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Facts
The assessee, a co-operative housing society, filed appeals against CIT(A) orders for A.Y. 2014-15 and 2015-16, where deductions u/s 80P were disallowed by way of adjustment u/s 143(1) for not filing returns by the due date. The appeals were filed with a delay of 1758 days due to various reasons, including the CIT(A)'s direction to file a rectification application u/s 154, which the AO failed to process for several years, and changes in the society's managing committee, leading to a bonafide belief that rectification would occur.
Held
The Tribunal condoned the delay in filing the appeals, finding the reasons bonafide. On merits, it held that for A.Y. 2014-15 and 2015-16, there was no provision under section 143(1)(a) to disallow deductions under section 80P merely because the return was not filed by the due date. This specific provision was introduced only by the Finance Act 2021, effective from A.Y. 2021-22. Therefore, the adjustments made by the AO were not permissible.
Key Issues
1. Condonation of delay in filing appeal before the Tribunal. 2. Validity of disallowing deduction u/s 80P through adjustment u/s 143(1) for A.Y. 2014-15 and 2015-16 due to late filing of return.
Sections Cited
143(1), 154, 80P, 10AA, 80AIA, 80IAB, 80IB, 80IC, 80ID, 80IE, Chapter VIA
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘SMC’ BENCH MUMBAI
आदेश / O R D E R PER AMIT SHUKLA (J.M): The aforesaid appeals have been filed by the assessee against order of even date 25/02/2019 passed by CIT(A)-40, Mumbai for the A.Y.2014-15 and 2015-16 in relation to the adjustment made u/s.143(1) for claim of deduction u/s.80IP.
2 704/MUM/2024 Lok Everest Co-op Hsg Soc. Ltd.
2. At the outset, the appeal of the assessee is time barred by 1758 days. The ld. Counsel informed that against the intimation u/s.143(1), the assessee had filed petition for rectification u/s.154 before the CPC. Once there was no response, the assessee also filed physical copy of petition u/s.154 before the ld. AO through speed post. Against such adjustment made u/s.143(1), appeal was filed before the ld. CIT(A) who held as under:- “The appellant society filed its return of income on 31.3.2016 which was processed on 30.6.2016 whereas the appellant filed the appeal on 5.10.2016. This is only a processing of return u/s. 143(1) and hence, the appropriate forum would be filing of rectification application before the AO by filing appropriate details for rectification and hence the assessee is directed to file a rectification petition before the AO. Therefore, the appeal filed by the appellant is dismissed for statistical purpose.”
3. It was informed that after the order of the ld. CIT(A) and direction to the ld. AO, assessee once again filed the rectification but no such rectification was carried out. Since assessee is a co- operative housing society and Management Committee had changed from time to time, it was not aware that appeal was to be filed, since rectification was still pending bfore the ld. AO despite the direction of the ld.CIT(A), it could not file the appeal in time. It was when demand was pressed, the assessee society approached the Chartered Accountant, and then appeal has been filed. Thus, the appeal in ciould not be filed before the Tribunal due to these bonafide reasons.
3 704/MUM/2024 Lok Everest Co-op Hsg Soc. Ltd.
4. After hearing both the parties, we find that assessee had filed petition for rectification u/s.154 before the CPC and then also in the physical form. The reason for condonation of delay has been stated as under:- “1. The return of income was processed vide Intimation under section 143(1) dated 30/06/2016 denying deduction under section 80P and raising demand of Rs. 9,32,760/-. As against this, appeal was filed before CIT (A) on 05/10/2016. The Ld. CIT (A) in its order dated 25/02/2019 directed to file rectification application under section 154 before the Ld. Assessing Officer.
That, upon receipt of CIT(A) order, dated 25.02.2019, the rectification application under section 154 dated 30/05/2019 was filed before the Ld. Assessing Officer by registered post sent on 03/06/2019.
That in between the managing committee of the society changed several times and there was no dedicated person to take care of the technical income tax issues and we were of the opinion that the grievance would be resolved by the rectification application.
That, the rectification application under section 154 is not decided by the Ld. Assessing Officer till date. It is still pending to be disposed of. Recently, a recovery of demand notice was raised for AY 2014-15.
5. That, upon receipt of such notice, we approached a professional expert to seek advice on the aforesaid matter. It was only then, we were advised to file an appeal before the Hon'ble Income Tax Appellant Tribunal. Thus, the appeal is now being filed against the CIT(A) order dated 25.02.2019.”
Looking to the fact that despite direction given by the CIT(A), the ld. AO has not passed any rectification, therefore, assessee was under a bonafide belief that ld. AO will pass the rectification order. Since, it was not passed for several years, assessee filed 4 704/MUM/2024 Lok Everest Co-op Hsg Soc. Ltd. the appeal before the Tribunal and therefore, delay in filing of appeal is condoned.
On merits, we find that primafacie adjustment for disallowance u/s.143(1) has been made on the ground that assessee has not filed the return of income during the due date. The assessee being a Coopertaive Housing Society. First of all for the A.Y.2014-15 and 2015-16 there was no such provision for making disallowance u/s.143(1)(a) because the adjustment which was permissible was with respect to 10AA, 80AIA, 80IAB, 80IB, 80IC, 80ID or Section 80IE. It was only by the Finance Act 2021 w.e.f. A.Y.2021-22, now the primafacie adjustment is permissible under Chapter VIA if the assessee has not filed the return of income on the due date. Thus, for the A.Y.2014-15 and 2015-16 there was no provision for making such adjustment, accordingly, adjustment made by the assessee is allowed.
In the result, appeals of the assessee for A.Y.2014-15 and 2015-16 are allowed.
Order pronounced on 28th June, 2024.