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Facts
The assessee, a cooperative society, filed its income return belatedly for AY 2018-19. CPC Bengaluru processed it under Section 143(1) and denied the Section 80P deduction of Rs. 1,52,407/- due to the late filing. The rectification application under Section 154 was also rejected, and the CIT(A) sustained the disallowance.
Held
The Tribunal held that for AY 2018-19, CPC lacked the jurisdiction under Section 143(1) to disallow a Section 80P deduction solely based on a belated return, as the enabling statutory amendments (Section 80AC amended by Finance Act 2018, and Section 143(1)(a)(v) by Finance Act 2021) were not in force for that assessment year. The disallowance was deleted, and the AO was directed to allow the deduction.
Key Issues
Whether the CPC had the jurisdiction under Section 143(1) to disallow Section 80P deduction for a belated return for Assessment Year 2018-19, prior to specific statutory amendments enabling such disallowance.
Sections Cited
80P, 143(1), 154, 139(1), 139(4), 80AC, 119(2)(b)
AI-generated summary — verify with the full judgment below
Order PER VIKRAM SINGH YADAV, A.M. : This is an appeal filed by the Assessee against the order of the Ld. CIT(A) / NFAC, Delhi dt. 27/05/2024 pertaining to Assessment Year 2018-19 wherein the assessee through its various grounds of appeal
has effectively challenged the sustenance of disallowance of deduction amounting to Rs. 1,52,407/- claimed under section 80P of the Act.
2. Briefly the facts of the case are that the assessee is a primary Agriculture Co-operative service society registered under Societies Act. It filed its return of income on 27/12/2018 which was processed under section 143(1) by CPC Bangaluru and vide its intimation dt. 31/05/2019, the claim of deduction under section 80P has been denied.
3. Being aggrieved, the assessee filed the rectification application under section 154 and the said rectification application was also rejected by the JAO vide order passed under section 154 r.w.s. 143(1) dt. 21/10/2020.
4. The assessee carried the matter in appeal before the Ld. CIT(A) who has sustained the said action of the CPC/JAO.
5. Against the said findings, the assessee is in appeal before us.
6. During the course of hearing, the Ld. AR submitted that the assessee is a cooperative society registered under the Society Act, 1860 and its accounts are subjected to audit by the Government Auditor and the said audit was only completed on 25/12/2018 and which has basically resulted in delay in filing of the return of income which was filed on 27/12/2019. It was submitted that the delay in filing the return of income was beyond the control of the assessee and the assessee cannot be penalized for the delay in filing the return whereby its lawful claim of deduction under section 80P for which assessee is otherwise eligible be denied. It was submitted that even the CBDT Circular vide its Circular No. 13/2023 dt. 26/07/2023 has realized the hardship which is caused to the Cooperative Societies whereby the claim of deduction under section 80P has been denied on account of delay in getting accounts audited under respective state laws and to mitigate genuine hardship, the powers have been granted to the Chief Commissioner of Income Tax and Director General of Income Tax to consider the condonation application under section 119 (2)(b) of the Act and it was accordingly submitted that the delay in filing the return of income be condoned and the AO be directed to allow the claim of deduction under section 80P of the Act.
7. It was further submitted that the CPC, Bagaluru has not provided the reasonable opportunity to the assessee in terms of proposed disallowance in compliance with first proviso to Section 143(1)(a) of the Act and has straight away made the adjustment by way of denial of claim of deduction under section 80P of the Act.
8. It was further submitted that no doubt, Section 80AC as amended by the Finance Act, 2018 mandated that even for claiming deduction claimed under section 80P of the Act, the return of income has to be fled before due date as specified under section 139(1) and 139(4) however it is a matter of fact that Sub- Clause (v) of Section 143(1)(a) was amended by the Finance Act 2021 and therefore, the enabling provision to address the amendment in Section 80AC came into place only w.e.f A.Y. 2021-22 and therefore, the CPC Bangaluru doesn’t have the necessary jurisdiction to make the disallowance while processing the return of income and issuance of intimation under section 143(1) of the Act for the impugned assessment year i.e, 2018-19.
9. It was submitted that there are series of decisions where Coordinate Chandigarh Benches have consistently held that in absence of the enabling provisions for the relevant assessment year, the CPC, Bangaluru cannot make the subject adjustment while processing the return of income. In this regard, our reference was drawn to the decision of Coordinate Chandigarh Benches in case of The Lanjani Co-op. Agriculture Service Society Ltd. & Ors Vs. DCIT(CPC) Bangaluru (ITA No. 332/Chd/2021), Balol Co-op Agriculture Service Society Ltd. Vs. The CIT(CPC) Bangaluru (ITA No. 79/Chd/2022), Karohta Co-op Agriculture Service Society Ltd. Vs. ITO, Ward Hamirpur (ITA No. 447/Chd/2022), Mundkhar Co-op. Agriculture Service Society Ltd. Vs. The ITO, Ward Hamirpur (ITA No. 513/Chd/2022). 10. It was further submitted that similar view has been taken by various other Benches of the Tribunal such as Indore Benches in case of Nagar Palika Nigam Karmchari Kalyan Sakh Sahakari Sanstha Maryadit, Ujjain Vs. CPC, Bangaluru (ITA No. 198/Ind/2024), Mumbai Benches decision in case of The Premier Co- operative Credit Vs. CIT(A) NFAC Delhi (ITA No. 2605/Mum/2024), Nagpur Benches in case of Food Corporation of India Employees Co-operative Society Vs. A.O/ CPC (ITA No. 422/Nag/2022).
11. Per contra, the Ld. DR has relied on the findings of the Ld.CIT(A) wherein the latter has placed reliance on the amended provisions of section 80AC wherein it has been held that in order to claim the deduction under section 80P, the return of income has to be filed within the specified time under section 139(1) of the Act and since, in the instant case, the return has been filed on 27/12/2018, the assessee is not eligible for deduction.
12. Have heard the rival contentions and pursued the material available on record. It is not in question that Section 80AC of the I.T. Act, as amended by Finance Act, 2018, stipulated that for claiming deduction u/s 80P of the Act, the return of income was required to be filed before the due date, as prescribed by section 139(1) and in the present case, the return was filed belatedly. However, it was only by the amendment to section 143(1)(a)(v) brought in by Finance Act, 2021, that the CPC can be said have been vested, exercising powers u/s 143(1)(a), to make disallowance on the ground of belated return. Prior to that, as per the un-amended provisions, the AO could disallow a claim u/s 143(1) (a) only on the grounds of arithmetical error or that the Assessee had made an incorrect claim, etc which is again not a case as so defined in the explanation which doesn’t include denial of deduction due to delayed filing of return of income. Reference, in this regard, may be had to ‘Fatehraj Singhvi & Ors. v. UOI and Ors’; 289 ITR 602 (Kar.). It goes without saying that in the absence of enabling powers, no disallowance can be made. As such, enabling provisions being absent, the CPC did not have the jurisdiction to make the disallowance in question, in the order u/s 143 (1) of the Act for impugned assessment year 2018- 19. This is a consistent stand taken by the Chandigarh Benches and therefore, to maintain the rule of consistency and in absence of the said orders being reversed or any contrary view taken by the higher authorities, we find merit in the grievance raised by the assessee and the same is accepted. The order under appeal is accordingly reversed. Consequently, the disallowance of Rs. 1,52,407/- is hereby deleted and the AO is directed to allow relief to the assessee in terms of claim of deduction so made u/s 80P of the Act.