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Facts
The assessee, Pune Zilla Madhyawati Sakakak (a Credit Co-operative Society), claimed deductions under Section 80P(2)(a)(i), 80P(2)(c), and 80P(2)(d) in its Income Tax Return for A.Y. 2019-20, filed within the extended due date. The Centralized Processing Centre (CPC), while processing the return under Section 143(1), disallowed deductions of Rs. 37,43,219/- and Rs. 50,000/- claimed under Section 80P(2)(a)(i) and 80P(2)(c) respectively, without providing any reason. The assessee appealed this disallowance.
Held
The tribunal held that the CPC erred in disallowing the deductions as the assessee's case did not fall under any of the sub-clauses of Section 143(1) that permit such adjustments. The tribunal noted that being a Credit Co-operative Society registered under the Maharashtra Co-operative Societies Act, the assessee was eligible for the claimed deductions under Section 80P(2)(a)(i) and 80P(2)(c). The Assessing Officer was directed to allow these claims.
Key Issues
Whether the Centralized Processing Centre (CPC) was justified in disallowing deductions under Section 80P(2)(a)(i) and 80P(2)(c) without reason while processing the return under Section 143(1) of the Income Tax Act, 1961, when the assessee, a Credit Co-operative Society, was eligible for such deductions.
Sections Cited
250, 143(1), 139(1), 80P, 80P(2)(a)(i), 80P(2)(c), 80P(2)(d), 142, 10AA, 80-IA, 80-IAB, 80-IB, 80-IC, 80-ID, 80-IE, 89, 90, 90A, 91, Chapter VIII
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Income Tax Appellate Tribunal, PUNE BENCHES “SMC” :: PUNE
Before: DR.DIPAK P. RIPOTE & SHRI VINAY BHAMORE
Assessee by CA-Sarang Gudhate and Ashwini V. Shendye – Advocate – AR’s Revenue by Shri Ratnakar Shelake – Addl.JCIT(DR) Date of hearing 30/04/2025 Date of pronouncement /04/2025 आदेश/ ORDER
PER DR. DIPAK P. RIPOTE, AM:
This is an appeal filed by the assessee against the order of ld.Addl./Joint Commissioner of Income Tax(Appeals)-1, Gurugram passed under section 250 of the Income Tax Act, 1961 for A.Y.2019-20 dated 10.12.2024. The assessee has raised the following grounds of appeal :
“1. Under the facts and circumstances of the case and in law, CPC has erred in disallowing deductions under Section 80P covered under Chapter VI A of Rs. 37,93,219/- 2. Under the facts and circumstances of the case and in law, CPC has erred in disallowing deductions under Section 80P covered under Chapter VI A of Rs. 37,93,219/- as scope in intimation u/s 143(1) is limited.
Under the facts and circumstances of the case and in law and by denying the rectification of the mistake the Assessing Authority is collecting the tax from the assessee for which it had no jurisdiction to collect. The Article 265 of the Constitution of India does not permit to collect the tax without authority of law. The CPC had no authority to collect the tax which was inherently exempt under the Income tax Act, 1961.
The appellant craves the permission to add, amend, modify, revise, substitute, delete or alter any/all of the above grounds of appeal
if deemed necessary at the time of hearing of the appeal.” Submission of ld.AR :
2. Ld.AR for the assessee filed a paper book. Advocate Ashvini explained that assessee’s claim for 80P has been denied by Centralized Processing Centre under section 143(1) of the Act. She further explained that assessee had filed Return of Income within the time allowed u/s.139(1) of the Act. She took us through the Return of Income and explained that Assessee had claimed 80P(2)(a)(i) of Rs.37,43,219/-, Section 80P(2)(c) of Rs.50,000/- and Section 80P(2)(d) of Rs.67,07,231/-. However, CPC has not allowed 80P(2)(a)(i) and 80P(2)(a)(c) of the Act. She further stated that CPC has erred in not allowing the assessee’s claim as assessee has rightly claimed all the amounts and there is no provision to disallow any such claim.
Submission of ld.DR : 3. The ld.DR for the Revenue relied on the order of the Assessing Officer and ld.CIT(A). The ld.DR read out the relevant paragraph of ld.CIT(A)’s order and pleaded that the assessee during appeal proceedings before the ld.CIT(A) had made incorrect submission. Therefore, order of ld.CIT(A) may be upheld.
Findings & Analysis : 4. We have heard both the parties and perused the records. The assessee is a Credit Co-operative Society of Employees of PDCC Bank. Assessee is registered under Maharashtra Cooperative Societies Act. On perusal of the order u/s.143(1) dated 02.12.2020 for A.Y.2019-20, it is noted that assessee had filed Return of Income on 09.10.2019 and extended due date for filing Return of Income was 31.10.2019. Thus, the Return of Income was filed within the extended due date for A.Y.2019-20. It means the Return of Income was filed validly u/s.139(1) of the Act. We have perused the Return of Income and noted that Assessee had claimed following deductions :
Section 80P(2)(a)(i) of Rs.37,4,3219/- Section 80P(2)(c) of Rs.50,000/- and Section 80P(2)(d) of Rs.67,07,231/-.
