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Facts
Allamaprabhu VUSS Niyamit Kalloli, a co-operative society, filed its belated Income Tax Return for AY 2018-19 on 30/03/2019, claiming a deduction of ₹10,21,541/- under Section 80P. The Central Processing Centre (CPC) summarily processed the return under Section 143(1) on 25/06/2019 and denied the 80P deduction, citing non-filing within the due date as per Section 139(1) and Section 80AC(ii). The assessee challenged the CPC's jurisdiction to make such a disallowance during summary assessment.
Held
The ITAT held that the CPC lacked jurisdiction to disallow the Section 80P deduction under Section 143(1)(a)(v) for AY 2018-19. The enabling amendment to Section 143(1)(a)(v), which expanded its scope to include general Chapter VI-A deductions for belated returns, came into effect only from 01/04/2021. Therefore, the disallowance made by the CPC on 25/06/2019 was beyond its authority and unlawful.
Key Issues
Whether the Central Processing Centre (CPC) had the jurisdiction under Section 143(1) of the Income Tax Act, 1961, to disallow a deduction claimed under Section 80P of Chapter VI-A for a belatedly filed return for Assessment Year 2018-19.
Sections Cited
Section 250, Section 143(1), Section 143(1)(a)(v), Section 139(1), Section 139(4), Section 80P, Chapter VI-A, Section 80AC(ii), Section 10AA, Section 80-IA, Section 80-IAB, Section 80-IB, Section 80-IC, Section 80-ID, Section 80-IE, Section 143(3)
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Income Tax Appellate Tribunal, PANAJI BENCH, PANAJI
Before: HON’BLE SHRI PAVAN KUMAR GADALE & SHRI G. D. PADMAHSHALI
V/s Income Tax Office, Ward-1, Gokak, Belagavi. . . . . . . . Respondent Appearances Assessee by : Mr Ramesh Mudhol [‘Ld. AR’] Revenue by : Ms Rijjula Uniyal [‘Ld. DR’] Date of conclusive Hearing : 03/04/2025 Date of Pronouncement : 04/04/2025 ORDER PER G. D. PADMAHSHALI; By the captioned appeal the assessee impugns DIN & Order 1072452216(1) dt. 23/01/2025 passed by the Addl./Jt. Commissioner of Income Tax Appeals-1, Noida [‘Ld. CIT(A)’ hereinafter] u/s 250 of the Income-tax Act, 1961 [‘the Act’ hereinafter] which in turn arisen out of order of intimation processed dt. 25/06/2019 passed u/s 143(1) of the Act by the Central Processing Centre, Bengaluru [‘Ld. CPC’ hereinafter] anent to assessment year 2018-19 [‘AY’ hereinafter]. ITAT-Panaji Page 1 of 11 Allamaprabhu VUSS Niyamit Kalloli Vs ITO, Gokak AY: 2018-19 2. Tersely stated facts of the case are that; 2.1 The assessee is a co-operative society and for the year under consideration filed its return of income u/s 139(4) of the Act on 30/03/2019 declaring total income at NIL after claiming deduction u/s 80P of chapter VI-A of the Act for sum of ₹10,21,541/-.
2.2 On 25/06/2019 the aforestated ITR of the assessee was summarily processed u/s 143(1) of the Act whereby deduction claimed u/s 80P of Chapter VI-A was denied to the assessee for defaulting in filing the return within the time limit prescribed u/s 139(1) of the Act.
2.3 Aggrieved by denial of deduction and the summary assessment, the assessee contested the dispute in first appeal before the Ld. CIT(A).
2.4 Dissatisfied by the actions of tax authorities below the assessee instituted the present appeal with the sole & substantive ground of jurisdiction of Ld. CPC in disallowing the deduction.
ITAT-Panaji Page 2 of 11 Allamaprabhu VUSS Niyamit Kalloli Vs ITO, Gokak AY: 2018-19 3. We have heard the rival party’s submission and subject to rule 18 of ITAT Rules, 1963 perused the material placed on records and considered the facts in the light of settled position of law and judicial precedents relied upon which are forewarned to the parties present.
We note that, the appellant assessee is a society and was entitled to claim deduction in relation to its business income u/s 80P of Chapter VI-A of the Act. In terms of section 139(1) of the Act the due date of filing return of income as applicable for the appellant for the year under consideration was 31/08/2018. The appellant however filed its return of income on 30/03/2019 wherein the claim for deduction u/s 80P of the Act was made. Admittedly the said return of income of the appellant was filed belatedly u/s 139(4) of the Act. The respondent revenue invoked the provisions of section 80AC(ii) of the Act, and denied the 80P deduction for assessee’s default in filing the return within the prescribed time limit in terms of section 139(1) of the Act.
