CHILODA SEVA SAHAKARI MANDALI LIMITED,GANDHINAGAR vs. THE ITO, WARD-1 (PREVIOUSLY WARD-5), GANDHINAGAR

The assessee Chiloda Seva Sahakari Mandali is assessed in the status of AOP/BOI. The assessee had not filed the original return of income for assessment year 2017- 18 within the time limit specified u/s. 139(1) of the Income Tax Act. Notice u/s. 142(1) was issued on 19-12-2017 upon which also the assessee did not file return within the time limit. The Assessing Officer proceeded for best judgment assessment. Notice u/s. 142(1) of the Act along with detailed questionnaire was issued on 14-08-2019 and show cause notice on 24-09-2019. The assessee filed return of income for assessment year 2017-18 on 17-10-2019 which was after the due date for filing return of income as the said date expired on 31-03-2018. Thus, the Assessing Officer treated the return filed on 17-10-2019 as nonest. The assessee society derived total income at nil in their computation sheet after claiming entire gross total income as deduction u/s. Chapter 6A of the Act. The Assessing Officer held that the assessee neither filed the return of 2 Chiloda Seva Sahakari Mandali Ltd., A.Y. 2017-18 income within the time allowed u/s. 139(1) of the Act, nor filed return within the time specified in the notice u/s. 142(1), hence in the absence of filing of return of income within the time limit prescribed under Income Tax Act, no claim of deduction u/s. 80P of the Act is allowed. Thus, the Assessing Officer assessed the total income at Rs.10,48,964/-.

Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee.

The ld. A.R. submitted that the assessee is a registered co-operative society engaged in providing certain services to its members. The assessee also provides finances to its members at concessional rate of interest as well as provides agricultural products such as seeds, fertilizers etc to the members of the society out of contribution received from the said members. The ld. A.R. submitted that the said co- operative society is administered by appointed committee members. Since the members of the committee do not have much knowledge about filing of ITR and was not properly advised, no ITR for assessment year 2017-18 was filed u/s. 139(1) of the Income Tax Act. The ld. A.R. submitted that in response to notice u/s. 142(1), the assessee filed income tax return and furnished the details. The ld. A.R. submitted that the Assessing Officer disallowed the claim of the deduction made u/s. 80P(2) of the Income Tax Act, thereby observing that the return of income filed are nonest and Chiloda Seva Sahakari Mandali Ltd., A.Y. 2017-18 passed assessment u/s. 144 instead of 143(3) of the Act. The ld. A.R. submitted that the Assessing Officer ignored the fact that section 80A(5) is direct in nature and since the assessee filed return in response to notice u/s. 142(1), the return cannot be treated as mandatory filing of income tax return u/s. 139 wherein section 80AC will apply. The ld. A.R. relied upon following case laws:

The ld. D.R. relied upon the assessment order and the order of the CIT(A).

We have heard both the parties and perused all the relevant material available on record. The assessee has filed income tax return for assessment year 2017-18 in response to notice u/s. 142(1) of the Act as the assessee could not file return of income u/s. 139(1) of the Act. At the time of assessment proceedings while filing the income tax return, the assessee has claimed deduction u/s. 80P(2) of the Act as the assessee has earned interest income from Chiloda Seva Sahakari Mandali Ltd., A.Y. 2017-18 Ahmedabad District Co-operative Bank and thus entitle for the said deduction. Since the assessee has not filed the return u/s. 139(1) within the due date, the Assessing Officer disallowed deduction u/s. 80P of the Act. In the present case, the assessee has filed the return of income before concluding of the assessment proceedings and in response to notice u/s. 142(1) of the Act and thus provisions of section 80A(5) of the Act will come into play. The observation of the Assessing Officer that return u/s. 139 has to be filed within the due date and the said compliance is mandatory will not be applicable in present case as the assessee has filed the return of income during assessment proceedings. The ld. A.R. relied upon the decision of the Tribunal in case of Gandhingar District Co-operative Society Ltd. (supra) wherein the Tribunal held as under: “7. We have heard both the parties and perused all relevant materials on record. At the time of hearing, the assessee has relied upon the decision of Bangalore Tribunal in case of M/s. Parthamika Krishi Pattina Sahakara Sangha Ltd. vs. ITO order dated 13-06-2022 wherein it is pointed out that not filing of income tax return without unintentional delay or not filing of return may be condoned. The provisions of section 80A(5) of the Act will come into play when only the return of income is filed by a assessee and the claim for deduction under chapter VIA of the Act is not claimed in the said return. Since the assessee did not file return of income for assessment year 2017- 18, there was no question of invocating the provisions of section 80A(5) of the Act. The Tribunal has categorically mentioned in para 8 that neither the Assessing Officer nor the CIT(A) examined the conditions for allowing deduction u/s. 80P of the Act while passing the order simply thereby invoking section 80AC is not justifiable. In the present case also, the revenue authorities have not examined the claim of the assessee for deduction u/s. 80P of the Act and therefore it will be appropriate to remand this issue regarding eligibility to claim deduction u/s. 80P of the Act in the sense with regard to the quantum of deduction and also with regard to the other conditions for allowing deduction u/s. 80P of the Act and the Assessing Officer after verifying the same Thus, in the present case, assessee’s case also facts remain as it is and hence the appeal of the assessee is partly allowed for statistical purpose.

In the result, the appeal of the assessee is partly allowed for statistical purpose.