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Facts
The assessee, a co-operative society, claimed a deduction under Section 80P which was disallowed by the CPC under Section 143(1) without providing an opportunity of being heard, leading to an addition of Rs. 2,73,300 to its income. The Ld. CIT(A) dismissed the assessee's appeal after noting an updated return was filed and considering Section 80AC.
Held
The Tribunal held that the amendment to Section 143(1)(a)(v), which allows disallowance of Chapter VI-A deductions (including Section 80P) during processing, came into effect from April 1, 2021. Therefore, for Assessment Year 2020-21, the Assessing Officer did not have the power to make such a prima facie adjustment under Section 143(1). Such disallowance could only be made during a scrutiny assessment under Section 143(3).
Key Issues
Whether the disallowance of Section 80P deduction during processing under Section 143(1) was valid for AY 2020-21, considering the effective date of the relevant amendment to Section 143(1)(a)(v).
Sections Cited
250, 80P, 143(1)(a), 143(1), 80AC, 139(1), 143(3), 10AA, 80-IA, 80-IAB, 80-IB, 80-IC, 80-ID, 80-IE, Chapter VI-A
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Income Tax Appellate Tribunal, KOLKATA ‘SMC’ BENCH, KOLKATA
Before: SHRI SONJOY SARMA & SHRI RAKESH MISHRA
order
: 08-December-2025 ORDER
PER RAKESH MISHRA, ACCOUNTANT MEMBER:
This appeal filed by the assessee is against the order of the Addl/JCIT(A)-9, Delhi [hereinafter referred to as Ld. ‘Addl/JCIT(A)'] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for AY 2020-21 dated 04.03.2025.
The assessee is in appeal before the Tribunal raising the following grounds of appeal:
1. That on the facts and in the circumstances of the case, the Ld. AddI/JT. CIT(A) erred in passing the order without considering the facts of the case and thereby, erred in not allowing the deduction claimed u/s.80P, which was wrongly added in the intimation u/s.143(1)(a) without issuing any show cause notice and thus the income assessed was contrary to the facts and law.
2. That on the facts and in the circumstances of the case, the Ld. Addl./Jt. CIT(A) erred in not considering the statement of facts and the submissions made in course of the appeal proceedings and erred in sustaining the ITA No.: 943/KOL/2025 Assessment Year: 2020-21 Chunakhali Samabay Krishi Unnayan Samity Ltd. disallowance claimed in the return of income, which was arbitrary and lawful.
3. That on the facts and in the circumstances of the case, the Ld. Addl./Jt. CIT(A) failed to adjudicate upon the order passed u/s.143(1) in its proper perspective
4. That the appellant craves leave to urge such other ground or grounds before or at the time of hearing of appeal.”
3. Brief facts of the case are that the assessee is a co-operative society formed by the cultivators for the benefit of its members for marketing of agricultural produce grow by its members and purchase of agricultural seeds, live stocks for the purpose of supplies the same to its members. The assessee claims to maintain proper books of accounts and the same are audited by the Auditor of the Co-operative Societies and the same claim to be checked and duly certified by a chartered account as per provisions of Tax Audit. The assessee derived income from interest on loan to its members and interest on Fixed deposit. Return of income was duly submitted claiming deduction u/s 80P and the total taxable income was show at Nil. The learned A.O. CPC passed an order u/s 143(1) on a total income of Rs. 2,73,300.00 without affording any reasonable opportunity of being heard to the assessee, it was claimed before the Ld. CIT(A). Aggrieved with the intimation under section 143(1) of the Act, the assessee filed an appeal before the Ld. CIT(A) who noted that an updated return was filed, examined the provisions relating to the updated return of income, the provision of section 80AC and dismissed the appeal of the assessee.
4. Aggrieved with the order of the Ld. CIT(A), the assessee has filed the appeal before the Tribunal.
5. Rival submissions were heard and the record and the submissions made have been examined. It was submitted by the the Ld. AR that the ITA No.: 943/KOL/2025 Assessment Year: 2020-21 Chunakhali Samabay Krishi Unnayan Samity Ltd. deduction claimed under section 80P of the Act could not have been disallowed as it was not part of the prima facie adjustment and the amendment in this regard in section 143(1)(a) was introduced with effect from 01/04/2021 which is applicable for assessment year 2021– 22 and not for the AY 2020-21. The Ld. DR relied upon the order of the appellate authority and requested that the same may be confirmed.
6. We have considered the submissions made. Similar issue arose in the case of Panisheola Samabay Krishi Unnayan Samity Limited vs. Deputy Commissioner of Income Tax, Circle 4(2), Kolkata [ for the Assessment Year 2019-20] order dated 14.10.2024 and it has been held that the provisions relating to Chapter VI-A adjustments are applicable from 01.04.2021 and prior to that there was no power available to the Ld. AO to disallow the claim under the head “C.- Deductions in respect of certain incomes” under section 80P of Chapter VI-A of the Act. The relevant extract from the order is as under: