THE LANJANI CO-OPERATIVE AGRI SERVICE SOCIETY LIMITED,KANGRA vs. DCIT,CPC/ITO-WARD-, DHARAMSHALA

आदेश/ORDER

The se seven appeals have been filed by the different assessees pertaining to 2018-19/2019-20 assessment year wherein the correctness of the separate orders dated

ITA/332 to 338/CHD/2021 Page 3 of 16

28.09.2021, 09.09.2021, 25.09.2021, 25.09.2021,

15.09.2021, 14.09.2021 and 15.09.2021 passed by CIT(A)

(NFAC i.e. National Faceless Appeal Centre) Delhi as First

Appellate Authority is challenged on identical grounds and

facts. Accordingly, it was a common request of the parties

before the Bench that the arguments advanced in ITA

332/CHD/2021 would apply to the re maining six appeals as

the facts, circumstances and position of law remain the

same.

reproduced hereunder for the sake of completeness:

is a primary agricultural cooperative society filed its ITR for

AY. 2018-19 on 13.10.2018 declaring ‘nil’ income by claiming

deduction u/s 80P of Rs.1,11,421/-.

3.1 The said return was processed u/s 143(1) by CPC,

Bangalore. Intimation u/s 143(1) dated 31.05.2019 was

served on assessee on 17.06.2019 assessing total income of

the assessee at Rs.1,11,420/-.

ITA/332 to 338/CHD/2021 Page 4 of 16

3.2 In the present case the due date of filing of the return

was 31.08.2018. The assessee has filed its return after the

due date on 13.10.2018. Similar is the position in the

remaining appeals as all the assessees filed their respective

returns after the due date.

deduction claimed u/s 80P by the intimation u/s 143(1) of

the Act by CPC, Bangalore carried the issue before the First

Appellate Authority assailing the disallowance. The

assessee's appeal did not succeed. The addition made by

way of a disallowance was sustained.

submitted that the disallowance has been made merely

because the return was filed beyond the due date. It was

submitted that prior to this ye ar, there was no such

require ment. Only on account of Ame ndment carried out in

Se ction 80AC by Finance Act 2018, the requirement

according to the Revenue was there. He agreed that as a

result of this amendment from 2018-19 assessment year, the

deductions falling in the heading "C" of chapter VIA of the

Income Tax Act,1961 can be said to be brought in the ambit

of this section. However, at the relevant point of time, no

ITA/332 to 338/CHD/2021 Page 5 of 16

such powers were vested with the CPC Bangalore. The

enabling provision to do so u/s 143(1) was available on the

Statute only by the Finance Act, 2021. Referring to the

provisions as they stood in 2018-19 and 2019-20 assessment

year, it was argued that as per law, the claim u/s 143(1)(a)

could be disallowed by the AO herein CPC Bangalore only on

the grounds of arithmetical error or that the assessee had

made an incorrect claim etc. but not on the grounds that the

return was filed beyond the due date. It was submitted that

the assessee Society is eligible for deduction u/s 80P and all

informations related to this deduction was correctly

provided. Inviting attention to Section 143(1)(a)sub clause

(v) as it then stood at the relevant point of time, it was

argued there was no mention of Section 80P therein.

6.1 It was re-iterated that only by the Finance Act, 2021

wherein sub-clause (v) of Section 143(1)(a) was amended that

the CPC, Bangalore could be said to be vested with the

jurisdiction to make a disallowance on the grounds of return

filed beyond the due date exercising the powers u/s

143(1)(a).

6.2. Reliance for the proposition of law as available in near

similar facts and legal position though in the context of

different provisions was placed upon the decision of the Hon'ble

ITA/332 to 338/CHD/2021 Page 6 of 16

Karnataka High Court in the case of Fatehraj Singhvi & Ors. Vs

UOI & ors (2016) 289 CTR 0602 (Kar). Apart from that orders of

the different Benches of the ITAT were also relied upon

pleading that the enabling provisions having been introduced

by the Finance Act, 2021 effective from 01.04.2021 by way of

amendment of sub-clause (v) of Section 143(1). Accordingly,

prior to the assessment year 2020-2021 disallowance of

deduction claimed u/s 80P on the grounds of late filing of

return by an order u/s 143(1) was not in accordance with law.

6.3 Reliance was also placed upon various decisions to argue

that absence of enabling provisions the order is sans powers.

