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Income Tax Appellate Tribunal, “SMC” BENCH KOLKATA
Before: SHRI RAJPAL YADAV & SHRI RAKESH MISHRA
Present for: Appellant by : P.K. Ray, Advocate Respondent by : L.N. Dash, JCIT Date of Hearing : 24.07.2024 Date of Pronouncement : 14.10.2024 O R D E R
PER RAKESH MISHRA, ACCOUNTANT MEMBER:
This appeal filed by the assessee is against the order of the Ld. Addl/JCIT (Appeals)-2, Bengaluru [hereinafter referred to as “the Ld. Addl/JCIT(A)”] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for AY 2019-20 dated 26.03.2024, which has been passed against the intimation u/s 143(1) of the Act dated 12.01.2021 issued by the ADIT, CPC, Bengaluru.
The grounds of appeal raised by the assessee are reproduced as under:
“1. That, the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi erred in confirming action of CPC Bengaluru by holding that claim made by the Appellant was "Incorrect claim as per Sec. 143(1) of the Income Tax Act, 1961. 2 That, the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi erred in confirming action of CPC Bengaluru by disallowing claim of deduction of Rs 33,17,814/- by failing to appreciate that Panisheola Samabay Krishi Unnayan Samiti Limited: AY: 2019-2020 provisions of under section 143(1)(a)(v) of the Income Tax Act, 1961 do not provide for denial of deduction under section 80P of the Act when the return of income is not filed within time allowed under section 139(1) read with under section 139(4) of the Income Tax Act, 1961.
3. That, the Ld Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi erred in upholding action of the CPC Bengaluru in making adjustment to the returned income of the Appellant by way of an intimation under section 143(1) of the Income Tax Act, 1961 and in denying the benefit of under section 80P of the Income Tax Act, 1961 of Rs 33,17,814/- to the Appellant by failing to appreciate that this was not a prima facie adjustment permissible under section 143(1)(a) of the Income Tax Act, 1961.
4. That, the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi erred in not adjudicating ground of disallowance of claim of deduction of Rs.33,17,814/- under section. 80P of the Income Tax Act, 1961.
5. That, the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi erred in disallowing the claim of deduction under section 80P of the Income Tax Act, 1961 without appreciating the facts and nature of the Appellant as well as the entire transaction within member of the Appellant.
That, the Ld Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi has erred in relying on various case laws, which are not at all applicable to the Appellant's case. The aforesaid grounds are without prejudice to each other and the appellant craves leave to add/delete/alter and/or amend any of grounds as aforesaid as and when necessary….”
Brief facts of the case as culled out from Form No. 35 are that the assessee is an agricultural cooperative society, located at Hooghly District of West Bengal, which is mainly engaged in development of agriculture and provides services to its member agriculturists. For the AY 2019-20, the return of income was filed u/s 139(4) of the Act on 11th November, 2020, declaring total income of Rs 4,55,200/- after claiming deduction u/s 80P of the Act at Rs. 33,17,814/-. The Ld. AO CPC, Bengaluru (hereinafter ‘the Ld. AO') disallowed the said claim of Rs 33,17,814/- as the return of income was filed belatedly after the due date, i.e. after 30th September, 2019. The return of income is submitted after completion of the audit by the Government cooperative society auditors appointed by the State Government authorities on the basis of the audited balance sheet signed by the audit officers. It was claimed before the Ld. Addl/JCIT(A) that no audit officers were deputed for audit of accounts by the State Government Panisheola Samabay Krishi Unnayan Samiti Limited: AY: 2019-2020 and the appellant society had to appoint some tax auditor for audit of accounts and the tax auditor furnished the audit report on 30th September, 2020. Thereafter, the return was uploaded by the appellant on 11.11.2020 u/s 139(4) of the Act. Aggrieved with the intimation u/s 143(1) of the Act, the assessee filed an appeal before the Ld. Addl./JCIT(A), however, the appeal was dismissed primarily for the reason that the return of income was not filed within the due date i.e. 30.09.2019 or the extended due date on 31.10.2019. The Addl./JCIT(A) also discussed the provisions of section 80AC which mention that the deduction shall not be allowed unless the return is furnished on or before the due date specified under sub-section (1) of section 139. He also relied upon the decision of the Hon’ble Supreme Court in the case of PCIT-III, Bengaluru Vs. Wipro Ltd. in Civil Appeal No. 1449 of 2022 (Arising out of SLP (Civil) No. 7620/2021) order dated 11.07.2022, which though was in the context of a different section but the underlying law settled is that a person who claims exemption of concession must establish that it is entitled to that exemption or concession as the provision has to be construed strictly with certain exceptions, depending upon the settings on which the provision has been placed in the Statute and the object and purpose to be achieved. Since the return was not filed within the due date, the deduction claimed u/s 80P of the Act on the basis of post facto filing of the return of income was not allowed as the return was filed by the assessee on 11.11.2020 while the extended due date for filing the original return was 31.10.2019. Aggrieved with the order of the Addl./JCIT(A), the assessee has filed this appeal before the Tribunal.
During the course of the hearing, it was submitted by the Ld. AR that the amendment in sub-clause (v) of Section 143(1)(a) of the Act which has substituted “sections 10AA, 80-IA, 80-IAB, 80-IB, 80-IC, 80-ID or section 80- IE, if” with “sections 10AA or under any of the provisions of Chapter VI-A under the headings “C.- Deductions in respect of certain incomes”, if” was inserted by the Finance Act, 2021 w.e.f. 01.04.2021. The Ld. AR also relied upon the decision of the coordinate Benches of the Tribunal in the cases of Panisheola Samabay Krishi Unnayan Samiti Limited: AY: 2019-2020 Bisharpara Kodalia Coop. Credit Society Ltd. Vs. Income Tax Officer, Ward 49(2), Kolkata, AY 2018-19, dated 06.02.2024 and The Commercial Taxes Directorate Employees Co Op. Credit Society Limited Vs. ADIT, CPC, Bangalore, ITA No. 204/Kol/2024, AY 2020-21, dated 19.04.2024. The Ld. Sr. DR relied upon the order of the Addl./JCIT(A).
We have heard the rival contentions and perused the material available on record. A perusal of the relevant provision shows that the power to make disallowance of deduction under the head “C.- Deductions in respect of certain incomes” under section 80P of Chapter VIA while processing the return u/s 143(1) has been given to the assessing officer only by the Finance Act, 2021 with effect from 01.04.2021. Prior to that there was no power available with the Ld. AO to disallow the claim made under head “C.- Deductions in respect of certain incomes” under Chapter VI-A of the Act. Similar issue also came up in the case of Bisharpara Kodalia Coop. Credit Society Ltd. Vs. Income Tax Officer, Ward 49(2), Kolkata (supra) in which the coordinate Bench has held as under: 4. We have heard rival submissions and have gone through the record placed before us. We notice that the assessee is a Co-operative Society engaged in the business of providing credit to its members. The assessee is required under law to get its account audited under the rules and regulations of West Bengal Cooperative Socie- ties Act, 2006 by the auditor appointed by Directorate of Cooperative Societies. For the AY 2018-19 due date for filing the return was 30.09.2018. However, the return was submitted on 25.11.2018. 5. We note that the Central Processing Centre denied the deduction u/s. 80P of the Act solely for the reason that return was not filed within the due date. Provisions of section 143(1)(a)(v) provides that – “(v) disallowance of deduction claimed under section 10AA or under any of the provisions of Chapter VIA under the heading “C – Deductions in respect of certain incomes”, if the return is furnished beyond the due date specified under sub- section (1) of section 139;” 5.1. In the above provision, an amendment brought is in by Finance Act from 01.04.2021 w.e.f. 1.4.21 and before such amendment in place of the phrase section 10A or in any of the provisions of Chapter VIA under the head e – the words “de- ductions in respect of certain income, previously which was provided as section 10AA, 80IA, 80IB, 80IC, 80ID or section 80IE of the Act were appearing.”
Panisheola Samabay Krishi Unnayan Samiti Limited: AY: 2019-2020 6. From perusal of the said amendment, we note that before 01.04.2021 there was no mechanism for the CPC to prima facie disallow the claim u/s. 80P of the Act. It was only from 01.04.2021 that such powers have been conferred with the CPC to make prima facie disallowance in case of the claim made u/s 10AA or deduction claimed under any of the provisions in Chapter VIA which, inter alia, includes 80P of the Act.
We note that section 80AC of the Act puts a bar against claiming of deduction in respect of certain income provided under the head (C) of Chapter VIA which includes section 80P of the Act also if the return of income are not filed before the due date prescribed u/s. 139(1) of the Act. Had it been a case of scrutiny proceeding u/s. 143(3) of the Act, the situation certainly would have been against the assessee subject to the approval by the authorities for condonation of delay in filing the return. However, before us, the issue is regarding prima facie adjustment made u/s. 143(1)(a)(v) of the Act and as discussed above, such power of making the prima facie adjustment towards deduction u/s. 80P of the Act came to CPC only from 1.4.2021 and thus, the alleged disallowance by CPC is beyond its jurisdiction. Therefore, the assessee deserves relief. We are thus inclined to hold that the Ld. CIT(A) erred in denying the deduction u/s 80P of the Act for Rs.19,42,264/-. We, therefore, set aside the order of the Ld. CIT(A) and allow the grounds of appeal
raised by the assessee for the claim of deduction u/s. 80P of the Act at Rs.19,42,264/-.
6. Therefore, respectfully following the decision of the co-ordinate Bench, on facts of the case which are identical to the cases relied upon by the Ld. AR, the Ld. AO was not justified in disallowing the claim for deduction u/s 80P while making prima facie adjustments u/s 143(1)(a)(v) of the Act as the amended provisions were not available for the impugned assessment year and no such adjustment was legally permissible. Section 80AC could have been invoked in the assessment u/s 143(3) of the Act only. Hence, the Ld. AO is directed to delete the disallowance made in the intimation u/s 143(1) of the Act and allow the deduction u/s 80P of the Act as per law. Thus, Ground Nos. 1 to 6 are allowed.
7. In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 14th October, 2024.