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Facts
The assessee, a co-operative society, filed its income tax return belatedly and claimed a deduction under section 80P. The Central Processing Centre (CPC) rejected this claim under section 143(1) for alleged violation of section 80AC, which requires returns to be filed by the due date for such deductions. The assessee's appeal was filed with a delay of 120 days.
Held
The Tribunal noted that while section 80AC disallows deductions for late filing, section 143(1)(a)(v) of the Act permits disallowance of Chapter VI-A deductions if the return is furnished beyond the due date. However, this specific provision was introduced later and is not applicable to the assessment year in question. The Tribunal followed a coordinate bench ruling, holding that the CPC was not empowered to make such an adjustment under section 143(1)(a) for the assessment year 2018-19.
Key Issues
Whether the CPC has the power under section 143(1)(a) to disallow a deduction claimed under section 80P for violation of section 80AC when the return was filed belatedly, given the specific amendments to section 143(1) and the assessment year.
Sections Cited
143(1), 143(1)(a), 143(1)(a)(v), 139(1), 80P, 80AC, 250, Chapter VI-A
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Income Tax Appellate Tribunal, JODHPUR BENCH, JODHPUR
Before: DR. MITHA LAL MEENA, HON’BLE & SHRI ANIKESH BANERJEE, HON’BLE
Dhaban Gram Sewa Sahakari vs ITO, Ward 2, Hanumangarh, Samity, Rajasthan Sangaria, 22, Dhaban, Sangaria, Rajasthan-335063 PAN : AABAD0315R APPELLANT RESPONDENT Present for Assessee None (Adjournment Application rejected) Present for Revenue Shri Brij Lal Meena, Addl.CIT-DR Date of hearing 19/08/2025 Date of pronouncement 21/08/2025 O R D E R Per Bench: The instant appeal of the assessee filed against the order of the Learned Commissioner of Income-tax (Appeals) / ADDL /JCIT (A)-7 Delhi [for brevity, ‘Ld.CIT(A)’] passed under section 250 of the Income-tax Act, 1961 (in short, ‘the Act’) for Assessment Year 2018-19, date of order 29/03/2024. The impugned order emanated from the order of the Ld.CPC, Bengaluru (in short, “the CPC”) passed under section 143(1) of the Act, date of order 31/05/2019.
The appeal was filed with a delay of 120 days. The assessee filed a duly notarised affidavit. The Ld.DR has not made any objection for condoning of M/s Dhaban Gram Sewa Sahakari Samity delay. We find the assessee has sufficient cause to file the appeal in delay. Accordingly, we condone the delay, and the matter is admitted for adjudication.
We heard the rival submissions and considered the documents available on the record. The assessee is a co-operative society engaged in business of trading in fertilizers and pesticides to its members. The assessee, while filing return of income claimed exemption under section 80P(2)(iv) amount to Rs.3,73,110/-. During the processing of return under section 143(1), the said claim was duly rejected for violation of Section 80AC of the Act. The Assessee filed the return of income with delay of 43 days. The ROI U/s 139 was due on 30/09/2018 but was filed on 12/11/2018. By pursing the amendment of Finance Act, 2018w.e.f 01/04/2028 related A.Y. 2018–19 onwards, Section 80AC provides that no deduction under any provision of Chapter VIA under the heading "C.—Deductions in respect of certain incomes" shall be allowed, unless: The return of income is furnished on or before the due date specified under section 139(1)”
The CPC during processing of return U/s 143(1) of Act rejected the claim made by the assessee U/s 80P of the Act and added back the surplus income amount to Rs. 3,73,108/-. We note that Section 143(1)(a) deals with processing of returns at CPC. While processing, certain adjustments can be made, such as: Arithmetical errors, Incorrect claims, Disallowance of loss set-off against late return, etc.
M/s Dhaban Gram Sewa Sahakari Samity But the CPC adjusted the said amount U/s 143(1)(a) of the Act by disallowing the claim of deduction U/s 80P of the Act by violation of Section 80AC of the Act.