Decision of the ITAT, Chandigarh in M/s Sonalac Paints &

Coating Ltd. Vs DCIT in ITA 1158/CHD/2017 dated 01.05.2018;

HIMUDA Nigam Vihar, Shimla V ACIT in ITA Nos.480,481 &

972/CHD/2012 dated 10.05.2019; decision dated 05.10.2015 of

Hon'ble Delhi High Court in the case of CIT-VI Vs M/s Unitech

Ltd. and decision dated 08.11.2019 of ITAT, Lucknow Bench in

Dy. CIT, Central Circle-1, Kanpur Vs M/s Rama Medicare Ltd.

in ITA No.183/LKW/2019 were specifically referred to.

there was any decision against the assessee on the issue. In

response thereto, ld. AR in all fairness invited attention to the

ITA/332 to 338/CHD/2021 Page 7 of 16

decision of the Hon'ble Madras High Court in WP No. 7038 of

2020 dated 07.04.2021 in the case of Veerappampalayam

Primary Agricultural Cooperative Credit Society Ltd. Vs DCIT.

Copy of the said decision was directed to be filed and 9.

made available to the Sr.DR.

the said decision on the next date.

submitted that it was distinguishable as the decision is very

fact specific. The position of law as argued by the assessees

before the First Appellate Authority extracted in the order and

before the ITAT has not been argued, hence the non-availability

of the enabling provision in the Statute at the relevant point of

time has not been considered by the Court.

11.1 Distinguishing the said decision, it was further submitted

that firstly, it was an ex-parte order where the assessee was

not present nor heard. It was further argued that the decision

rendered was in the context of the prayer in the Writ Petition

on facts as available. Attention was also invited to the fact

that the petitioners therein were repeatedly found to be non-

cooperative with the Revenue right from the assessment

proceedings stage. For the said purposes, para 9 of the said

order was referred to. It was his submission that therein the

ITA/332 to 338/CHD/2021 Page 8 of 16

Court went on to categorically observe that the assessee

petitioners did not cooperate and it was noticed that the writ

petitions were filed belatedly i.e. after more than 6 to 8 months

and only when the Revenue had initiated proceedings for

recovering by attaching the bank accounts etc. that the

petitioners were found to have approached the Court invoking

the writ jurisdiction.

11.2 In the facts of the present case, it was his submission

that the none of the assessees have been found to be non-

cooperative. They have cooperated in the proceedings all

along. It is only a case wherein the return was filed late. The

assessee has all along been live and alert in approaching the

First Appellate Authority well within time and again the appeal

before the ITAT also has been filed well within time. There is no

delay.

11.3 Apart from referring to para 9 it was argued that

following specific facts as available before the Hon'ble Court for

consideration were referred to so as to argue that they are not

applicable to the present assessees. These read as under:

(iii) disallowance of loss claimed if the returns were filed beyond the due date, (iv) disallowance of expenditure indicated in the audit report but not taken into account in computing total income (v) disallowance o f d e d u c t i o n claimed u n d e r specified provisions of the Act i f the return was filed beyond due date or

(vi) additional income appearing in Form 26AS or 16A or l6, which has not been taken into account in computing total income. According to them, there is no error

ITA/332 to 338/CHD/2021 Page 9 of 16 as aforesaid that emanates from the returns of income tiled by the petitioners and as such, the invocation of Section 143 (1)(a) of the Act is itself flawed. 11.4 Emphasis was also laid on the following argument for

consideration before the Court which is not the argument

advanced in the present case :

“5 Learned counsel for the petitioners would than argue that the Explanation under Section 143(1)(a) of the Act explains an incorrect claim' for the purpose of Clause (ii) of Section 143 (l) (a) of the Act, as meaning a claim based on an entry in a return of income. According to them, the date of return does not constitute an 'entry' and hence no adjustment is called for on this score.

11.5 It was submitted that in the light of this factual

background and argument, the Hon'ble Court in an ex-parte

order considered the issue in the following manner :

again, it was submitted, that commenting upon the conduct of

the petitioners wherein they had not bothered to respond to the

defect notices from the CPC and non cooperation on the part of

the petitioners wherein the writ jurisdiction of the Court was

also invoked on account of the fact that the Revenue had

initiated proceedings for recovery by attachment of bank

account and there was a lapse of 6 to 8 months in filing of the

writ petitions were all the factors taken into consideration to

ITA/332 to 338/CHD/2021 Page 10 of 16

address the prayer in the Writ proceedings. It is in that factual

background that the Court was pleased to hold as under :

“9. The conduct of the petitioners is also relevant. Not only have the returns been filed belatedly but the petitioners have also chosen not to co-operate in the conduct of assessment. They are admittedly in receipt of the defect notices from the CPC, but have not bothered to respond to the same. The writ petitions have themselves been filed belatedly and after the elapse of more than six to eight months from the dates of impugned orders, in all cases, it is only when the Revenue has initiated proceedings for recovery by attachment of bank accounts have the petitioners approached this Court.” 11.7 Accordingly, it was his submission that the said decision

proceeds on facts peculiar to its own. Reliance was placed

upon decision of the Hon'ble Supreme Court in the case of CIT

Vs B.C. Srinivasa Shetty 128 ITR 294 (S.C) for allowing relief to

the assessee.

was invited to para 8.1 of the said decision.

