exemption. If those returns are eligible to be accepted in terms of law, going by the provisions of the statute and the governing binding precedents, it goes without saying that the claim for exemption will also stand effectuated as a claim duly made as part of the returns so filed, for due consideration.
ITA No.215/Coch/2019. 5 M/s.The Mannur SCB Limited.
When a notice under section 142(1) is issued, the person may furnish the return and while doing so, could also make claim for deduction referable to section 80P. Not much different is the situation when pre- assessment enquiry is carried forward by issuance of notice under section142(1) or when notice is issued on the premise of escaped assessment referable to section 148 of the Income-tax Act. This position notwithstanding, when an assessment is subjected to first appeal or further appeals under the Income-tax Act or all questions germane for concluding the assessment would be relevant and claims which may result in modification of the returns already filed could also be entertained, particularly when it relates to claims for exemptions. This is so because the finality of assessment would not be achieved in all such cases, until the termination of all such appellate remedies. Under such circumstances, the Tribunal was not justified in denying exemption under section 80P of the Income-tax Act on the mere ground of belated filing of return by the assessee concerned. A return filed by the assessee beyond the period stipulated under section 139(1) or 139(4) or under section 142(1) or section 148 can also be accepted and acted upon provided further proceedings in relation to such assessments are pending in the statutory hierarchy of adjudication in terms of the provisions of the Income-tax Act. In all such situations, it cannot be treated that a return filed at any stage of such proceedings could be treated as non est in law and invalid for the purpose of deciding exemption under section 80P of the Income-tax Act. We thus answer substantial questions of law B and C formulated and enumerated above.” (emphasis given by us) 8.2 The above judgment of the Hon’ble High Court had clearly stated in para 19 that when no return of income has been filed, no deduction shall be allowed. Following the above said judgment of the Hon’ble jurisdictional High Court in the case Chirakkal Service Co-operative Bank Ltd. & Others (supra), the recent judgment of the Hon’ble Kerala High Court in the case of M/s.Kuthuparamba Range Kalluchethu Vyavasaya Thozhilali Sangham Ltd. (supra), had categorically held that filing of return is mandatory for claiming benefit u/s 80P(2) of the I.T.Act. The Hon’ble High Court in the case of M/s.Kuthuparamba Range Kalluchethu Vyavasaya Thozhilali Sangham Ltd. (supra) was considering the following question of law :-
““Whether the Tribunal was correct in having affirmed the orders of the lower authorities declining deduction under section 80P for the mere reason that no return was filed; when
ITA No.215/Coch/2019. 6 M/s.The Mannur SCB Limited. deduction as permissible under section 80A(1) if of the total income?” 8.3 In adjudicating the above question of law, the Hon’ble High Court held as follows :- Only when a return is filed claiming deduction under section 80P, the AO will be enabled to first consider the question of eligibility of the assessee and then consider the allowability of deduction from the total income. We, hence, answer the question of law framed in ITA No.273 of 2015 against the assessee and in favour of the Revenue.”
8.4 In the instant case, admittedly, no return of income was filed by the assessee u/s 139 or in response to notices issued u/s 148 / 142 of the I.T.Act. In the cases considered by the Hon’ble jurisdictional High Court cited supra, it has been clearly held that the assessee is entitled to claim the deduction u/s 80P of the I.T.Act only if the return of income has been filed (irrespective whether it is filed belatedly). Since no return of income has been filed by the assessee, the assessee is not entitled to the benefit of deduction u/s 80P of the I.T.Act, going by the dictum laid down by the judgment of the Hon’ble jurisdictional High Court, cited supra. It is ordered accordingly.
In the result, the appeal filed by the assessee is dismissed. Order pronounced on this 04th day of September, 2019.
Sd/- Sd/- (Chandra Poojari) (George George K.) ACCOUNTANT MEMBER JUDICIAL MEMBER
Cochin ; Dated : 04th September, 2019. Devdas*
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Copy of the Order forwarded to : 1. The Appellant. 2. The Respondent. 3. The Pr.CIT, Thrissur. 4. The CIT(A) Thrissur. 5. DR, ITAT, Cochin 6. Guard file. BY ORDER,
(Asstt. Registrar) ITAT, Cochin