ITAT-Panaji Page 3 of 11 Allamaprabhu VUSS Niyamit Kalloli Vs ITO, Gokak AY: 2018-19 5. As we note, the rival parties has no dispute over the application of provisions of section 80AC(ii) of the Act which for the purpose of allowance of claim u/c VI-A of the Act mandates the filing of return with a such claim therein within the time limit prescribed u/s 139(1) of the Act. That is to say, without disputing the application of section 80AC(ii) of the Act, the appellant by the present appeal only challenges the jurisdiction of Ld. CPC in denying the claim for deduction to it through ‘primary adjustment’ u/s 143(1) of the Act. In view of the appellant, at the relevant time of passing the order of intimation, the Ld. CPC was not vested with the power to deny or disallow the claim for 80P deduction to the assessee. The appellant therefore contended that, the impugned action of disallowance by the Ld. CPC was without authority or sanction of law, hence barred by jurisdiction. To drive home this contention the Ld. AR relied on co-ordinate bench’s decision in ‘Dayalbhag Co- op. Chrome Leather Tanneries Ltd. Vs DCIT, CPC’ [ITA No 164/AGR/2022 dt. 24/01/2024] ITAT-Panaji Page 4 of 11 Allamaprabhu VUSS Niyamit Kalloli Vs ITO, Gokak AY: 2018-19 6. Per contra, the Revenue tried to cut the dispute to the corner by averring that; where the return of income is filed beyond the time limit prescribed u/s 139(1) of the Act, the clause (ii) of section 80AC of the Act come into play, which explicitly disqualifies deduction claimed u/c VI-A of the Act for defaulting with the provisions of section 139(1) of the Act. Now when a claim for ‘C- Deduction in respect of certain income’ u/c VI-A of the Act is statutorily barred by operation by specific provision of law, then a question as to who and how such denial or disallowance is to be made rests with the mechanism put in place in administration of the Act. The said denial or disallowance could have possible be made through one of the two lawful mechanisms provided & available with the Revenue viz; (i) through summary assessment u/s 143(1) of the Act and (ii) through regular assessment u/s 143(3) of the Act. Since not all the returns pass through second mechanism but invariably passes through first mechanism, therefore the Ld. CPC rightly denied the claim while processing the return. ITAT-Panaji Page 5 of 11 Allamaprabhu VUSS Niyamit Kalloli Vs ITO, Gokak AY: 2018-19 7. The only question for our adjudication is that; ‘as to whether the Ld. CPC had a jurisdiction to disallow or deny the claim for deduction made u/s 80P of Chapter VI-A of the Act at the relevant time of passing the order of intimation u/s 143(1) of the Act’? To settle this question, it is apt deal with relevant clause (v) of section 143(1)(a) of the Act which deal with the power of Ld. CPC at the relevant period passing intimation order was as; (v) disallowance of deduction claimed under sections 10AA, 80-IA, 80-IAB, 80-IB, 80-IC, 80- ID or section 80-IE, if the return is furnished beyond the due date specified under sub-section (1) of section 139; or
It is also necessary to note that, subsequently, this sub-clause (v) of clause (a) of s/s (1) of section 143 of the Act was substituted by the Finance Act, 2021 with the following which came into effect from 01/04/2021; (v) disallowance of deduction claimed under [section 10AA or under any of the provisions of Chapter VI-A under the heading "C.— Deductions in respect of certain incomes", if] the return is furnished beyond the due date specified under sub-section (1) of section 139; or ITAT-Panaji Page 6 of 11 Allamaprabhu VUSS Niyamit Kalloli Vs ITO, Gokak AY: 2018-19 9. The bare reading of substituted provisions clearly suggest that, the jurisdiction of Ld. CPC s/c (v) of clause (a) of s/s (1) of section 143 of the Act to deny or disallow the deduction claimed under the head ‘C-Deduction in respect of certain income’ u/c VI-A of the Act was not available as on the date when the order of intimation was passed, As the matter of fact that s/c (v) (supra) was amended by substitution 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 substituted provision of s/c (v) extended its umbrella to Section 10AA or under any of the provisions of Chapter VI-A under the head ‘C-Deductions in respect of certain incomes’. No doubt Section 80AC(ii) as amended by the Finance Act, 2018 mandated that even for claiming deduction claimed u/c VI-A of the Act, the return of income was to be filed before the expiry of due date prescribed u/s 139(1) of the Act, however, the enabling jurisdiction clause (v) of s/c (a) of section143(1) of the Act came into play only w.e.f. 01/04/2021. ITAT-Panaji Page 7 of 11 Allamaprabhu VUSS Niyamit Kalloli Vs ITO, Gokak AY: 2018-19 10. As on the date of processing the return summarily u/s 143(1)(a)(v) of the Act there was no enabling power vested with the Ld. CPC to apply provisions of section 80AC(ii) of the Act. Therefore, the impugned action of disallowance in our considered view was beyond Ld. CPC’s jurisdiction or authority.