12.1 Apart from relying upon para 8.1 she further placed

reliance upon the decision of the Apex Court in Civil Appeal

No.332.7 of 2017 dated 30.07.2018 in the case of Commissioner

of Customs (Import), Mumbai vs M/s Dilip Kumar and Company & Sons for the following proposition :

"(2) When there is ambiguity in exemption notification which is subject to strict interpretation, the benefit of such ambiguity cannot be claimed by the subject/assessee and it must be interpreted in favour of the revenue." 13. The ld. AR submitted that the decision is not applicable.

on record. Since heavy reliance has been placed by the ld.

ITA/332 to 338/CHD/2021 Page 11 of 16

Sr.DR on the impugned order, specific para 8.1. For ready

reference of the same is extracted hereunder :

“8.1 Finding on Ground of appeal Nos. 1 to 3 a) The CPC Bangalore has made the addition/adjustment of Rs.1,11,421/- u/s 143(1) of the Act as deduction u/s 80P claimed of Rs.1,11,421/- was disallowed on the ground that return was not filed within the due date. The undersigned has gone through the 143(1) intimation and written submissions filed by the Appellant. These Grounds of Appeal are discussed and decided in subsequent paras of this order. b) It is not in dispute that from AY. 2018-19, the Appellant for claiming deduction u/s 80P has to file return of income within the due date of filing of ITR as provided in Section 80AC of the IT Act, 1961. Section 80AC was amended by Finance Act, 2018. From AY. 2018-19, all the deductions falling under the heading 'C of Chapter VIA of IT Act, 1961 were brought into the ambit of this section. Section 80P also falls under the heading 'C of Chapter VIA of the Act is included in Section 80AC of the Act. c) The amended Section 80AC provides as under:- "[Deduction not to be allowed unless return furnished. 80AC. Where in computing the total income of an assessee of any previous year relevant to the assessment year commencing on or after— (i) the 1st day of April, 2006 but before the 1st day of April, 2018, any deduction is admissible under section 80-IA or section 80-IAB or section 80-IB or section 80- IC or or; (ii) the 1st day of April, 2018, any deduction is admissible under any provision of this Chapter under the heading "C.—Deductions in respect of certain incomes", no such deduction shall be allowed to him unless he furnishes a return of his income for such assessment year on or before the due date specified under sub-section (1) of section 139.]" d) Thus, from 01.04.2018, the clause(i) of the above section has become inoperative and clause (ii) was introduced which provides that all the deductions falling under the heading 'C of Chapter VIA of the Act will be allowed only when ITR is furnished before the due date specified u/s 139(1) of the Act. This amendment became effective from AY. 2018-19. e) In the present case the due date of filing ITR for AY. 2018-19 was 31.08.2018. However, the Appellant filed its return on 13.10.2018 i.e. after the due date for filing of ITR. Appellant had claimed deduction u/s 80P of Rs. 1,11,421/-. As discussed above Section 80P falls under the heading 'C of Chapter VIA of the Act. Therefore, from AY. 2018-19 and onwards, any assessee claiming deduction u/s 80P has to file its return within due date specified u/s 139(1) of the Act to avail such deduction as required u/s 80AC of the Act. In the present case, the Appellant did not file its return within the due date prescribed u/s 139(1) of the Act for AY. 2018-19, therefore, the AO

ITA/332 to 338/CHD/2021 Page 12 of 16 rightly disallowed deduction u/s 80P of Rs. 1,11,421/- in intimation u/s 143(1). Thus, the action of AO in disallowing deduction u/s 80P is upheld. Grounds of Appeal Nos. 1 to 3 are dismissed.” 14.1 On consideration of the above when read alongwith the

arguments advanced before the CIT(A) on behalf of the assessee

which have been re-iterated before the ITAT, I find that on facts

the case of the assessee is allowable. The AO/CPC Bangalore

at the relevant time though considering the amended Section

80AC was exercising the powers as vested by the Section 143(1)

of the Act as it then stood. At the relevant point of time, the

provisions of Section 143(1) of the Act were as under :

ITA/332 to 338/CHD/2021 Page 13 of 16

(emphasis supplied) 14.2 It is a matter of fact that sub-clause (v) of Section

143(1)(a) was amended by the Finance Act, 2021 wherein

instead of reference to Sections 10AA, 80-IA, 80-IAB, 80-IB,

80-IC, 80-ID or Section 80-IE, the provision instead makes a

mention of Section 10AA or under any of the provisions of

Chapter VI-A under the head ‘C-Deductions in respect of certain

incomes”. Accordingly, the enabling provisions to address the

amendment in Section 80-AC by Finance Act, 2018 came into

play only in 2020-21 assessment year. Thus, no doubt Section

80AC as amended by the Finance Act, 2018 mandated that even

for claiming deduction claimed u/s 80P, the return of income

was to be filed before the due date as specified under sub-

section (1) of Section 139. However, for the AO to insist upon

the compliance by way of making a disallowance, the power was

vested in the said Authority only vide Finance Act, 2021.

