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Before: SHRI SANDEEP SINGH KARHAIL & SMT. RENU JAUHRI
Appellant by : Shri Rajesh Shah Respondent by : Shri R. R. Makwana Date of Hearing 05.08.2024 Date of Pronouncement 29.08.2024 आदेश / O R D E R PER RENU JAUHRI [A.M.] :- These appeals are filed by the assessee against the order of the Learned Additional/Joint Commissioner of Income-tax (Appeals), Surat-2 /National Faceless Appeal Centre, Delhi [hereinafter referred to as “Addl. CIT(A)”] dated 11.03.2024 passed u/s. 250 of the Income-tax Act, 1961 [hereinafter referred to to 2604/Mum/2024 A.Y. 2012-13, 14-15, 15-16, 16-17 & 18-19 Silverline co-operative Housing Society Ltd. as “Act”] for Assessment Years [A.Ys.] 2012-13, 2014-15, 2015-16, 2016-17 & 2018-19.
(A.Y. 2012-13) 2. The assessee has raised following grounds of appeal:
1. The Grounds mentioned Rs. here under are without prejudice to one another i On the facts and circumstances the case The Learned Addl/Jt. Commissioner of Income Tax Surat-2 has failed to appreciate Appellant that the appellant had filed rectification application with Income Department ii The Learned Addl/Jt. Commissioner of Income Tax Surat 2 has failed to give opportunity to be heard
2. The Appellant prays that one more opportunity may be granted to them in the interest of natural justice.”
3. The assessee has also raised additional grounds of appeal which is reproduced below: “1 On facts and circumstances of the case and in law, the learned CIT(A) erred in not dealing with the Grounds of Appeal raised in appeal.
2. On facts and circumstances of the case and in law, the order of CPC is bad in law since the adjustment envisaged in the intimation u/s. 143(1) was beyond the jurisdiction of the AO. The CPC had no jurisdiction to make any adjustments in respect of deduction claim u/s.80P(2)(d) since the said authority was given only with effect from A.Y.2021-22 by amending the Act.
3. On facts and circumstances of the case and in law, the learned CIT(A) erred in not allowing disallowing u/s.80P(2)(d) of the Act.”
4. Brief facts of the case are that the assessee had filed its return of income on 01.10.2012 declaring nil income. The case was processed u/s 143(1) of the Act by the CPC, Bengaluru and deduction claimed u/s 80P was disallowed and income was determined at Rs. 1,73,710/-. The assessee filed a rectification Page 2 of 12 to 2604/Mum/2024 A.Y. 2012-13, 14-15, 15-16, 16-17 & 18-19 Silverline co-operative Housing Society Ltd. application on 14.06.2013 which is stated to be still pending, as per the screenshot taken on 25.07.2024. Subsequently, an appeal was also filed by the assessee on 29.11.2023 i.e. after a gap of almost 10 years. Vide order dated 11.03.2024, Addl. CIT (A) has dismissed the appeal on the ground of inordinate delay of 3860 days. It has been stated in the order that the assessee also did not file proof of filing of application for rectification u/s 154 of the Act, hence, the delay was not condoned.
5. Before us, the Ld. AR has submitted that there was a reasonable cause for delay in filing of the appeal. In this regard, an affidavit has been filed on behalf of the society by its secretary. The relevant portion of the affidavit is reproduced below: “...........................
The society is a small Co-operative Housing Society Ltd.
The society is looking after the welfare of the members namely, collecting the contribution from each member of the society who are having flat in the society and incurring an expenditure in respect of Municipal Tax, cleanliness of the society building, water tax and other matters of the common interest of the society.
The society is managed by 5 voluntary members (without any remuneration) who are normally busy with their own business. The managing committee members are usually appointed by persuasion since no member like to join managing committee to carry out honorary work.
The society normally has a part time accountant who looks after the accounts, and files tax returns.
6. The society totally relies on such accountant since they can't afford the higher fees for this type of work to keep qualified person.
In the case of the society normally the Income Tax Returns are accepted without any adjustment. Even in between certain years returns have been accepted on the basis of the returns filed and claim u/s.80P(2) (d) was allowed. Assessment Year 2012-13 & A.Y.2014-15 Page 3 of 12 to 2604/Mum/2024 A.Y. 2012-13, 14-15, 15-16, 16-17 & 18-19 Silverline co-operative Housing Society Ltd.
a) For the year A.Y 2012-13 & A.Y.2014-15 society had filed return of Income before due date of filling of return. However, while processing the Intimation by CPC, the CPC has taken the stand that since return was filed after the due date hence deduction under Chapter VI A is not allowable. It may be stated that a co-operative Society registered under the provisions of the Maharashtra Co-op Society Act 1960 it is required to get its accounts Audited, and hence the due date of filing of Return is not 31st July every year but as required for the assessee who are under audit. The society has filed return in time in above two years. b) The Society had claimed deduction of being interest from Co-op Bank which is deductible under Section 80P(2)(d). c) On receipt of Intimation for A.Y.2012-13 & A.Y.2014-15, Rectification Petitions u/s.154 of the Act were filed as per the advice taken by the then Secretary. The said Petitions are still pending before the CPC/AO. d) The society waited for Rectification Petition being disposed off however there was no action from the department. On advice of the senior counsel, as an abended caution the society filed an appeal before the learned CIT(A). Therefore, there was no delay on the part of the assessee to file an appeal. e) The society filed the appeal before learned CIT on 30/11/2023 f) The appeal was delayed on account of following reasons: i. The Rectification Petitions u/s.154 were filed before CPC and they are still pending before the CPC/AO. ii. The Rectification Petitions u/s.154 are not yet rejected. iii. As per Supreme Court decision in the case of SUO MOTO WRIT PETITION (C) NO.3 OF 2020, the period from 15/03/2021 till 28/02/2022 and further period of 90 days from 01/03/2022 i.e. up to 31/05/2022 was not to be counted for the delay purpose. iv. It was only when the matter relating to recovery of the demand for all the years came up before the society. The society immediately approached senior CA to advice in a matter. On the advice, as a abended caution the society filed an appeal before the CIT(A). v. There was no malafide intention nor there was any negligence on the part of the society. vi. The appellant society has not got any benefit for not filing appeal in time. Page 4 of 12 to 2604/Mum/2024 A.Y. 2012-13, 14-15, 15-16, 16-17 & 18-19 Silverline co-operative Housing Society Ltd. g) In view of the above facts, the delay if any may be condoned. h) It may also be stated that that the AO had no power to make any adjustment u/s.143(1) up to A.Y.2021-22. The said principal has been decided in the case of ITAT No.682/Mum/2024 in respect of Vishva Villa Co-operative Housing Society Limited. Therefore, the Intimation passed with adjustment itself is bad in law. 9. Α.Υ.2015-16 a) In this year the Return was delayed, however the Rectification Petition was pending. Considering the fact that CPC has not power to make any adjustment u/s.143(1) of the Act. The appellant request that the delay may be condoned. whatever stated above is correct best to my knowledge and belief.”
Ld. AR has also placed reliance on a recent decision of the co-ordinate in the cases of Vishva Villa Co-op. Housing Society Ltd. v/s ITO, Ward 19(3)(1) in to 684/Mum/2024 wherein on similar facts, the issue has been decided in favour of the assessee.
7. We have heard the rival submissions. We find that the assessee had filed a rectification application u/s 154 of the Act which is still pending, as per the screenshot taken on 25.07.2024. He was therefore under a bonafide belief that his request for rectification would be allowed since for AY 2013-14, he had already received order u/s 154, giving identical relief in that year. However, no order u/s 154 was passed, and therefore, the assessee decided to filed an appeal before Ld. Addl. CIT(A). There was, thus, reasonable cause for the inordinate delay of 3860 days in filing the appeal. Moreover, the adjustment made by the CPC u/s 143(1) by disallowing the claim of deduction u/s 80P(2)(d) in respect of interest received from co-operative banks is beyond the scope of adjustment Page 5 of 12 to 2604/Mum/2024 A.Y. 2012-13, 14-15, 15-16, 16-17 & 18-19 Silverline co-operative Housing Society Ltd. u/s 143(1) of the Act. In this regard, the relevant portion of the order of the co- ordinate bench (supra), relied upon by the assessee, is reproduced below: “7. We heard both the parties and also peruse the relevant material based on record. First of all the assessee has explained the reason for delat in filing of the first appeal before CIT(A) that earlier CA of the assessee had filed rectification application u/ 154 before the AO/CPC, then assessee was under bonafide belief that the adjustment would get rectified and even CA also did not advice the society to file an appeal when application was disposed of for certain period. It is later on when demand notice was issued then assessee was advised to file an appeal. Thus, looking to the fact that assessee is cooperative housing society and it was under a bonafide belief that it has filed a rectification which was not disposed of till date, therefore delay in filing of first appeal cannot be held to latches on part of the assessee. Thus, delay in filing appeal before the first appellate authority is condoned.