We find the that, a similar issue came for consideration before Co-ordinate bench in ‘Bhagyalaxmi Co-Op. Cr. Soc. Ltd. Vs DCIT’, ‘M/s Sangam Souharda Cr. Sah. Ltd. Vs DCIT’ [ITA No 01 & 30/PAN/2023 dt. 01/09/2023] wherein vide para 10-13 was held as; ‘10. Both the present two appeals are relating to AY 2018-19 and both these assessee societies undisputedly have filed their returns on 15/03/2019 and 31/11/2018 respectively, wherein claim for 80P deductions u/c VI-A of the Act were duly made. The only dispute in these appeals is eligibility of claims made in the belated return, therefore apparently out of two riders laid in s/s (5) of section 80A and clause (ii) of section 80AC of the Act, the later rider is seems to have rightly attracted. For the reasons the Ld. CPC rejected the claim while processing the ITR summarily u/s 143(1) of the Act, and finding no fault therewith the Ld. NFAC has dismissed the appeal on this score.
ITAT-Panaji Page 8 of 11 Allamaprabhu VUSS Niyamit Kalloli Vs ITO, Gokak AY: 2018-19 11. In present appeals we note that, the appellant societies have furnished their ITR albeit beyond the prescribed due date (filed belated) and however those were filed with an eligible claim for 80P deduction therein. Therefore jurisdiction of Ld. CPC s/c (v) of clause (a) of sub section (1) of section 143 of the Act is not available as the matter of fact that s/c (v) (supra) 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(ii) 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 u/s 139(1) of the Act. However, for the Ld. CPC to insist upon the compliance by way of making a disallowance owning to filing the return belated, the power vested in the said Authority only vide Finance Act, 2021 and came into effect accordingly. Therefore, in the absence of the enabling jurisdiction provisions, the Ld. CPC lacked the jurisdiction to make any disallowance of claim made u/c VI-A of the act while processing the return summarily u/s 143(1)(a)(v) of the Act. ITAT-Panaji Page 9 of 11 Allamaprabhu VUSS Niyamit Kalloli Vs ITO, Gokak AY: 2018-19 13. We found that similar views has been taken by various co- ordinate benches in ‘Lanjani Co-Operative Agri Service Society Ltd. Vs DCIT’ reported in 146 taxmann.com 468, ‘Lunidhar Seva Sahkari Mandali Ltd. Vs. Assessing Officer (CPC)’ 200 ITD 0014, And ‘Karohta Co-Operative Agriculture Service Society Ltd. Vs ITO (ITA No. 447/CHD/2022)’
Undisputedly in the present case, the appellant society furnished its ITR beyond the prescribed due date (filed belated) but making therein claim for 80P(2) deduction. The claim for deduction was no doubt subjected to disallowance by application of provisions of clause (ii) of section 80AC of the Act, however there was complete absence of authority vested with the Ld. CPC to carry out the disallowance u/s 143(1)(a)(v) of the Act. Therefore, the impugned action of denial of 80P deduction to the appellant by the Ld. CPC was barred by jurisdiction, hence unlawful. And in the absence of any explicit power contained in and vested with any authority under the Act to ratify the impugned action of the Ld. CPC, we are duty bond to reverse prejudice caused to the appellant by vacating the impugned disallowance. ITAT-Panaji Page 10 of 11 Allamaprabhu VUSS Niyamit Kalloli Vs ITO, Gokak AY: 2018-19 13. Without multiplying the judicial precedents on the subject matter, maintaining the parity with the decision of learned co-ordinate benches (supra), we concur with the claim of the appellant society that the Ld. CPC clearly traversed and in fact exceeded its jurisdiction in disallowing the appellant’s claim for deduction u/s 80P of the Act. Therefore, same is liable to be vacated. In consequence, we set-aside impugned order of Ld. CIT(A) and direct the Ld. CPC to reverse the disallowance and accept the claim of deduction u/c VI-A of the Act as claimed in the return of income filed by the appellant assessee.
The appeal in result stands ALLOWED. In terms of rule 34 of ITAT Rules, 1963 the order pronounced in the open court on date mentioned herein before.