Hence, in the absence of the enabling provisions, the CPC

Bangalore lacked the jurisdiction to make this disallowance in

the order u/s 143(1). Accordingly, on facts, I find that the

appeal of the assessee has to be allowed.

14.3 Before parting, it may also be relevant to refer to the

decision of the Apex Court dated 30.07.2018 in the case of

Commissioner of Customs (Import) Vs M/s Dilip Kumar & Co. &

ITA/332 to 338/CHD/2021 Page 14 of 16

Ors. Civil Appeal No.3327 of 2007 relied upon by the ld. Sr.DR.

On a reading therefrom, it is seen that the issue for

consideration before the Hon'ble Court was whether the denial

of benefit of Customs Notification No. 20/1999 was justified to

the party who pleaded that the benefit of concessional rates for

import of animal feed should also be available to import which

admittedly contained chemical ingredients for animal feed. The

concessional rate of duty under the extent Notification was

being considered. The order of denial by the Customs Officer

was reversed by Commissioner of Customs. This order was

confirmed by Customs Excise & Service Tax Tribunal (CESTAT)

which led to the filing of the appeal before the Hon'ble High

Court and then the Apex Court. It is in that background that

the Hon'ble Court held that exemption notification should be

interpreted strictly and the burden of proving that the case

comes within the parameters of the exemption clause or

exemption notification would be on the assessee. In such

circumstances, in case there is ambiguity, the Notification

must be interpreted in favour of the Revenue. In the facts of

the present case, there is no ambiguity. It is a case of absence

of enabling provision. Hence, the ratio laid down therein has

no applicability to the facts of the present case.

ITA/332 to 338/CHD/2021 Page 15 of 16

14.4 It is also necessary to refer to the decision of the Hon'ble

Madras High Court in the case of Veerappampalayam Primary

Agricultural Cooperative Credit Society Ltd. Vs DCIT (cited

supra). A perusal of the same shows that the issue for

consideration before the Hon'ble High Court in the Writ

Jurisdiction invoked by the assessee was very fact specific.

The assessee therein was canvassing that u/s 143(1)(a) for

considering denial on the grounds of “incorrect claims” the

scope was limited to “entry” in the return of income. The Court

therein did not permit such a restrictive interpretation

commenting variously on the conduct of the assessee. Hence,

the decision is distinguishable. Further, before the Hon'ble

High Court, the amendment carried out in Section 143(1)(a) by

the Finance Act 2021 was neither argued nor referred to for

consideration of the Hon'ble Court.

14.5 It is further seen that the decision of the Apex Court in

the case of CIT Vs B.C. Srinivasa Shetty 128 ITR 294 fully

supports the view taken. The Court therein at page 299 has

held as under :

" …………..The character of the computation provisions in each case bears a relationship to the nature of the charge. Thus, the chagrining section and the computation provisions together constitute an integrated code . When there is a case to which the computation provisions cannot apply at all, it is evident that such a case was not intended to fall within the charging section. Otherwise one would be driven to conclude that while a certain income seems to fall within the charging section there is no scheme of computation for quantify it……………..

ITA/332 to 338/CHD/2021 Page 16 of 16

(emphasis supplied) 14.6 In the facts of the present case, admittedly the provision

enabling the AO to pass an order relying upon sub-clause (5) of

Section 143(1)(a) was not on the Statute for 2018-19

assessment year. Accordingly, for the detailed reasons

hereinabove, setting aside the impugned order, the appeal of

the assessee is allowed.

and position of law continues to remain the same, accordingly,

mutatis-mutandis the decision arrived at in ITA 332/CHD/2021

would apply. Accordingly, all appeals of the assessees are

allowed.

Order pronounced in the Open Court on 30 th August,2022.

Sd/- (�दवा �संह ) (DIVA SINGH) �या�यक सद�य/Judicial Member “पूनम” आदेश क� ��त�ल�प अ�े�षत/ Copy of the order forwarded to : अपीलाथ�/ The Appellant – 2.��यथ�/ The Respondent 3.आयकर आयु�त/ CIT 4.आयकर आयु�त (अपील)/ The CIT(A) 5.�वभागीय 1. ��त�न�ध, आयकर अपील�य आ�धकरण, च�डीगढ़/ DR, ITAT, CHANDIGARH 6.गाड� फाईल/ Guard File 2. आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar