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Income Tax Appellate Tribunal, COCHIN BENCH, COCHIN
Before: SHRI PRASHANT MAHARISHI & SHRI KESHAV DUBEY
Per Prashant Maharishi, Vice President 1. ITA Number 289/Coch/2023 is filed by the Mahadevikad Service Cooperative bank Limited for assessment year 2017-18 against appellate order passed by The National Faceless Appeal Centre, Delhi [the ld. CIT–A] dated 24/02/2023 wherein the appeal filed by Assessee against the best judgement assessment order passed under section 144 of the Income Tax Act, 1961 [the Act] by The Income Tax Officer– Ward-5, Alappuzha [the ld. AO ] dated 14/ 12/ 2019 was dismissed.
2. Therefore, assessee is aggrieved with the same and has preferred this appeal raising following grounds: - “1. The order of the learned CIT [A] upholding the Order of the Assessing Officer is against law, facts and circumstances of the case.
The assessment made by the AO and upheld by the CIT[A], under section 144 is against law, facts and circumstances of the case.
3. The CIT[A] should not have upheld the action of the AO, who completed the assessment under section 144 after assessee having filed a valid return of income in response to a notice under section 142(1).
The CIT[A] should not have disallowed the assessee's claim under section 80P by wrongly holding that the assessee had not filed any return of income for the year.
5. The CIT[A] should have considered the return of income filed by the assessee and granted the deduction under section 80P as claimed in the return.
The CIT[A] should have noted that the return filed in response to notice issued under section 142(1) is a valid one, and the delay in filing was only a technical defect, cured before the completion of the assessment.
After having computed the income based on the computation details available in the return of income filed, the Assessing Officer should not have denied the claim made in the return under section 80P of the Income tax Act, 1961.
7. Any other grounds that may be adduced at the time of hearing may also be considered.”
Brief facts of the case show that Assessee is a cooperative society, did not file any return of income for the impugned assessment year. The Income tax Department was in possession of the information that the assessee has made substantial cash deposit in bank accounts during
demonetisation period. But the assessee has not filed any return of income. Therefore, a notice under section 142(1) was issued, subsequent reminders were also sent, and a show cause notice was also sent to the assessee. In spite of notice under section 142(1) of the Act, the assessee did not file any return of income, but stated that it is eligible for deduction under section 80P of the Act and such income did not exceed the maximum amount which is not chargeable to income tax and therefore assessee is not required to file an income tax return under section 139(1) of the Act. The learned assessing officer issued a letter dated 2/9/2019 explaining the provisions of section 139, section 80A(5) and deduction under chapter VI-A of the Act. It was also stated that in absence of any documentary evidence related to the deposits or credits, it would be assessed in the hands of the assessee as unexplained income. The assessee failed to comply with the same and therefore the assessment was proposed to be completed under section 144 of the Act. The learned assessing officer further obtained details under section 133(6) of the Act from the Registrar of Cooperative Societies and the banks for obtaining the audit report and bank statement. It was found that assessee has deposited Rs.595,000 with Alappuzha District cooperative bank in bank account number 40231102000117 and Rs.2,005,500 with Kerala State cooperative bank in account number 015101033003211 amounting to Rs. 2,600,500. As the audit report was also called it was found that assessee has deposited of Rs.203,655,999/– during financial year 2016–17 out of which during the year there is an increase of Rs.12,753,039. Accordingly, a summons under section 131 was issued to the assessee stating the proposed addition of unexplained investment of Rs.2,600,500/– and unexplained credit of Rs.203,655,999/–. In response to that assessee appeared and submitted a note stating that assessee has already filed its return of income on 16/10/2019 in response to notice u/s 142(1) of the Act and therefore the assessment should be completed based on the above return. It was further submitted that all the deposits into the bank accounts were made from the cash collection from the members during demonetisation period and further the deposit of Rs.203,655,909 is receipt of such deposits from its members only with respect to the computation of business income, assessee also attached to computation of total income where the income of the assessee was computed at Rs.3,60,991/–, it was also submitted that