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राज�व क� ओर से/ Revenue by : Dr. Ranjeet Kaur, Sr.DR सुनवाई क� तार�ख/Date of Hearing : 03.10.2024 उदघोषणा क� तार�ख/Date of Pronouncement : 04.10.2024 आदेश/Order The assessee is in appeal before the Tribunal against the order dt 25.04.2023 of ld. Commissioner of Income Tax(Appeals), National Faceless Appeal Centre (NFAC), Delhi.
47-Chd-2024 – The Chaplah Co-operative Agriculture Service Society ltd, Distt. Kangra 2 2. At the outset, it is noted that there is a delay of 208 days in filing the appeal by the Assessee. We note that the Assessee has filed the appeal under Section 5 of the Limitation Act for seeking condonation of delay in filing the appeal supported with an affidavit of Shri Rakesh Kumar Sharma S/o Shri Bishan Dass Sharma VPO Chouli,Tehsil Rakkar,District Kangra (H.P.) in the capacity of Secretary of the Society and stated therein that the Assessee was not aware as to how to operate the ITBA, E-filing Portal. I further note that all the notices were sent by the Appellate Authority on ITBA E- filing portal and the Assessee came to know about the passing of the order u/s 250 of the Act only when the staff of the assessee visited the counsel to enquire about the case and thereafter steps were taken to file the appeal immediately. I note that the Assessee is a very small institution being operated for the benefit of its agriculturists and poor people and has hardly any set up to handle the matters. Considering these facts and circumstance, I am of the view that the Assessee should not be condemned unheard as the technicalities must not prevail over the substantial justice.
Sub-section 5 of Section 253 contemplates that the Tribunal may admit an appeal or permit filing of memorandum of cross- 47-Chd-2024 – The Chaplah Co-operative Agriculture Service Society ltd, Distt. Kangra 3 objections after expiry of relevant period, if it is satisfied that there was a sufficient cause for not presenting it within that period. This expression sufficient cause employed in the section has also been used identically in sub-section 3 of section 249 of Income Tax Act, which provides powers to the ld. Commissioner to condone the delay in filing the appeal before the Commissioner. Similarly, it has been used in section 5 of Indian Limitation Act, 1963. Whenever interpretation and construction of this expression has fallen for consideration before Hon’ble High Court as well as before the Hon’ble Supreme Court, then, Hon’ble Court were unanimous in their conclusion that this expression is to be used liberally. We may make reference to the following observations of the Hon’ble Supreme court from the decision in the case of Collector Land Acquisition Vs. Mst. Katiji & Others, 1987 AIR 1353 wherein the Hon’ble Court has held that When substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay.
47-Chd-2024 – The Chaplah Co-operative Agriculture Service Society ltd, Distt. Kangra 4
In the light of above, if we examine the facts of the present case, then it would reveal that there was bonafide lapse at the end of the assessee because the assessee will not gain anything by making his appeal time barred. Considering the bonafide reasons , we condone the delay and proceed to decide the appeal on merit.
The issue raised in Ground No.1 is against the order of the CIT(A) upholding disallowance of deduction claimed u/s 80P of the Income Tax Act, 1961(in short 'the Act') by the assessee as made by Assessing Officer, CPC in the intimation passed u/s 143(1) of the Act.
The facts in brief are that the Assessee is Primary Agricultural Co-operative Society engaged mainly in providing credit facilities to its members and also engaged in the retail business of supplying general store items / agricultural implements, seeds, fertilizers or other items intended for agricultural use under the PDS system of government. The 47-Chd-2024 – The Chaplah Co-operative Agriculture Service Society ltd, Distt. Kangra 5 Assessee filed the return of income for A.Y. 2018-19 on 2.12.2018, declaring total income at Nil after claiming deduction chapter VIA of Rs.5,43,490/-. Pertinent to state that the appellant society has filed return of income after due date u/s 139(4) of the Act. The Dy. CIT, CPC, Bengaluru in the intimation passed u/s 143(1) of the Act disallowed the claim made by the Assessee u/s 80P (a)((v) of Rs. 5,43,490/- on the ground that return of income was not filed within the due date u/s 139(1) of the Act.
