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Income Tax Appellate Tribunal, RAJKOT BENCH, RAJKOT
Before: Shri Waseem Ahmed & Shri Siddhartha Nautiyal
आदेश/ORDER PER : SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER:-
This assessee’s appeal for A.Y. 2019-20, arises from order of National Faceless Appeal Centre (NFAC), Delhi dated 31-10-2022, in proceedings under section 250 of the Income Tax Act, 1961; in short “the Act”.
The assessee has taken the following grounds of appeal:
Page No 2 Batava Devli Seva Sahakari Mandali Ltd. vs. ADIT (CPC)
Grounds of Appeal Tax effect relating to each Ground of appeal
The learned Commissioner (Appeals), National 1,23,470/- Faceless Appeal Centre, Delhi erred in confirming action of CPC Bengaluru by disallowing claim of deduction of Rs.3,99,585/- by failing to appreciate that provisions of Sec. 143(l)(a)(v) do not provide for denial of deduction u/s 80-P of the Act when the return of income is not filed within time allowed u/s 139(1) of the Act but u/s 139(4).
2. The learned Commissioner (Appeals), National 1,23,470/- 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 u/s 143(1) and in denying the benefit of Sec. 80-P of the Act of Rs.3,99,585/-to the Appellant by failing to appreciate that this was not a prima facie adjustment permissible u/s 143(l)(a) of the Act.
3. The learned Commissioner (Appeals), National Faceless Appeal Centre, Delhi, erred in holding that in view of Sec. 80AC, benefit of deduction u/s 80-P has been denied by CPC, by failing to appreciate that this was not a prima facie adjustment permissible u/s 143(l)(a) of the Act during the year under appeal.
4. The learned Commissioner (Appeals), National 1,23,470/- Faceless Appeal Centre, Delhi, erred in not adjudicating ground of disallowance of claim of deduction of Rs.3,99,585/- u/s 80-P of the Act on Page No 3 Batava Devli Seva Sahakari Mandali Ltd. vs. ADIT (CPC)
merits.
5. The Appellant craves leave to add, amend, alter and withdraw any ground of appeal anytime up to the hearing of this appeal.
Total tax effect 1,23,470/-
The brief facts of the case are that the assessee is a co-operative society, who filed return of income on 27-11-2020 declaring total income of � � Nil and claimed deduction of 3,99,585/-under section 80P of the Act. Thereafter, the assessee received intimation under section 143(1)(a) of the Act making adjustment in the returned income and not granting deduction of � 3,99,585/- claimed in the return of income under section 80P of the Act, since the return of income was not filed within the due date prescribed under section 139(1) of the Act.
The assessee filed appeal against the order of Ld. CIT(A), who dismissed assessee’s appeal with the following observations:
“Assessee in it's ground of appeal claims that as per section 143(1)(v) of the IT Act, " provisions of Sec. 143(1)(a)(v) do not provide for denial of deduction u/s 80P of the Act when the return of income is not filed within time limit as provided u/s 139(1) of the Act but u/s 139(4). However as per intimation order u/s 143(1) of the ACT, reason for addition is mentioned as "In Schedle VI-A, under Part –C deduction is respect of certain incomes in SI.No.2.m deduction is claimed under section SOP however return is not filed within due date". Since, the addition is made u/s 143(1)(ii) of the IT Act and objection is filed Page No 4 Batava Devli Seva Sahakari Mandali Ltd. vs. ADIT (CPC) against section 143(1 )(v) of the IT Act and both do not have direct linkage, hence, Ground 1 is dismissed. Further to analyse the grounds of appeal, let us look into the sections 80P & 80AC of the IT Act :- xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx In this case, the assesses has not satisfied the conditions laid down in section 80AC of the IT Act to be eligible to claim deduction u/s 80P(2)(a)(i) of the IT Act, i.e., return was not filed u/s 139(1) of the IT Act but filed u/s 139(4) of the IT Act and hence not eligible to claim the deduction. Grounds 2 & 3 are dismissed. The case laws quoted by the assessee are noted but not considered as the facts of the case are not same. In the case laws, assessee had either filed ITR within due date or it's status of society is not similar to assessee.
In view of the above, appeal is dismissed and the order of AO is upheld.”
The assessee is in appeal before us against the aforesaid order passed by Ld. CIT(A) denying assessee’s claim of exemption under section 80P of the Act,
Before us, the counsel for the assessee submitted that CPC made adjustment to income of the assessee by denying assessee’s claim of deduction of � 3,99,585/- under section 80P of the Act on the ground that the claim of assessee was incorrect under section 143(1)(a)(ii) of the Act since the return of income was not filed within the due date prescribed under section 139(1) of the Act. The counsel for the assessee submitted that the Page No 5 Batava Devli Seva Sahakari Mandali Ltd. vs. ADIT (CPC) adjustment made by the CPC was beyond the scope of section 143(1)(a)(v) of the Act. The counsel for the assessee submitted that 143(1)(a)(v) of the Act was amended w.e.f. 01-04-2021 and hence any prima facie adjustment relating to denial of deduction when the return of income was not filed within due date, was not possible for the year under consideration. Further, “incorrect claim” u/s 143(1)(a)(ii) of the Act is defined by way of an Explanation to section 143(1) of the Act which does not state that the claim would be “incorrect” if return of income is not filed within the due date. Hence, the action of CPC is bad in law and therefore Ld. CIT(A) erred in facts and in law in holding that the assessee is not eligible for claiming deduction under section 80P of the Act for not filing return within the due date prescribed under section 139(1) of the Act.
6.1 In response, Ld. Departmental Representative submitted that the case of the assessee is covered under the provisions of section 143(1)(ii) of the Act, since this clause refers to the incorrect claim which is apparent from the information in the return of income. The DR pointed out that at the time of e-filing of return of income, the assessee was fully aware of the fact that the claim was incorrect, since as per the provisions of section 80AC(ii) of the Act, no deduction shall be allowed unless the assessee furnishes the return of income for such assessment year on or before the due date specified in sub- section (1) of section 139. Further, the Ld. Departmental Representative relied upon the Supreme Court decision the case of Prakash Nath Khanna v. CIT 135 Taxman 327, wherein the Honourable Supreme Court held at the time within which the return is to be furnished is indicated only in sub- section (1) of section 139 and not in sub- section (4) of section 139 and Page No 6 Batava Devli Seva Sahakari Mandali Ltd. vs. ADIT (CPC) therefore the return filed under section 139(4) would not dilute the fact that the return was filed after the due date. Further, the Ld. Departmental Representative also placed reliance of the case of PCIT v. Wipro 140 Taxman.com 223, wherein the Honourable Supreme Court held that for claiming benefit under section 10B, it was mandatory for the assessee to file a declaration as per the provisions of section 139(1), which is mandatory nature and directory as well. Further, Ld. Departmental Representative relied on the case of Saffire Garments 28 taxmann.com 27 (Rajkot) (SB), wherein the Rajkot ITAT Special Bench held that proviso to sub-section (1A) of section 10A, which provides that no deduction under section 10A shall be allowed to an assessee who does not furnish its return on or before due date specified under section 139(1) is a mandatory provision. Accordingly, the Ld. Departmental Representative submitted that, evidently, the assessee had filed return of income beyond the due date prescribed under section 139(1) of the Act. Therefore, in light of the above decisions, the deduction claimed under section 80P was required to be disallowed in view of the express language of section 143(1)(ii), which provides for disallowance of incorrect claim which is apparent from the information given in the return of income.