4.1 However, the Centralized Processing Center in the order u/s.143(1) has allowed deduction only of Rs.67,07,231/-. We have perused the entire order u/s.143(1), but could not find any reason for such disallowance. We requested ld.DR for the Revenue also to specify the exact reason for such disallowance. Therefore, the case was adjourned on 28.04.2025 to 30.04.2025. The ld.AR filed a Screenshot to demonstrate that she has submitted the copy of the [A]
order u/s.143(1) as available on the system. Ld.AR also submitted that they have also raised a grievance, but no reply has been received.
4.2 Be it as it may be, the fact is that in the order u/s.143(1) of the Act, the CPC has disallowed assessee’s claim of Section 80P(2)(a)(i) and 80P(2)(c) without specifying any reason. We have already mentioned that assessee had filed Return of Income u/s.139(1) of the Act.
4.3 The Section 143(1) is reproduced here as under : “143. (1) Where a return has been made under section 139, or in response to a notice under sub-section (1) of section 142, such return shall be processed in the following manner, namely:— (a) the total income or loss shall be computed after making the following adjustments, namely:— (i) any arithmetical error in the return; (ii) an incorrect claim, if such incorrect claim is apparent from any information in the return; (iii) disallowance of loss claimed, if return of the previous year for which set off of loss is claimed was furnished beyond the due date specified under sub-section (1) of section 139; (iv) disallowance of expenditure indicated in the audit report but not taken into account in computing the total income in the return; (v) disallowance of deduction claimed under sections 10AA, 80-IA, 80- IAB, 80-IB, 80-IC, 80-ID or section 80-IE, if the return is furnished beyond the due date specified under sub-section (1) of section 139; or (vi) addition of income appearing in Form 26AS or Form 16A or Form 16 which has not been included in computing the total income in the return:
Provided that no such adjustments shall be made unless an intimation is given to the assessee of such adjustments either in writing or in electronic mode: Provided further that the response received from the assessee, if any, shall be considered before making any adjustment, and in a case where no response is received within thirty days of the issue of such intimation, such adjustments shall be made: 36[Provided also that no adjustment shall be made under sub-clause (vi) in relation to a return furnished for the assessment year commencing on or after the 1st day of April, 2018;] (b) the tax, interest and fee, if any, shall be computed on the basis of the total income computed under clause (a); (c) the sum payable by, or the amount of refund due to, the assessee shall be determined after adjustment of the tax, interest and fee, if any, computed under clause (b) by any tax deducted at source, any tax collected at source, any advance tax paid, 37[any relief allowable under section 89,] any relief allowable under an agreement under section 90 or section 90A, or any relief allowable under section 91, any rebate allowable under Part A of Chapter VIII, any tax paid on self-assessment and any amount paid otherwise by way of tax, interest or fee; (d) an intimation shall be prepared or generated and sent to the assessee specifying the sum determined to be payable by, or the amount of refund due to, the assessee under clause (c); and (e) the amount of refund due to the assessee in pursuance of the determination under clause (c) shall be granted to the assessee: Provided that an intimation shall also be sent to the assessee in a case where the loss declared in the return by the assessee is adjusted but no tax, interest or fee is payable by, or no refund is due to, him: Provided further that no intimation under this sub-section shall be sent after the expiry of one year from the end of the financial year in which the return is made. Explanation.—For the purposes of this sub-section,— (a) "an incorrect claim apparent from any information in the return" shall mean a claim, on the basis of an entry, in the return,— (i) of an item, which is inconsistent with another entry of the same or some other item in such return;
(ii) in respect of which the information required to be furnished under this Act to substantiate such entry has not been so furnished; or (iii) in respect of a deduction, where such deduction exceeds specified statutory limit which may have been expressed as monetary amount or percentage or ratio or fraction;” 4.4 Thus, u/s.143(1), the CPC can make adjustment only as mentioned in section 143(1) of the Act. However, it is noted that assessee’s case does not fall under any of the sub-clauses of section 143(1). Therefore, CPC has erred in disallowing the assessee’s claim of deduction u/s.80P(2)(a)(i) and 80P(2)(c) of the Act. Even otherwise, assessee is eligible for said deduction being Credit Co- operative Society duly registered under Maharashtra Co-operative Societies Act. In these facts and circumstances of the case, the AO is directed to allow assessee’s claim of deduction u/s.80P(2)(a)(i) and 80P(2)(c) of the Act. Accordingly, grounds of appeal raised by the assessee are allowed.