BHANIYAWALA KISAAN SEWA SAHKARI SAMITI LIMITED,DEHARADUN vs. THE INCOME TAX OFFICER, WARD-1(1)(2), DEHRADUN

The assessee has raised following grounds of appeal: - “1. That on the facts and in circumstances of the case the order of the Ld. CIT(A) is bad in law and against the principle of natural justice.

That on the facts and in circumstances of the case the Ld. CIT(A) has erred by not considering the fact that the Ld. Assessing Officer has completed the assessment u/s 144.

That the Ld. CIT(A) has erred disallowed deduction u/s 80P of the Income Tax Act 1961 on the ground that the assessee has not filed its income return and also not considered that the assessee is co- operative society.

That on the facts and in circumstances of the case the Ld. CIT(A) has erred not considering Income Tax Return submitted during the assessment proceeding.

That the Ld. CIT(A) has erred while passing the order also did not consider the judgment of Hon'ble Apex Court and Hon'ble High Court and several Hon'ble Tribunal's Judgments.

That the Ld. CIT(A) has erred not granted personal hearing/Virtual Hearing before passing the erroneous order.

That the Ld. CIT(A) has erred by sustaining the levy interest u/s 234A & 234B of the Income Tax Act, 1961.

That the Ld. CIT(A) has erred by sustaining the initiating penalty proceedings u/s 271F & u/s 270A(10)(a) of the income Tax Act, 1961.

The appellant craves leave add, alter, amend or vary from above grounds of appeal at or before the time of hearing.” 2.1 Later on, following additional grounds were raised by the assessee:

The appellant craves leave to add, alter, amend or vary from the above grounds of appeal at or before the time of hearing.” 2.2 We are tasked to decide following issues:

The relevant facts giving rise to this appeal are that the appellant assessee, a cooperative society, carrying out the activities of financing and sales of fertilizers/seeds/manures/cattle feed etc., is a non-filer ITR. It has not filed the ITR of the relevant assessment year 2017-18 within the specified time provided under section 139(1) of the Act. Since the assessee society had deposited cash of Rs.10,67,579/- during demonetization period in its bank accounts; therefore, the Assessing officer (hereinafter, the ‘AO’) issued notice under section 142(1) of the Act calling various details, documents, ITR, etc. vide notice dated 10.06.2019 (annexure-1B & 1C). In response to the notice under section 142(1) of the Act, the assessee filed various details, documents, etc. but not the ITR. Later, the assessee ensured compliances. The Assessee had furnished copy of the audited accounts. As per the Trading, Income & Expenditure Account of the relevant year, the assessee society has shown surplus of Rs.87,91,171/-. The same has been claimed eligible for deduction under section 80P of the 3.1 Aggrieved, the assessee filed appeal before Ld. CIT(A), who dismissed the appeal holding as under:

The Ld. Counsel submitting that the AO had not issued any notice under section 143(2) of the Act; therefore, the assessment was void abinitio. He cited various case laws. On merit, the Ld. Counsel, placing reliance on various decisions; Moolathara Services Co-op. Bank Ltd. 2019 SCC Online ITAT 11660 Shri Bhairav Seva Samiti 101 ITR (Tribu.) 708 (Mum), Major Suresh Yadav 153 taxmann.com 159 (ITAT, Del), Doreswamaih Sureshbabu 155 taxmann.com 13 (Kar.), Triyogi Narayan Singh 60 taxmann.com 351 (Cal), Absolute Entertainment Pvt. Ltd. 152 taxmann.com 10 (Del) and SBG Infrastructure LLP 130 taxmann.com 319 (Ahd. ITAT), argued that the assessee was entitled for deduction under section 80P of the Act.

The Ld. Sr. DR, drawing our attention to various Para of the impugned appellate order, submitted that since the assessee had not filed any ITR; therefore, the deduction under section 80P of the Act was rightly denied by the AO and the Ld. CIT(A). To buttress the argument, the Ld. Sr. DR placed submitted that the present case got squarely covered by the decision of the ITAT, Bengaluru in the case of Shri Kalabhairaveshwara Multi-purpose Co-op. Society Ltd. in ITA No. 1344/Bang/2024.

We have heard both parties at length and have perused the material available on the record. The material available on the record clearly show that the assessee has not filed any valid ITR of the relevant year either suo- moto or in response to the notice under section 142(1) of the Act. The assessee has not established and demonstrated that it has filed a valid ITR. Since there is no valid ITR; therefore, the question of issuance of notice under section 143(2) of the Act does not arise. Accordingly, it is held that the assessment without issuance of notice under section 143(2) of the Act has been rightly completed by the AO. Thus, the additional ground challenging validity of assessment without issuance of notice under section 143(2) of the Act is dismissed.

The next issue is whether claim of deduction under section 80P of the Act is allowable in the facts of this case. The claim of deduction under section 80P of the Act has been denied for the reason that assessee has not filed the ITR within the due date prescribed under section 139(1) of Bhaniyawala Kisaan Sewa Samiti Ltd. the Act. We are of the considered view that this case is squarely covered by the decision of the ITAT, Bengaluru in the case of Shri Kalabhairaveshwara Multi-purpose Co-op. Society Ltd. in ITA No. 1344/Bang/2024. The relevant part of the said decision (ITA No. 1344/Bang/2024) reads as under:

We have heard the rival submissions and perused the material on record. The solitary issue that is arising for our consideration is whether claim of deduction under section 80P of the Act can be allowed in the facts of this case. The claim of deduction under section 80P of the Act has been denied for the reason that assessee has not filed the return of income within the due date prescribed under section 139(1) of the Act. The issue is no longer res integra. The Hon'ble Kerala High Court in the case of Nileshwar Range Kallu Chethu Vyavasaya Thozhilali Sahakarana Sangham v. CIT (supra) has decided the issue in favour of the Revenue. The relevant finding of the Hon'ble Kerala High Court reads as follows: "11. On a consideration of the rival submissions and on a perusal of the statutory provisions, we find that a reading of section 80A(5) and Section 80AC of the IT Act as they stood prior to 1-4- 2018, when the latter provision was amended by Finance Act 2018, would reveal that the statutory scheme under the IT Act was to admit only such claims for deduction under section 80P of the IT Act as were made by the assessee in a return of income filed by him. That return can be under sections 139(1), 139(4), 142(1) or section 148, and to be valid, had to be filed within the due date contemplated under those provisions. Under section 80A(5), the claim for deduction under section 80P could be made by an assessee in a return filed within the time prescribed for filing such returns under any of the above provisions. The amendment to Section 80AC with effect from 1-4- 2018, however, mandated that for an assessee to get a deduction under section 80P of the IT Act, he had to furnish a return of his income for such assessment year on or before the due date specified in section 139(1) of the IT Act. In Bhaniyawala Kisaan Sewa Samiti Ltd. other words, after 1-4-2018, even if the assessee makes his claim for deduction under section 80P in a return filed within time under sections 139(4), 142(1) or section 148, he will not be allowed the deduction, unless the return in question was filed within the due date prescribed under section 139(1). Thus, it is clear that the statutory scheme permits the allowance of a deduction under section 80P of the IT Act only if it is made in a return recognised as such under the IT Act, and after 1-4-2018, only if that return is one filed within the time prescribed under section 139(1) of the Act. As the return in these cases, for the assessment years 2009-10 and 2010-11, were admittedly filed after the dates prescribed under sections 139(1) and 139(4) or in the notices issued under section 142(1) and section 148, the returns were indeed non- est and could not have been acted upon by the Assessing Officer even though they were filed before the completion of the assessment.

There is yet another aspect of the matter. The requirement of making the claim for deduction in a return of income filed by the assessee can be seen as a statutory pre-condition for claiming the benefit of deduction under the IT Act. It is trite that a provision for deduction or exemption under a taxing Statute has to be strictly construed against the assessee and in favour of the Revenue. Thus viewed, a failure on the part of an assessee to comply with the pre- condition for obtaining the deduction cannot be condoned either by the statutory authorities or by the courts.

It is in the backdrop of the aforesaid discussion that we must consider the findings of a Division Bench of this Court in Chirakkal Service Co-operative Bank Ltd. [supra]. The findings therein, that appear to suggest that a claim for deduction under section 80P can be entertained even if it is made in a return filed beyond the time permitted under the IT Act, ignores the perspective that sees the requirement of the claim for deduction being made in a valid return as a pre-condition for obtaining the benefit of the statutory deduction. The said findings also fly in the face of the express statutory provisions that requires the claim to be made in a return filed by the assessee, by which term is meant a valid return under the Act, and therefore have necessarily to be seen as per Bhaniyawala Kisaan Sewa Samiti Ltd. incuriam. We also find that the subsequent amendments to section 80AC by the Finance Act 2018 fortifies the view that we have taken for, it makes the claim for deduction under section 80P conditional on filing a return within the due date prescribed under section 139(1) of the IT Act. In other words, the precondition for claiming the deduction under section 80P of the IT Act has now been made more stringent by reducing the time available to an assessee for making the claim.

Before parting with these cases, we must also address the arguments of the learned counsel for the appellant/assessee relying on the provisions of section 139(8)/(9) and section 234A of the IT Act. A reading of the provisions of section 139(8) and (9) of the IT Act clearly reveals that even under those provisions, the restrictions placed with regard to the accrual of interest on amounts assessed on an assessee is with regard to the date of filing of a return within the time prescribed under the IT Act. Under section 234A of the IT Act, however, although the provision suggests that even a return filed beyond the time prescribed under any of the provisions of the IT Act can have the effect of limiting the accrual of interest on the amounts assessed against an assessee, we have to see the said provision as permitting a filing of a belated return for the limited purpose of conferring a specific benefit of limiting the accrual of interest, on an assessee, and for no other purpose. We cannot accept the contention of the appellant/assessee that the said provisions which are intended for a specific purpose and are not general in nature, have to be seen as manifesting a statutory scheme that enables the Department to act upon a belated return for allowing the claim of an assessee for deduction under section 80P of the IT Act.

Section 80A(5) of the Act reads as under:- "(5) Where the assessee fails to make a claim in his return of income for any deduction under section 10A or section 10AA or section 10B or section 10BA or under any provision of this Chapter under the heading "C.--Deductions in respect of certain incomes", no deduction shall be allowed to him thereunder."

It is clear from the above section that for claiming deduction under Chapter VIA under the head, "Deductions to be made in computing total income", which covers section 80P also, the assessee has to file return of income. However, the assessee did not file return of income at all and therefore the assessee is not eligible for deduction u/s. 80P of the Act. The Hon'ble Kerala High Court in the case of Nileshwar Rangekallu Chethu Vyavasaya Thozhilali Sahakarana Sangham v. CIT [2023] 152 taxmann.com 347 (Kerala) has held as under: - 10. Respectfully following the above judgment, we hold that the assessee is not eligible for deduction u/s. 80P of the Act."

In light of the aforesaid judicial pronouncements, we reject the grounds revolving on the issue of deduction under section 80P of the Act raised by the assessee. It is ordered accordingly.

As far as the issues relating to chargeability of interest under section 234A & 234B of the Act and initiation of penalties under the Act are concerned, these are either consequential or premature; therefore, these grounds stand dismissed.

In the result, appeal filed by the assessee is dismissed.