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Facts
The assessee, a Primary Agricultural Co-operative Credit Society, had cash deposits in its account. The Assessing Officer (AO) reopened the assessments and, after accepting the nature and source of deposits, disallowed the deduction under Section 80P solely because the Return of Income (RoI) was filed belatedly.
Held
The Tribunal held that while the AO initially disallowed the deduction under Section 80P due to belated filing of the RoI, the delay was subsequently condoned by the Chief Commissioner of Income Tax. Since the lacuna of belated filing was rectified, there was no impediment to grant the deduction under Section 80P.
Key Issues
Whether the deduction under Section 80P can be denied solely on the ground of belated filing of the Return of Income when the delay has been subsequently condoned.
Sections Cited
80P, 147, 148A, 148, 139(1), 119(2)(b)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI
Before: SHRI ABY T. VARKEY & SHRI JAGADISH
आदेश / O R D E R PER ABY T. VARKEY, JM: These are appeals preferred by the assessee Primary Agricultural Co-operative Credit Society against the order of the Learned Commissioner of Income Tax (Appeals)/NFAC, (hereinafter referred to as "the Ld.CIT(A)”), Delhi, both dated 27.08.2024 for the Assessment Year (hereinafter referred to as "AY”) 2018-19 & 2019-20 respectively.
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Both the parties agreed that for both assessment years under challenge, the assessment orders as well as the Ld.CIT(A)’s order are similar/identical and therefore, the grounds of appeal are also similar for both years, hence AY 2019-20 is taken as the lead case and the decision of it, will decide the fate of AY 2018-19.
1. 3. The main grievance of the assessee is against the action of the Ld.CIT(A)/NFAC disallowing the deduction claimed u/s.80P of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act‘) of Rs.10,04,281/- for AY 2019-20 and for AY 2018-19 [the AO disallowed deduction u/s.80P to the tune of Rs.9,33,060/-].
The brief facts are that the AO received information that assessee had deposited cash amounting to Rs.1,22,56,300/- in its account with Erode District Central Co-operative Bank Ltd., during the relevant AY 2019-20 [in AY 2018-19, similarly the AO got information that cash amounting to Rs.89,20,000/- was deposited with the same bank]. And the AO reopened the assessments and gave an opportunity to the assessee as per Section 148A(b) of the Act vide notice dated 17.02.2023.
But the assessee didn’t respond and hence, the AO passed an order u/s.148A(d) of the Act on 08.03.2023 and issued notice u/s.148 on the same day. Pursuant to the notice, assessee filed its return of income (RoI) on 14.11.2023 declaring total income at Rs.NIL after claiming & 2763/Chny/2024 (AYs 2019-20 & 2018-19) AA222 Kethelrave PACCS Ltd. deduction of Rs.10,04,281/- under Chapter VI-A of the Act. [Similarly for AY 2018-19, pursuant to the notice u/s.148 of the Act, the assessee filed RoI on 15.11.2023 declaring total income at Rs.NIL after claiming deduction of Rs.9,33,065/- under Chapter VI-A of the Act]. Thereafter, the AO asked the assessee to file the relevant evidences regarding the nature and source of the cash deposits to the tune of Rs.1,22,56,300/- for AY 2019-20; and Rs.89,20,000/- for AY 2018-19; and pursuant to which, assessee filed relevant documents to prove that assessee was a Co- operative Society, registered under the Tamilnadu Cooperative Societies Act, 1983; and its main objects was to serve the interest of its members in the area of operation. And that the assessee has raised funds by collecting deposits from its Members, and providing loan facilities to its Members in cash only. After going through the relevant documents filed by the assessee, the AO recorded his satisfaction about the source of the cash deposits as explained by assessee and didn’t drew any adverse findings against the assessee. However, the AO denied the deduction claimed u/s.80P of the Act only on the ground that the assessee had belatedly filed RoI and didn’t file the RoI within the due date as specified under sub-section (1) of sec.139 of the Act for relevant assessment year and therefore, disallowed Rs.10,04,281/- for AY 2019-20 and likewise Rs.9,33,060/- for AY 2018-19.
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Aggrieved, the assessee preferred an appeal before the Ld.CIT(A) who also reiterated the views of the AO that since, the assessee didn’t file the RoI within the due date as specified u/s.139(1) of the Act, the AO rightly disallowed deduction u/s.80P of the Act, and thus dismissed the appeals of the assessee.
Aggrieved, the assessee is in appeal before this Tribunal.
We have heard both the parties and perused the material available on record. We find that even though assessment of the assessee for AY 2019-20 & 2018-19 was re-opened u/s.147 of the Act for examining the cash deposits in its account as noted supra, the AO has accepted the nature and source of the cash deposits and didn’t draw any adverse inference against the assessee on this score. However, the AO noted that the assessee didn’t file RoI u/s.139(1) of the Act in both the Assessment years and had only filed return pursuant to the notice issued u/s.148 of the Act. In other words, the assessee had filed RoI for both years belatedly after the due date prescribed u/s.139(1) of the Act and therefore, the deduction claimed u/s.80P of the Act was disallowed by the AO. However, in this regard it has been brought to our notice that the assessee had filed petition for condonation of delay in filing of the return (RoI) before the Ld.CCIT, Coimbatore, u/s.119(2)(b) of the Act relying on Circular No.13/2023 dated 26.07.2023; and pursuant to it, the Ld.CCIT & 2763/Chny/2024 (AYs 2019-20 & 2018-19) AA222 Kethelrave PACCS Ltd. vide order dated 29.05.2024 [for both assessment years 2018-19 & 2019-20] has condoned the delay in filing of the return u/s.139(1) of the Act. Therefore, it is noted that the ground on the basis of which the disallowance u/s 80P was made is not existing after the order passed by Ld CCIT (supra).
Further, it is noted that the AO in his assessment order has accepted the eligibility of the assessee society to claim deduction u/s.80P of the Act by taking note of the fact that assessee is a co-operative society registered under the Tamilnadu Cooperative Societies Act, 1983; and that it serve the interest of its members and provides loan facilities to its Members; and the only reason to deny the claim of deduction u/s.80P is noted to be not because of any ineligibility to claim the same but because assessee society failed to file within the prescribed time RoI u/s.139(1) of the Act viz for belated filing of RoI, which lacuna has now been rectified as noted supra. Therefore, there is no fetter to grant deduction u/s.80P of the Act, hence, we are of the view that deduction should be allowed u/s.80P of the Act to the assessee for both assessment years and we order accordingly.
& 2763/Chny/2024 (AYs 2019-20 & 2018-19) AA222 Kethelrave PACCS Ltd. 9. In the result, appeals filed by the assessee are allowed.