Following the order of coordinate bench of ITATLucknow Bench 'A'Sahkari Ganna Vikas Samiti Ltd.v.ACIT[2024] 169 taxmann.com 300 (Lucknow - Trib.)held that “6. We find that the issue is no longer res integra. The identical issue has come up before the Co-ordinate Bench of Tribunal in the case of KishorepurPaschimanchal SKUS Limited (supra) wherein after taking note of provisions of Section 80AC of the Act and provision of Section 143(1) and subsequent amendment thereto, it was concluded that such adjustments under Chapter VI-A was not permissible under Section 143(1) of the Act in response of assessment years prior to A.Y. 2021-22.
7. The relevant operative para of the order of the decision rendered by the Co- ordinate Bench is reproduced hereunder: "7. We have heard rival contentions and perused the materials available on record. It is apparent from the order of the ld. CIT(A) that the amendment in Section 143(1) made by Finance Act, 2021 which is not applicable for the present Assessment Year 2019-20. However, the same was not considered by the Ld. CIT(A). 7.1. The Co-ordinate Bench of this Tribunal in Lunidhar Seva SahakariMandali Ltd. (supra) considered the above amendment and held as follows: "7. We have heard the rival contentions and perused the material on record. In the instant facts, admittedly the assessee did not file return of income within the time permissible under section 139(1) of the Act. However, the assessee filed its return of income belatedly on 30-11-2020 and claimed deduction of Rs. 2,22,704/- under section 80P of the Act. The issue for consideration before us is that whether once the return of income is filed beyond the prescribed date under section 139(1) of the Act, can the deduction under section 80P of the Act be denied to the assessee, by way of adjustment under section 143(1) of the Act. On going through the statutory provisions, we observe that 80AC of the Act provides that no such deduction under section 80P of the Act shall be allowed to an assessee unless he furnishes a return of his income on or before the due date specified under section 139(1) w.e.f. assessment year 2018-19 onwards. However, section 143(1)(a)(v) of the Act provides that disallowance of deduction claimed under any of the provisions of Chapter VI-A under the heading "C.—Deductions in respect of certain incomes" (which includes deduction under section 80P of the Act), can be made if the return is furnished beyond the due date specified under sub-section (1) of section 139. This amendment has been M/s Dhaban Gram Sewa Sahakari Samity introduced w.e.f. 1-4-2021. Accordingly, the above amendment would not apply to the impugned assessment year. Further, section 143(1)(ii) of the Act permits adjustment in case of an incorrect claim, if such incorrect claim is apparent from any information in the return. However, Explanation to the aforesaid section specifies the following cases where the claim made in the return of income can be said to be "incorrect" for the purposes of this sub-section: (a) "an incorrect claim apparent from any information in the return" shall mean a claim, on the basis of an entry, in the return,— (i) of an item, which is inconsistent with another entry of the same or some other item in such return; (ii) in respect of which the information required to be furnished under this Act to substantiate such entry has not been so furnished; or (iii) in respect of a deduction, where such deduction exceeds specified statutory limit which may have been expressed as monetary amount or percentage or ratio or fraction.”
The Ld. DR argued and stands in favour of the orders of the revenue authorities.
We heard the rival submission and considered the documents available on records. We note the claim of deduction U/s 80P was duly rejected for contravening provision u/s 80AC of Act amendment Finance Act 2018. But the CPC is not empowerd to adjust the said claim U/s 143(1)(a) of the Act. We respectfully follow the order of the ITAT Lucknow Bench 'A'Sahkari Ganna Vikas Samiti Ltd.(supra). The adjustment was made by the CPC is unjustified. The impugned appellate order is duly set aside. The addition is quashed. In the result, appeal of the assessee bearing is allowed for statistical purpose. Order pronounced in the open court on 21st August, 2025 Sd/- sd/- (DR.MITHA LAL MEENA) (ANIKESH BANERJEE) ACCOUNTANT MEMBER JUDICIAL MEMBER Jodhpur, Dt : 21 August, 2025 Pavanan