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Facts
The assessee, a cooperative society, filed its return of income for AY 2019-20 belatedly on September 30, 2020, claiming deduction under Section 80P. The CPC disallowed this deduction and added Rs. 1,79,940/- to the total income in the intimation under Section 143(1). The assessee's appeal to the CIT(A) was unsuccessful.
Held
The Tribunal noted that the assessee had filed a valid belated return for AY 2019-20 based on a CBDT order extending the due date. It was held that the disallowance made by the CPC under Section 143(1) on the grounds of delayed filing was not tenable as per the provisions of Section 143(1) existing at that time, and also considering a consistent view from the ITAT, Rajkot.
Key Issues
Whether the disallowance of deduction under Section 80P by the CPC in the intimation under Section 143(1) for AY 2019-20, on the ground of belatedly filed return, is tenable?
Sections Cited
139, 143(1), 80P, 80AC, 119(2)(a), 143(1)(a)(v), 143(1)(a)(ii)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: SHRI VIJAY PAL RAO & SHRIB.M. BIYANI
आदेश/O R D E R
Per Vijay Pal Rao, VP:
This appeal by the assessee is directed against the order dated 28th February, 2024, of Commissioner of Income-tax (Appeals), National Faceless Centre, Ahmedabad, for the assessment year 2019-20.
The assessee has raised solitary ground as under :-
“The deduction u/s 80P of Rs.1,79,940/- has been disallowed and added to the total income of the assessee, which is unjustified and liable to set aside. ”
Page 1 of 7 Societies Act. The assessee filed its return of income u/s 139(4) of the Act, on 30th September, 2020, the extended date vide C.B.D.T. Notification No.
56 of 2020. The assessee claimed deduction u/s 80P on the income derived from the business of banking and providing credit facilities to its members.
The return was processed by C.P.C. u/s 143(1) vide order dated 23rd November, 2020, whereby the claim of deduction u/s 80P was disallowed and addition of Rs. 1,79,940/- was made on this account. The assessee challenged the action of C.P.C. before the Ld. CIT(A), but could not succeed.
We have heard the Ld. Authorized Representative of the assessee as well as the Ld. Departmental Representative and considered the material on record. The Ld. Authorized Representative of the assessee has relied upon the decision of this Tribunal dated 09.09.2024 in the case of Nagar Palika Nigam Karmchari Kalyan Sakh Sahakari Sanstha Maryadit, Ujjain, vs. CPC, Bangaluru/CIT, NFAC, Delhi, in I.T.A.No. 198/Ind/2024.
On the other hand, the Ld. Departmental Representative has submitted that the Ld. CIT(A) has confirmed the disallowance by following the decision of Mumbai Bench of the Tribunal.
Having considered the rival submissions and careful perusal of the record, at the out-set, we note that an identical issue of disallowance of deduction u/s 80P by the CPC, while processing the return u/s 143(1) has been considered by this Tribunal in the case of Nagar Palika Nigam
Page 2 of 7 as under :-
6. We first refer section 80AC, which is the basis of impugned disallowance, as applicable to relevant AY 2019-10 reading as under: “80AC – Deduction not to be allowed unless return furnished - 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-IE; (ii) the 1st day of April, 2018, any deduction is admissible under any provision of this Chapter under the heading C.-Deductions in respect of certain incomes", 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 sub-section (1) of section 139.” In present case of assessee, the deduction u/s 80P for AY 2019-20 is involved. Therefore, the case of assessee fits in clause (ii) of section 80P re-produced above and the lower-authorities, on a plain reading of section 80AC, were within power to hold that deduction u/s 80P was not allowable to assessee for non-filing of return upto 31.08.2019 which was due date for filing of return u/s 139(1).
7. However, the case of assessee requires us to go further and look other legal provisions as advanced by Ld. AR. Firstly, we need to check whether the belated return filed by assessee u/s 139(4) on 30.09.2020 was itself valid or not? We find that in the light of CBDT’s order dated 30.09.2020 u/s 119(2)(a) placed by Ld. AR before us, the assessee could very well file belated return u/s 139(4) upto 30.11.2020 and therefore the return filed on 30.09.2020 was a valid return. The CBDT’s order is re-produced below for an immediate reference:
Going next, we find a strong merit in Ld. AR’s contention that the AO had no authority to make the impugned disallowance in the intimation u/s 143(1) because the provision of section 143(1) exiting at that time, did not permit such disallowance for AY 2019-20 involved in present appeal. This issue is elaborately dealt and decided by ITAT,
Page 4 of 7 Shree Sidh Balaji Sakh Sahkarita Maryadit, Ujjain Assessment year 2019-20 Rajkot Bench in Chakargadh Seva Sahakari Mandali Ltd. Vs. The DCIT (CPC), Bengalurur, order dated 19.07.2023 for the very same AY 2019-20, copy of ITAT’s order is filed by Ld. AR at Page 36-47 of Paper-Book. The relevant paras of order are re-produced below:
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 28-11- 2020 and claimed deduction of 5,58,494/- 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 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.”
7.1 A joint reading of the above provisions makes it evident that the claim of deduction under section 80P of the Act cannot be Page 5 of 7 Shree Sidh Balaji Sakh Sahkarita Maryadit, Ujjain Assessment year 2019-20 allowed the assessee, if the assessee does not file its return of income within the due date stipulated under section 139(1) of the Act w.e.f. assessment year 2018-19 onwards. However, we also note that amendment has been introduced in section 143(1)(a)(v) of the Act to provide that the claim of deduction under section 80P of the Act can be denied to the assessee, in case the assessee does not file its return of income within the time prescribed under section 139(1) of the Act with effect from 01-04- 2021 and does not apply to the impugned assessment year i.e. assessment year 2019-20 relevant to financial year 2018-19. Accordingly, in our considered view, denial of claim under section 80P of the Act would not come within the purview of prima facie adjustment under section 143(1)(a)(v) of the Act, for the simple reason that the section was not in force during the period under consideration i.e. assessment year 2019-20.
7.2 The second issue for consideration is that whether the case of the assessee would fall within the purview of prima facie adjustment under section 143(1)(a)(ii) (an incorrect claim, if such incorrect claim is apparent from any information in the return). In our view, the scope of the adjustments that can be made under the said provision has been elaborated in the Explanation to the aforesaid section, which does not include denial of deduction claimed by the assessee in case the assessee does not furnish its return of income within the date stipulated under section 139(1) of the Act. The Explanation to the said section specifically provides for cases/instances when the claim made by the assessee could be said to be “incorrect”. Therefore, in our considered view, the case of the assessee would also not fall within the purview of prima facie adjustment under section 143(1)(a)(ii) (an incorrect claim, if such incorrect claim is apparent from any information in the return).”