Being aggrieved, the assessee carried the matter before the first appellate authority who dismissed the appeal of the Assessee. While dismissing the appeal, the CIT(A) by held that CPC could make adjustments u/s 143(1)(a) of the Act while processing the return of income CPC on the basis of information by the Assessee itself in the return of income which are prima facie wrong and incorrect.
The ld. AR vehemently submitted before us that although the Assessee has filed the return after the due date u/s 139(4) of 47-Chd-2024 – The Chaplah Co-operative Agriculture Service Society ltd, Distt. Kangra 6 the Act, however, the fact remains that the powers of the Assessing Officer CPC in the impugned assessment year while processing of the return of income were not there to cover the claim u/s 80P of the Act and therefore the AO CPC had no jurisdiction to reject / disallow the claim made by the Assessee u/s 80P of the Act of Rs. 5,43,490/-. The ld. AR while candidly admitting that u/s 80AC of the Act any deduction under Chapter under the heading “C-deduction in respect of certain incomes w.e.f. 1.4.2018 can only be made if the Assessee furnished the return of income on or before the due date specified u/s 139(1) of the Act but the fact remains that the Assessing Officer CPC does not have any jurisdiction to reject or disallow the deduction claimed u/s 80P as amendment to Clause 5 to Clause 143(1)(a)has been introduced only by Finance Act 2021 i.e., which is effective from 1.4.2021 meaning thereby that the same is effective from 2021-22 onwards and will not hold good from the impugned assessment year. The ld AR in defense of his arguments relied on the decision of the Coordinate Bench in the case of ‘The ‘Sard Dogri Co-operative Agri Services Society ltd. vs. DCIT, Bangaluru’ for assessment year 47-Chd-2024 – The Chaplah Co-operative Agriculture Service Society ltd, Distt. Kangra 7 2018-19 Order dated 5.6.2023, wherein the similar issue has been decided in favour of the Assessee. The ld. AR finally prayed that in view of the aforesaid decision, the appeal of the Assessee may be allowed.
Per contra, the ld. CIT DR vehemently opposed the arguments presented by the ld. AR by submitting that the Act expressly provides u/s 80AC clause (ii)effective from 1.4.2018 i.e. assessment year 2018-19 that any deduction which is admissible under the provisions of this Chapter under the head “C-deduction in respect of certain incomes” was only be allowed if return of income is filed on or before the due date as mandated u/s 139(1) of the Act and therefore, the claim made by the assessee is apparently not admissible in terms of provisions of section 80AC(ii) of the Act and thus was rightly disallowed by the A.O. CPC in the order passed u/s 143(1) of the Act. The ld. CIT DR in defense of her arguments relied heavily on the following decisions: a)Wipro ltd vs. Pr. CIT [2022] 140 taxmann.co 223 (SC), 47-Chd-2024 – The Chaplah Co-operative Agriculture Service Society ltd, Distt. Kangra 8 b)Janki Vaishali Cooperative Housing Society Ltd, Mumbai vs. CIT Delhi c)M/s Rushi Sanskruti Vividoddeshagal Souhard Sahakari Niyamit Bagalkot vs. DCIT, ITA No. 1043/Bang/2022 order dated 27.1.2023 The ld. CIT DR, therefore, prayed that the appeal of the Assessee may kindly be dismissed.
