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Facts
The assessee, a co-operative society, failed to file its income tax return for AY 2010-11. Consequently, the AO completed an ex-parte assessment under Section 144 r.w.s. 147, disallowing a deduction under Section 80P and making a disallowance under Section 40(a)(ia). The CIT(A) upheld the AO's order, leading the assessee to file an appeal before the ITAT.
Held
The Tribunal confirmed the disallowance of Section 80P deduction, noting that the assessee was not eligible as the return of income was not filed within the prescribed time under Section 139(1) or in response to a notice under Section 148. The disallowance under Section 40(a)(ia) was also upheld, as the assessee failed to provide any evidence of being a primary agricultural credit society exempt from TDS or supporting documents for Form 15G/15H declarations.
Key Issues
1. Whether deduction under Section 80P is allowable if the return of income is not filed within statutory timelines or in response to a notice. 2. Whether disallowance under Section 40(a)(ia) is justified when the assessee fails to provide evidence of being an eligible primary agricultural credit society.
Sections Cited
144, 147, 148, 142(1), 139(1), 80P, 80P(2)(a)(i), 80A(5), 40(a)(ia)
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Income Tax Appellate Tribunal, COCHIN BENCH : COCHIN
Before: SHRI INTURI RAMA RAO & SHRI SOUNDARARAJAN K.
ORDER
PER SOUNDARARAJAN K., JUDICIAL MEMBER
This is an appeal filed by the assessee challenging the order of the NFAC, Delhi dated 21/06/2024 in respect of the A.Y. 2010-11 and raised the following grounds: “1. The appellate order passed by the Commissioner of Income Tax(Appeals),National Faceless Appeal Centre in respect of the appeal filed against the order of Income Tax Officer,Ward-5 relating to AY2010-`11,is opposed to law, facts and circumstances of your appellant's case.
2. The Commissioner of Income Tax(Appeals),erred in disallowing your appellants claim u/s 80P(2)(a)i).He ought to have found out that your appellant is a primary credit society entitled for deduction u/s 80P as pronounced by Honourable Supreme Court in the case of The Mavilayi Service Co-operative Bank Limited and Others vs Commissioner of Income, Calicut & another{reported in (2021)431 ITR(SC)}.
3. The Commissioner of Income Tax(Appeals),erred in concluding that the appellant has not filed it's returns of income so as to be eligible to claim deduction u/s 80P is contrary to the facts of the case. The appellant had filed it's return of income on 22.10.2018 and the acknowledgment number in evidence of the same is 341333881221018.Hence the confirmation of denial of deduction is arbitrary.
4. The Commissioner of Income Tax(Appeals),erred in concluding that, the appellant has failed to provide evidence in support of it's status of primary agricultural co- operative society. The appellant is classified as such by Assistant Registrar of Co-operative Societies(General),Chittur.Hence,the dismissal of the contention against the disallowance u/s 40(a)(ia) is not in accordance with the law.
5. The Commissioner of Income Tax(Appeals),erred in concluding that the appellant has not complied to statutory notices from time to time as it is against the facts of the case.
For the above grounds and such other grounds that may be adduced at the time of hearing, your appellant's prays that the order of the assessing officer be cancelled.”
2. The brief facts of the case are that the assessee is a co-operative society registered under the provisions of the Kerala Co-operative Societies Act and did not file their return of income. Thereafter the AO issued a notice u/s. 148 of the Act and notice u/s. 142(1) were issued but the assessee had not responded to any of the notices. Subsequently, a pre- assessment notice was issued for which the assessee filed a letter seeking an adjournment which was also granted but unfortunately the assessee had not filed any objections or documents before the AO. Therefore the AO had completed the assessment u/s. 144 r.w.s. 147 of the Act based on the information from the audit certificate and audit memorandum of Kerala State Co-operative Department. The AO assessed the income from business and made disallowance u/s. 40(a)(ia) of the Act. As against the said order, the assessee filed an appeal before the Ld.CIT(A) and contended that the disallowance u/s. 80P(2)(a)(i) of the Act is not correct since the assessee is a primary credit society. The Ld.CIT(A) had dismissed the appeal filed by the assessee on the ground that the assessee had not filed their return of income and therefore they are not eligible for deduction u/s. 80P(2)(a)(i) of the Act. Insofar as the disallowance made u/s. 40(a)(ia) of the Act, the Ld.CIT(A) had also dismissed the same since the assessee had not filed any details and documents in support of their contention. As against the said order, the assessee is in appeal before this Tribunal.
3. At the time of hearing, the assessee submitted that they have filed their return of income on 22/10/2018 and therefore the denial of deduction u/s. 80P(2)(a)(i) is not correct. Insofar as the disallowance u/s. 40(a)(ia) of the Act is concerned, the Ld.AR submitted that the assessee is a primary agricultural co-operative society and therefore they are exempted from the TDS provisions and therefore prayed to allow the appeal.
The Ld.DR relied on the orders of the lower authorities.
We have heard the arguments of both sides and perused the materials available on record.
6. The first dispute involved in this appeal is against the disallowance of deduction claimed u/s. 80P of the act without filing the return of income in time. Admittedly in this case, the assessee had not filed their return of income u/s. 139(1) of the Act within the prescribed time granted under the Statute and also not filed their return of income to the notice issued u/s. 148 of the Act and therefore the AO had made the assessment based on the information from the audit certificate and audit memorandum of Kerala State Co-operative Department. Therefore the Ld.CIT(A) had relied on section 80A(5) and on that basis, had rejected the ground raised by the assessee. The Ld.CIT(A) also relied on the judgment of Hon’ble Jurisdictional High Court reported in (2023) 152 taxmann.com 347 in case of Nileshwar Rangekallu Chethu Vyavasaya Thozhilali Sahakarana Sangham vs. CIT in which the Hon’ble High Court had clearly held that the deduction u/s. 80P cannot be allowed in case of non-filing of return or belated return. Even though the assessee had filed their return of income on 22/10/2018, the same was not filed within the period prescribed under the Statute and also not filed in response to the notice issued u/s. 148 and also not filed before passing the assessment order. Therefore there is no valid claim made by the assessee in order to consider the claim of deduction u/s. 80P of the Act. We therefore accept the finding given by the Ld.CIT(A) and confirm that the assessee is not entitled to get the benefit u/s. 80P of the Act since no return was filed in order to grant the deduction.
The second dispute is with regard to the disallowance made u/s. 40(a)(ia) of the Act. The AO had made the disallowance since the required documents were not filed before him. The assessee has also not furnished any proofs to show that it is a primary agricultural credit society eligible for not deducting the TDS. Even before the Ld.CIT(A), the assessee had raised a ground that the AO had not provided sufficient opportunity to produce the declarations in form 15G/15H. The assessee had not filed any such declarations as additional evidences before the Ld.CIT(A). Even before this Tribunal, the assessee had not filed any documents in support of his contention. Therefore we have no other option except to confirm the order of the authorities below.
In the result, the appeal filed by the assessee is dismissed.
Order pronounced in the open court on 11th March, 2025.