as the assessee has filed its return of income, deduction under section 80P of the Act is allowable. The assessee also submitted that provisions of section 80P(4) does not apply to the facts of the case. The learned assessing officer after perusing the explanation of the assessee and after examination accepted that a sum of Rs. 2,005,000/– is received by the assessee from its members and therefore same is not required to be added, further total deposit of the assessee at Rs. 203,655,999/– was also found to be from the members and therefore there was no addition made on that account as the assessee was maintaining the confirmation as well as the Know Your Customer details. The profit of the assessee was determined at Rs.301,523. However, the learned assessing officer noted that the return of income for assessment year 2017–18 was filed on 16/10/2019 which could not have been treated as a valid return as it is filed beyond the time prescribed under the notice under section 142(1) of the Act. He further referred to the provisions of 80A(5) of the Act and stated that failure to file a return under section 139 when a notice was issued under section 142(1) is not a technical defect and therefore the assessee cannot be allowed deduction under section 80P of the Act. Accordingly, he computed the total income of the assessee and did not allow any deduction under section 80P of the Act and determined the gross total income of the assessee at Rs.301,523 by passing an assessment order under section 144 of the Act on 14/12/2019.
4. This assessment order was challenged by the assessee before the learned CIT–A wherein the ground was raised that the assessing officer should not have disallowed the assessee claim under section 80P holding that the assessee has not filed any return of income as the assessing officer should have considered the return of income filed by the assessee and should have granted the deduction under section 80P as claimed by the return of income. It was further contended that the assessing officer should have noted that the return filed in response to notice under section 142(1) is a valid one and the delay in filing such a return is only a technical defect which could have been cured before the completion of the assessment.
5. The learned CIT–A considered the explanation of the assessee and held that as per provisions of section 139(1) read with section 80A(5), one has to file its return of income under section 139 (1) if any deduction is to be claimed under chapter VIA of the Act. It is mandatory on the part of the appellant to file its return of income and claim deduction there in within the due date prescribed of such notices. In view of this, he held that the learned assessing officer is correct in disallowing the assessee deduction under section 80P of the Act. Accordingly, the appeal of the assessee was dismissed.
6. Aggrieved with the same the assessee is in appeal before us. The learned authorised representative reiterated the submission made in the grounds of appeal and stated that assessee has already filed its return of income before the assessing officer which was placed before him and therefore the learned CIT-A and the learned AO were incorrect in not allowing the claim of the assessee of deduction under section 80P of the Act.
However, it was submitted that the issue is squarely covered against the assessee by the Hon’ble Kerala High Court in Nileshwar Rangekallu Chethu Vyavasaya Thozhilali Sahakarana Sangham, 459 ITR 730 [Ker].
Ld. departmental representative relied upon the orders of the learned lower authorities.
We have carefully considered the rival contention and perused the orders of the learned lower authorities. The impugned assessment year in this case is assessment year 2017–18. The facts show that the assessee has filed the return of income for the assessment year 2017–18
on 16/10/2019 in response to the notice under section 142 (1) of the Act. But the notice under section 142 (1) was issued to the assessee on 21/12/2017. Thus, naturally the return of income filed by assessee was neither u/s 139(1) or u/s 142(1) of the Act. Ld. AO has treated such a return as not valid return and same has not been challenged by assessee.
As per provision of section 80A(5) where the assessee fails to make a claim in his return of income for any deduction under section 10A or section 10AA or section 10B or section 10BA or under any provision of this Chapter under the heading "C.—Deductions in respect of certain incomes", no deduction shall be allowed to him thereunder. As there is no valid return of income filed by assessee, there is no question of making any claim for deduction u/s 80P of the Act. Thus, we find no infirmity in the order of the ld. lower authorities and hence all grounds of appeal are dismissed.
In the result appeal of assessee is dismissed.
Pronounced in the open court on this 03rd day of January, 2025.