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Facts
The assessee, a cooperative society, filed a belated return declaring NIL income after claiming a deduction under Section 80P. The CPC disallowed this deduction citing violation of Section 80AC due to the belated filing. The assessee's subsequent rectification application and appeal to the CIT(A) were dismissed.
Held
The Tribunal held that the CIT(A) had inadvertently passed an order concerning the rectification application under Section 154, whereas the appeal before the CIT(A) was against the intimation under Section 143(1). The issue needed to be revisited by the CIT(A).
Key Issues
Whether the CIT(A) erred by addressing the appeal against a Section 154 order instead of the Section 143(1) intimation, and whether the Section 80P deduction should be allowed despite belated filing.
Sections Cited
139, 139(4), 80P, 80AC, 143(1), 154, 119(2)(b)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘SMC’ BENCH, BANGALORE
Before: SHRI WASEEM AHMED & SHRI KESHAV DUBEY
PER WASEEM AHMED, ACCOUNTANT MEMBER:
This is an appeal filed by the assessee against the order passed by the NFAC, Delhi vide order dated 26/03/2025 in DIN No. ITBA/NFAC/S/250/2024-25/1075049027(1) for the assessment year 2019-20.
The effective issue raised by the assessee is that the learned CIT(A) erred in holding the appeal filed before him was against rectification order u/s 154 of the Act and thereby further erred in confirming the intimation issued u/s 143(1) of the Act.
The relevant facts are that the assessee, a co-operative society, is registered under Karnataka Cooperative Societies Act 1959 and engaged in the business of providing credit facilities to its members. For the year under consideration, the assessee filed belated return of income under section 139(4) of the Act declaring income at NIL after claiming a deduction under section 80P of Act amounting to Rs. 5,07,058/- only. The return was processed under section 143(1) of the Act vide dated 11- 04-2021 wherein the CPC disallowed the deduction claimed under section 80P of the Act on account of violation of conditions prescribed under section 80AC of the Act i.e. return of income not filed within the due date prescribed under section 139 of the Act.
Thereafter, the assessee filed a rectification application under section 154 of the Act with the CPC but the same was also dismissed. Subsequently, the assessee also preferred an appeal before the learned CIT(A) against the intimation under section 143(1) of the Act.
The assessee before the ld. CIT-A contended that the return was filed within the time permitted under the Act, and the deduction claimed was valid and allowable. It was further submitted that the deduction under section 80P of the Act, being a benevolent provision enacted by Parliament to encourage and promote co-operative societies, must be interpreted liberally and in favour of the assessee. The assessee argued that if a deduction is otherwise allowable, the same should not be denied merely due to procedural lapses. It was pointed out that the CPC had .
Page 3 of 5 not considered the merits of the claim and rejected the deduction without proper verification. The assessee relied on CBDT Circular No. 13/2023 which supports condonation of delay under section 119(2)(b) of the Act and allows genuine claims to be considered. Accordingly, the assessee earnestly prayed that the learned CIT(A) may kindly consider the above factual and legal submissions and direct the Assessing Officer to allow the claim under section 80P of the Act.
However, the learned CIT(A) dismissed the appeal of the assessee by observing as under: 6.2 I have carefully considered the assessment order, the grounds of appeal
and the appellant's statement of facts. The Appellant is seeking relief on the grounds that CPC ought to have condoned the delay in filing the return of income and granted deduction under Section 80P of the Act. 6.3 The Appellant has filed an appeal against the rectification order under Section 154 of the Act. The Appellant has failed to bring on record what was the mistake apparent from the record which CPC had committed while processing the return and passing the rectification order. The adjustment has been made by the CPC, on the basis of information available in the return of income. If the appellant was aggrieved, it should have challenged the said order by filing appeal against the same. Apparently, the appellant has chosen not to do so. It has later on filed an application u/s 154 and claimed that the said disallowance was a mistake apparent from record. In rectification the most important aspect which needs to be looked into is whether the claim of the appellant within the scope of section 154 or not. Scope of rectification is limited to correcting error of fact or error of law, on the basis of material available on record. In the appeal under consideration the appellant has sought rectification on issues which will require fresh investigations of facts. The appellant has tried to use appeal against rejection of rectification application as a method to challenge the order u/s 143(1), as it has not filed any appeal against the same. Without prejudice to the same, the appellant has not shown, that it had ever filed any such request for condonation of delay and that such delay had been condoned. Anyhow, these aspects could have been looked into if the appeal was against order u/s 143(1), but for rectification purposes the assessing officer could not have taken into account these aspects being brought to his knowledge.
7. As a result, Ground of appeal No. 1 is dismissed.
Being aggrieved by the order of the learned CIT(A) the assessee is in appeal before us.
The learned AR before us submitted that the issue in the present case arises against the intimation issued under section 143(1) of the Act but the ld. CIT-A inadvertently has given finding on the order passed under section 154 of the Act. Accordingly, the ld. AR prayed to set-aside issue to the file of the ld. CIT-A for fresh adjudication as per law.
On the other hand, the learned DR before us vehemently supported the order of the authorities below.
We have heard the rival contentions of both the parties and perused the materials available on record. From the preceding discussion, we note that the appeal before the ld. CIT-A was filed against the intimation generated by the CPC under section 143(1) of the Act. However, on perusal of the finding of the learned CIT-A, it is seen that the learned CIT-A in advertently has given the finding against the order passed under section 154 of the Act. The issue in the present case is emanating from the intimation generated under section 143(1) of the act and not against the rectification order passed by the AO under section 154 of the Act. Accordingly, we hold that the issue on hand needs to be revisited by the learned CIT-A afresh as per the provisions of law. Accordingly, we set aside the issue to the file of the learned CIT- A for fresh adjudication as per the provisions of law and after providing reasonable opportunity to the assessee. Hence, the ground of appeal of the assessee is allowed for the statistical purposes.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in court on 23rd day of July, 2025