8. On merits in both the years, adjustment has been made by the CPC u/s. 143(1) treating the interest received from the Co- operative Bank as income from other sources by disallowing the claim of section 80P(2)(d).
First of all prior to assessment year 2021-22 there was no such provision for disallowing the claim of deduction within the scope of section 143(1)(a). Prima adjustment was permissible only with regard to claim of deduction u/s. 10AA, 80 IA, 801AB, 801B, 80IC, 801D or section 80-IE. It was from the Finance act 2021 with effect from A.Y. 2021-22, disallowance of claim of deduction under chapter VIA can be made, if the return has been furnished beyond the due date of return of income filed u/s. 139(1). Here in this case the CPC has treated the due date of return of income as on 31/08/2012 for A.Y. 2012-13 and 05/08/2013 for A.Y. 2014-15, whereas the return has been filed by the assessee on 02/09/2012 and 20/09/2013 respectively.
Admittedly assessee is a Co-operative Housing Society registered under Maharashtra Society act 1960 and as per the said act of the Co- operative Housing Societies have to get their accounts audited ones there is requirement to furnish and audit before from Charted Accountant, and therefore the due date was 31/10/2012 and 31/10/2014 for the A.Y 2012-23 and 2014 15 respectively and thus assessee had filed the return of income within the due date of under section 139(1). Thus even under amended provision no prima facie adjustment have been made no prima facie adjustment on account of Page 6 of 12 to 2604/Mum/2024 A.Y. 2012-13, 14-15, 15-16, 16-17 & 18-19 Silverline co-operative Housing Society Ltd. deduction u/s.80P could have been made. In the early provision of adjustment u/s. 143(1)(a) no such disallowance could have been made. Accordingly, we hold that disallowance made by the CPC u/s. 143(1)(a) on the claim of deduction u/s. 80P is beyond the scope of adjustment u/s. 143(1) accordingly the adjustment is deleted.”
Respectfully following the order of the co-ordinate bench, the appeal of the assessee is allowed and the AO is directed to allow the claim of 80P(2)(d) of the Act.
(A.Y. 2014-15) 9. The grounds of appeal and facts in this year are same as in the year of the AY 2012-13 except for difference in dates. The return has been filed on 30.09.2014 as against the extended due date of 30.09.2014. An intimation u/s 143(1) was received on 22.01.2015. A rectification application u/s 154 was filed on 31.03.2015. The rectification application is still pending, as per the screenshot dated 25.07.2024. An appeal before Addl. CIT(A) was filed on 30.11.2023 with a delay of 3153 days. Since, the fact for this year are exactly similar to AY 2012-13, it is held that CPC had no jurisdiction to make any adjustment in respect of deduction claimed u/s 80P(2)(d) of the Act.
10. Respectfully following the order of the co-ordinate bench of Vishva Villa Co-op. Housing Society Ltd. v/s ITO, Ward 19(3)(1) [supra], the appeal of the assessee is allowed. The AO is directed to allow the claim of deduction u/s 80P(2)(d) of the Act.
Page 7 of 12 to 2604/Mum/2024 A.Y. 2012-13, 14-15, 15-16, 16-17 & 18-19 Silverline co-operative Housing Society Ltd. (A.Y. 2015-16) 11. For AY 2015-16 similar grounds have been raised by the assessee as earlier years. The facts are also similar except that the return has been filed on 24.12.2015 as against the extended due date of 31.10.2015. The intimation u/s 143(1) disallowing the claim of deduction u/s 80P(2)(d) of Rs. 1,62,710/- was issued on 03.03.2016. A rectification application u/s 154 of the Act was filed by the assessee on 11.03.2016, which is still pending.
Subsequently, an appeal was filed before Ld. Addl. CIT(A) on 30.11.2023 with a delay of 2765 days. The Ld. Addl. Addl. CIT(A) vide order dated 11.03.2024 dismissed the appeal of the assessee on account of unexplained delay as well as on merits, observing that the return had to be filed within the time allowed u/s 139 of the Act to claim the benefit of section 80P(2)(d). Facts regarding delay in filing of appeal are exactly similar as in the earlier years. With regard to delay in filing of the return, it is seen that section 80AC specifies the under which section deduction would not be allowed unless the return was furnished on or before the due date specified u/s 139(1). The disallowance of deduction claimed u/s 80P(2)(d) is not mentioned therein: “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 section 80-ID or section 80-IC, ii. the 1st day of April, 2018, any deduction is admissible under any [provision of this Chapter under the heading “C.-Deduction in respect of certain incomes”, Page 8 of 12 to 2604/Mum/2024 A.Y. 2012-13, 14-15, 15-16, 16-17 & 18-19 Silverline co-operative Housing Society Ltd. 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 the sub section (1) of section 139.”