Having heard the rival submissions and perusing the facts on record including the decisions cited by both the parties, I observe that the Assessee for the year under consideration has filed the return of income after the due date u/s 139(4) of the Act in which it claimed deduction u/s 80P of Rs. 5,43,490/-. The AO CPC in the order passed u/s 143(1) of the Act rejected the claim of the assessee on the ground that the return was not filed within due date. On the issue for adjudication before me is whether the Assessing Officer CPC has jurisdiction to reject or disallow a claim made by the Assessee u/s 80P of the Act in the impugned assessment year when there is no jurisdiction conferred upon the Assessing Officer u/s 143(1)(a) of the Act to make such 47-Chd-2024 – The Chaplah Co-operative Agriculture Service Society ltd, Distt. Kangra 9 disallowance or rejection of claim. I have carefully perused and analyzed the provisions of section 80AC (2) of the Act vis a vis section143(1)(a)(v) and find that there is no dispute as to the fact that section 80AC (ii) provides for allowance of deduction under any provision under this Chapter under the head “C- deduction in respect of certain income” if the return of income is filed on or before the due date as specified u/s 139(1) of the Act but in the present case return was filed after due date and the above clause (ii) is effective from assessment year 2018-19. However, the corresponding enabling provisions conferring jurisdiction upon the Assessee to make any disallowance u/s 143(1)(a)(v) is effective from A.Y. 2021-22 as clause (5) to section 143(1) (a) was amended only by Finance Act 2021 w.e.f. 1.4.2021 to include all deductions claimed under any provision of Chapter VI-A “C- “deductions in respect of certain incomes”. Therefore, in our considered view though the Assessee has made a claim which is not admissible u/s 80AC(ii),yet the A.O. CPC has no jurisdiction to disallow the same in the order passed u/s 143(1) of the Act as amendment in clause v to section 143(1)(a) was made by Finance Act 2021 which empowered the AO to make such disallowance of 47-Chd-2024 – The Chaplah Co-operative Agriculture Service Society ltd, Distt. Kangra 10 deduction u/s 80P. The case of the Assessee finds support from the decision of the Coordinate Bench in the case of The Sard Dogri Cooperative Agri Service Society Limited(supra), wherein the same issue was decided in favour of the Assessee under substantially similar facts and operative part is reproduced as under:- “9. We have heard the rival contentions and have perused the material on record. It is not in question that section 80AC of the I.T. (Act, as amended by Finance Act, 2018, stipulated that for claiming deduction u/s 80P of the Act, the return of income was required to be filed before the due date, as prescribed by section 139(1) and in the present case, the return was filed belatedly. However, it was only by the amendment to section 143(1) (a)(v) brought in by Finance Act, 2021, that the CPC can be said have been vested, exercising powers u/s 143(1)(a), to make disallowance on the ground of belated return. Prior to that, as per the un-amended provisions, the AO could disallow a claim u/s 143(1) (a) only on the grounds of arithmetical error or that the Assessee had made an incorrect claim, etc. Reference, in this regard, may be had to ‘Fatehraj Singhvi & Ors. v. UOI and Ors’; 289 ITR 602 (Kar.). It goes without saying that in the absence of enabling powers, no disallowance can be made. As such, enabling provisions being absent, the CPC did not have the jurisdiction to make the disallowance in question, in the order u/s 143(1) of the Act. For this, we find support from the decision of the Coordinate Chandigarh Benches in case of ‘The Lanjani Co- operative Agri Service Society Ltd., VPO Lanjani, Kangra (HP)
47-Chd-2024 – The Chaplah Co-operative Agriculture Service Society ltd, Distt. Kangra 11 vs. The DCIT (CPC) Bangaluru’ (supra) wherein the relevant findings read as under: “14. I have heard the submissions and perused the material on record. Since heavy reliance has been placed by the ld. Sr.DR on the impugned order, specific para 8.1. For ready reference of the same is extracted hereunder : “8.1 Finding on Ground of appeal Nos. 1 to 3 a) The CPC Bangalore has made the addition/adjustment of Rs.1,11,421/- u/s 143(1) of the Act as deduction u/s 80P claimed of Rs.1,11,421/- was disallowed on the ground that return was not filed within the due date. The undersigned has gone through the 143(1) intimation and written submissions filed by the Appellant. These Grounds of Appeal are discussed and decided in subsequent paras of this order. b) It is not in dispute that from AY. 2018-19, the Appellant for claiming deduction u/s 80P has to file return of income within the due date of filing of ITR as provided in Section 80AC of the IT Act, 1961. Section 80AC was amended by Finance Act, 2018. From AY. 2018-19, all the deductions falling under the heading 'C of Chapter VIA of IT Act, 1961 were brought into the ambit of this section. Section 80P also falls under the heading 'C of Chapter VIA of the Act is included in Section 80AC of the Act. c) The amended Section 80AC provides as under:- "[Deduction not to be allowed unless return furnished. 80AC. 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 or; (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.]" d) Thus, from 01.04.2018, the clause(i) of the above section has become inoperative and clause (ii) was introduced which provides that all the deductions falling under the heading 'C of Chapter VIA of the Act will be allowed only when ITR is furnished before the due date specified u/s 139(1) of the Act. This amendment became effective from AY. 2018-19.
