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Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: SHRI VIJAY PAL RAO & SHRI B.M. BIYANI
आदेश / O R D E R
Per B.M. Biyani, A.M.:
Feeling aggrieved by appeal-order dated 08.06.2022 passed by learned Commissioner of Income-Tax (Appeals)-NFAC, Delhi [“CIT(A)”] which in turn arises out of intimation of assessment dated 08.06.2022 passed by learned ADIT, CPC, Bengaluru [“AO”] u/s 143(1) of Income-tax Act, 1961 [“the Act”] for Assessment-Year [“AY”] 2019-20, the assessee has filed this appeal on the grounds as mentioned in Appeal Memo (Form No. 36).
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The registry has informed that the present appeal is filed on 12.03.2024 against impugned order dated 08.06.2022 whereas the assessee has mentioned date of service of impugned order as 01.02.2024 in Form No.
36 filed to ITAT. According to registry, there should be a delay of around one and half year. Ld. AR for assessee submitted that the assessee has filed a condonation application supported by an affidavit of the President of assessee-society in this regard. Referring to contents of these documents, Ld. AR submitted that the assessee is a registered co-operative society of employees of local body (municipal corporation, Ujjain). The registered email id in the profile of assessee in income-tax portal was of previous accountant who resigned from society and the order of CIT(A), if any served upon such registered email, never came to the knowledge of assessee. It is only when the assessee contacted its authorized representative on 01.02.2024 that the income-tax portal was checked and the assessee came to know that the impugned order had already been passed by CIT(A). After being aware, the assessee arranged to pay appeal fee and file present appeal on 12.03.2024 without further delay. Ld. AR submitted that there was no physical service of impugned order upon assessee. Ld. AR very humbly submitted that the assessee is a society of employees of local body and there is no deliberate lethargy, negligence, mala fide intention or ulterior motive of assessee in making delay and the assessee does not stand to derive any benefit because of delay. She further submitted that the issue involved in present appeal is the deduction u/s 80P which was rightly claimed by assessee and also Page 2 of 9 allowable to assessee as per provisions of Income-tax but the AO has disallowed such deduction without authority of law as would be seen in subsequent discussion, therefore the assessee’s case has full strength on merit as well. With these submissions, Ld. AR prayed that the delay in filing appeal, even if there, be condoned in the light of court decisions. Ld. DR for Revenue did not express any objection against the submissions and prayer of Ld. AR; in fact he fairly expressed that the assessee is a co-operative society of employees of local body and the reason of delay explained by assessee appears worthy. Accordingly, he left the matter to the wisdom of Bench. We have considered the explanation advanced by assessee and in absence of any contrary fact or material on record, the assessee is found to have a “sufficient cause” for delay in filing present appeal. We find that section 253(5) of the Act empowers the ITAT to admit an appeal after expiry of prescribed time, if there is a “sufficient cause” for not presenting appeal within prescribed time. It is also a settled position by Hon’ble Supreme Court in Collector, Land Acquisition Vs Mst. Katiji and others 1987 AIR 1353, 1987 2 SCC 387 that whenever substantial justice and technical considerations are opposed to each other, the cause of substantial justice must be preferred by adopting a justice-oriented approach. The case of assessee has a sufficient strength on merit. Therefore, taking into account the provision of section 253(5) and the decision of Hon’ble Supreme Court, we take a judicious view, condone delay, admit appeal and proceed with hearing.
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The background facts leading to present appeal are such that the assessee is a society of employees of local body. It filed return of income of relevant AY 2019-20 belatedly u/s 139(4) on 30.09.2020 after showing gross total income of Rs. 5,52,757/-, claiming deduction of equal amount u/s 80P and thereby reporting total income at Rs. Nil. The AO processed assessee’s return u/s 143(1) wherein the deduction u/s 80P claimed by assessee was denied for the reason that the return of assessee was not filed upto due date u/s 139(1) and therefore the deduction was not allowable by virtue of restrictive provision of section 80AC. Aggrieved, the assessee carried matter in first-appeal but did not get any success. Now, the assessee has come in next appeal before us challenging the orders of lower-authorities.
The precise and short issue before us is whether or not the disallowance made by AO and upheld by CIT(A) by rejecting assessee’s claim of deduction of Rs. 5,52,757/- u/s 80P was in order? Basically, the case relates to AY 2019-20 and the due date for filing of return u/s 139(1) was 31.08.2019 but the assessee filed return belatedly u/s 139(4) on 30.09.2020. Therefore, the AO made impugned disallowance while processing assessee’s return u/s 143(1) on the strength of section 80AC.
Ld. Representatives of both sides made their respective contentions against and for the action of lower-authorities. We have heard them at length and considered the facts of case in the light of relevant provisions of law and the judicial rulings quoted before us.
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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).
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 Page 5 of 9 30.09.2020 was a valid return. The CBDT’s order is re-produced below for an immediate reference:
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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, Rajkot Bench in Chakargadh Seva Sahakari Mandali Ltd. Vs. The DCIT (CPC), 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,—
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(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 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).”
Thus, the case of assessee is squarely covered by order of ITAT, Rajkot. Respectfully following the same, we too hold that the impugned disallowance made by AO in intimation u/s 143(1) for AY 2019-20 on the basis that return was not filed upto due date u/s 139(1), is not tenable.
Page 8 of 9 Accordingly, we direct the AO to allow deduction. The asessee’s appeal is allowed.
Resultantly, this appeal is allowed.
Order pronounced in open court on 09.09.2024.
Sd/- sd/- (VIJAY PAL RAO) (B.M. BIYANI) JUDICIAL MEMBER ACCOUNTANT MEMBER Indore िदनांक /Dated : 09.09.2024 CPU/Sr. PS Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Assistant Registrar Income Tax Appellate Tribunal Indore Bench, Indore
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