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 27-11-2020 and claimed deduction of � 3,99,585/- under section 80P of the Act. The issue for consideration before us is that whether once the return of income is Page No 7 Batava Devli Seva Sahakari Mandali Ltd. vs. ADIT (CPC) 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 Page No 8 Batava Devli Seva Sahakari Mandali Ltd. vs. ADIT (CPC)
(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 to 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 Page No 9 Batava Devli Seva Sahakari Mandali Ltd. vs. ADIT (CPC) 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). We are therefore of the considered view that the case of the assessee specifically covered by the provisions of section 143(1)(a)(v) of the Act, with specifically deals with the issue of disallowance of claim of the assessee in case the return of income has been filed by the assessee beyond the prescribed date. It is well settled principle of law that general provisions of the Act cannot operate within the purview of specific provisions, which have been introduced in the Statute to deal with specific situations/circumstances. Therefore, we are unable to agree to the proposition that till such time section 143(1)(a)(v) of the Act was not introduced in the Income Tax Act, the claim of deduction under section 80P could be disallowed in section 143(1)(a)(ii) of the Act, especially in the fact that the scope of sub- clause (ii) has been specifically defined in section 143(1). As observed earlier, in our view, the scope of sub- clause (ii) of section 143(1)(a) does not cover delay in filing of return of income beyond the due prescribed date, which has been only introduced as part of sub- clause (v) of section 143(1)(a) of the Act w.e.f. 01-04-2021. Further, in our considered view, the case of assessee is also not covered by the decision of Saffire Garments28 taxmann.com 27 (Rajkot) (SB) supra, where the issue for consideration before the ITAT was on a different set of facts and the Page No 10 Batava Devli Seva Sahakari Mandali Ltd. vs. ADIT (CPC) issue whether denial of deduction under Chapter- VI could be made within the scope of prima facie adjustments under section 143(1) was not considered upon by the ITAT Special Bench.
7.3 We note that in the case of Chirakkal Service Co-Operative Bank Ltd. Kannur v. CIT 2016] 68 taxmann.com 298 (Kerala), the Kerala High Court held that a return filed by assessee beyond period stipulated under section 139(1) or 139(4) or under section 142(1) or section 148 can also be accepted and acted upon for entertaining claim raised under section 80P provided further proceedings in relation to such assessments are pending in statutory hierarchy of adjudication in terms of provisions of Act. In the case of ASR Engg. & Projects Ltd. [2019] 111 taxmann.com 49 (Hyderabad - Trib.), the ITAT held that to be eligible to make claim under section 80-IA or any other section of Chapter VI A, assessee should have filed return of income under section 139(1) and even if it did not make claim for deduction in original return and subsequently file revised return making such claim, its claim for deduction under section 80-IA is maintainable. Therefore, where assessee had filed return under section 139(1), it was entitled to claim deduction under section 80-IA even if such claim was not made in original return but subsequently in revised return filed in response to notice issued under section 153A. In the case of Lanjani Co-Operative Agri Service Society Ltd. (CPC) v, DCIT 146 taxmann.com 468 (Chandigarh - Trib.), the ITAT held that enabling provisions of sub-clause (v) of section 143(1) providing for disallowance of deduction under section 80P due to late filing of return having been introduced by Finance Act, 2021 effective from 1-4-2021, disallowance of deduction claimed under section Page No 11 Batava Devli Seva Sahakari Mandali Ltd. vs. ADIT (CPC)
80P during relevant years 2018-19 and 2019-20 on grounds of late filing of return was unjustified. Again, in the case of Lunidhar Seva Sahkari Mandali Ltd. v. Assessing Officer (CPC)49 taxmann.com 28 (Rajkot - Trib.), the assessee, a co-operative society claimed deduction under section 80P. The Assessing Officer denied said deduction holding that return of income was not filed within due date prescribed under section 139(1) of the Act. However, assessee had filed its return of income belatedly on 30-11- 2020. It was noted that denial of claim under section 80P would not come within purview of prima facie adjustment under section 143(1)(a)(v) for reason that said section was not in force during period under consideration i.e. assessment year 2019-20. Further case of assessee would also not fall within purview of prima facie adjustment under section 143(1)(a)(ii). Therefore, since return of income was filed within due date permissible under section 139(4), in which claim for deduction under section 80P was made, therefore, deduction under section 80P could not be denied to assessee only on basis that assessee did not file its return of income within due date prescribed under section 139(1) of the Act.
7.4 We note that the instant case, there was a few-month delay in filing the return of income by the assessee for the assessment year 2019-20 and return of income was filed within due date permissible u/s 139(4) of the Act, in which the claim for deduction u/s 80P of the Act was made. Therefore, looking into the totality of facts, we are of the view that claim of deduction u/s 80P of the Act cannot be denied to the assessee only on the basis that the assessee did not file return of income its return of income within due date u/s Page No 12 Batava Devli Seva Sahakari Mandali Ltd. vs. ADIT (CPC)
139(1) of the Act, in light of the discussion and judicial precedents highlighted above.
In the result, appeal of the assessee is allowed.
Order pronounced in the open court on 25-04-2023