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Facts
The assessee, a co-operative society, did not file its return of income for AY 2017-18. The Assessing Officer made an addition of Rs. 13,44,561/- by disallowing deduction u/s 80P(2). The CIT(A) dismissed the assessee's appeal.
Held
The Tribunal noted that the revenue authorities did not examine the conditions for allowing deduction u/s 80P. Therefore, the issue of eligibility for deduction u/s 80P, including the quantum and other conditions, was remanded back to the Assessing Officer.
Key Issues
Whether the disallowance of deduction u/s 80P is justified when the assessee did not file its return of income and whether the revenue authorities properly examined the eligibility criteria for the deduction.
Sections Cited
250, 80P, 80A(5), 80AC, 139, 142(1), 144, 80P(2)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, AHMEDABAD “SMC” BENCH
Before: Ms. Suchitra Kamble & Shri Makarand V. Mahadeokar
आदेश/ORDER PER : SUCHITRA KAMBLE, JUDICIAL MEMBER:-
This is an appeal filed against the order dated 14-08- 2024 passed by ld. CIT(A), Addl/JCITA(A)-12, Mumbai for assessment year 2017-18.
The grounds of appeal
are as under:- “1. The order passed u/s. 250 by ADDL/JCIT (A)-12, Mumbai confirming addition of Rs. 13,44,561/= is against law, equity and justice.
2. The Ld. ADDL/JCIT (A) 12, Mumbai erred in law and or on facts in confirming the disallowance of claim made u/s 80P invoking section 80A(5) ignoring the fact that relevant section do not speak about filing of ITR and ignoring submission made and documentary evidences filed.
3. The Ld. ADDL/JCIT(A) - 12, Mumbai erred in law and or on facts in confirming the disallowance of claim u/s 80P ignoring the fact that section 80AC (ii) for claim of deduction u/s 80P in respect of income falling under Chapter VIA-C inserted from 01/04/2018 by Finance Act, 2018.
4. The Ld. ADDL/JCIT 12, Mumbai erred in law and or on fact in confirming disallowance of Rs. 13,44,561/- being claim of deduction made u/s 80P ignoring the fact that ITR could not be filed due to technical reason, however Statement of Computation of total income and Hard copy of ITR to be filed were furnished during Assessment proceeding.
5. The appellant craves liberty to add, amend, N.A. alter or modify all or any grounds of appeal before final appeal.”
3. The assessee is a co-operative society providing certain services to its members but has not filed return of income as required u/s. 139 of the Act. The assessee derives income from business and profession. As per the information, the assessee made cash/cheque/transfer deposits of Rs. 24,21,775/-. Accordingly, notice u/s. 142(1) dated 28-12- 2017 was issued to the assessee requesting to file return of income on or before 27-01-2018. Thereafter, again notice u/s. 142(1) of the Act was issued on 10-04-2019 calling upon details/information in respect of cash deposits and other details required for finalization of assessment. The assessee did not comply with the same. Therefore, the Assessing Officer proceeded on the basis of section 144 of the Income Tax Act. The Assessing Officer made addition of Rs. 13,44,561/- thereby disallowing deduction u/s. 80P(2) of the Act.
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 the assessee is a registered co- operative credit society limited engaged in giving loans to its members out of contribution received from them and majority of the members are farmers. Members of the committee do not have much knowledge about filing of the ITR and were not properly advised by the auditors. Therefore, the ld. A.R. submitted that no return of income was filed for assessment year 2017-18. The ld. A.R. submitted that audit report of financial year 2016-17 relevant to assessment year 2017-18 was done on 28-12-2017. Later on, the due date to file ITR, the reasons stated was the bank account of the assessee maintained with the Gujarat District Co-operative Bank Ltd. was freezed by the Income Tax Department and through oversight appeal was not filed by the chartered accountant. The ld. A.R. submitted that during the assessment proceedings, the assessee furnished statement of computation of chargeable income, income and expenditure account, balance sheet, registration certificate etc. vide submission filed dated 26-09-2019 which is reflected in para 3 of the assessment order. The ld. A.R. submitted that section 80A(5) is directory and therefore the interpretation of mandatory requirement does not arise in case of assessee to file the return of income when the assessee is not having income at tall. The ld. A.R. relied upon the following decisions:-
(i) M/s. Parthamika Krishi Pattina Sahakara Sangha Ltd. vs. ITO- (ii) Krushi Vibhag Karmachari Vrund Sahakari Pat Sanstha Maryadit vs. ITO- (iii) The Wanka Vividh Karyakari Seva Sahkari Mandli Ltd. vs. ITO-ITA No. 470/SRT/2003
The ld. D.R. submitted that since the assessee has not filed any return of income, the assessee cannot claim deduction u/s. 80P as the assessee is required to comply with the filing of return of income to claim the specific deduction which is not done in present case. The ld. D.R. relied upon the assessment order and the order of the ld. CIT(A).
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 adjudicate as per Income Tax Act. Thus, the appeal of the assessee is partly allowed for statistical purposes.
In the result, the appeal of the assessee is partly allowed for statistical purposes.