From the above, it is seen that before 01.04.2018 the disallowance of deduction u/s 80IA, 80IAB, 80IB, 80IC, 80ID, 80IE only could be made in case of belated filing of returns. Therefore, deduction u/s 80P(2)(d) is not hit by the provisions of 80AC.
Rest of the facts being similar to AY 2013-14 and 2014-15, it is held that the disallowance made by the CPC u/s 143(ia) on the claim of deduction u/s 80P(2)(d) is beyond the scope of adjustment u/s 143(1) of the Act and it is accordingly deleted.
ITA No. 2603/MUM/2024 (A.Y. 2016-17)
The assessee has raised following grounds for AY 2016-17: 1. “The Grounds mentioned here under are without prejudice to one another i. On the facts and circumstances the case The Learned Addl/Jt commissioner of income Tax Surat 2 has failed to appreciate Appellant that had the filed rectification application with Income Department Tax ii. The Learned Addl/Jt Commissioner of Income Tax Surat 2 has failed to give opportunity to be heard.
2. The Appellant prays that one more opportunity may be granted to them in the interest of natural justice.”
16. Brief facts are that the return declaring income Rs. 4,460/- was filed on 07.12.2017 which was processed by the CPC, Bengaluru u/s 143(1) of the Act on 09.08.2018. An appeal was filed before the Ld. Addl. CIT(A) on 30.11.2023 i.e. after a delay of 1853 days. The Ld. Addl. CIT(A) vide order dated 12.03.2024 Page 9 of 12 to 2604/Mum/2024 A.Y. 2012-13, 14-15, 15-16, 16-17 & 18-19 Silverline co-operative Housing Society Ltd. has dismissed the appeal of the assessee, after rejecting the application for condonation of delay and also on merits after observing that the return has been filed after the due date and as such the benefit of section 80P(2)(d) cannot be allowed.
We have heard the rival submissions. With regard to the delay, it has been submitted in the affidavit filed on behalf of society that there was no competent accountant to look after the income tax matters. Out of the total delay of 1853 days, approximately 1200 days delay is covered by the Hon’ble Apex Court’s decision regarding exclusion of period from 15.03.2021 to 28.02.2022 and 01.03.2022 to 31.05.2022 on account of Covid pandemic. Thereafter, due to the fact that it is a small society with no regular staff and no one brought the matter to the knowledge of society. Attention of the office bearers was drawn to the issue only when a notice for recovery of demand was received.
As remaining facts are similar to the earlier years discussed hereinbefore. respectfully following the decision of the co-ordinate bench in the case of Vishva Villa Co-op. Housing Society Ltd. v/s ITO, Ward 19(3)(1) [supra], it is held that the disallowance made by CPC u/s 143(1a) on the claim of deduction 80P(2)(d) is beyond the scope of adjustment u/s 143(1) and accordingly the addition made on this account is hereby dismissed.
The appeal of the assessee is allowed and AO is directed to allow the claim of deduction u/s 80P(2)(d) of the Act.
Page 10 of 12 to 2604/Mum/2024 A.Y. 2012-13, 14-15, 15-16, 16-17 & 18-19 Silverline co-operative Housing Society Ltd. (A.Y. 2018-19) 20. The grounds and the facts of the AY 2018-19 are similar to AY 2016-17 except that the delay in filing of appeal is 1537 days. The return was filed declaring nil income which was processed u/s 143(1) of the Act by the CPC, Bangaluru. After making disallowance of deduction claimed u/s 80P(2)(d) income was assessed at 5,16,650/- vide intimation dated 12.07.2019.
In view of the identical facts and circumstances as discussed in AY 2016- 17 and respectfully following the decision of the co-ordinate bench in the case of Vishva Villa Co-op. Housing Society Ltd. v/s ITO, Ward 19(3)(1) [supra], we hereby deleted the disallowance of deduction u/s 80P(2)(d) u/s 143(1) of the Act..
In the result, the appeals of the assessee are allowed. Order pronounced in the open court on 29.08.2024.