47-Chd-2024 – The Chaplah Co-operative Agriculture Service Society ltd, Distt. Kangra 12 e) In the present case the due date of filing ITR for AY. 2018-19 was 31.08.2018. However, the Appellant filed its return on 13.10.2018 i.e. after the due date for filing of ITR. Appellant had claimed deduction u/s 80P of Rs. 1,11,421/-. As discussed above Section 80P falls under the heading 'C of Chapter VIA of the Act. Therefore, from AY. 2018-19 and onwards, any assessee claiming deduction u/s 80P has to file its return within due date specified u/s 139(1) of the Act to avail such deduction as required u/s 80AC of the Act. In the present case, the Appellant did not file its return within the due date prescribed u/s 139(1) of the Act for AY. 2018-19, therefore, the AO rightly disallowed deduction u/s 80P of Rs. 1,11,421/- in intimation u/s 143(1). Thus, the action of AO in disallowing deduction u/s 80P is upheld. Grounds of Appeal
Nos. 1 to 3 are dismissed.” 14.1 On consideration of the above when read alongwith the arguments advanced before the CIT(A) on behalf of the assessee which have been re-iterated before the ITAT, I find that on facts the case of the assessee is allowable. The AO/CPC Bangalore at the relevant time though considering the amended Section 80AC was exercising the powers as vested by the Section 143(1) of the Act as it then stood. At the relevant point of time, the provisions of Section 143(1) of the Act were as under : 143. (1) Where a return has been made under section 139, or in response to a notice under sub-section (1) of section 142, such return shall be processed in the following manner, namely:— (a) the total income or loss shall be computed after making the following adjustments, namely: — (i)any arithmetical error in the return; [***] (ii) an incorrect claim, if such incorrect claim is apparent from any information in the return; (iii) disallowance of loss claimed, if return of the previous year for which set off of loss is claimed was furnished beyond the due date specified under subsection (1) of section 139; (iv)disallowance of expenditure indicated in the audit report but not taken into account in computing the total income in the return; (v)disallowance of deduction claimed under Sections 10AA, 80
1. A, 80
1. AB, 80- IB, 80- IC, 80-1D or section 80-1E if the return is furnished beyond the due date specified under sub-section (1) of section 139; or (vi) addition of income appearing in Form 26AS or Form 16A or Form 16 which has not been included in computing the total income in the return:
47-Chd-2024 – The Chaplah Co-operative Agriculture Service Society ltd, Distt. Kangra 13 Provided that no such adjustments shall be made unless an intimation is given to the assessee of such adjustments either in writing or in electronic mode: (emphasis supplied) 14.2 It is a matter of fact that sub-clause (v) of Section 143(1)(a) was amended by the Finance Act, 2021 wherein instead of reference to Sections 10AA, 80-IA, 80-IAB, 80-IB, 80-IC, 80-ID or Section 80-IE, the provision instead makes a mention of Section 10AA or under any of the provisions of Chapter VI-A under the head ‘C-Deductions in respect of certain incomes”. Accordingly, the enabling provisions to address the amendment in Section 80-AC by Finance Act, 2018 came into play only in 2020-21 assessment year. Thus, no doubt Section 80AC as amended by the Finance Act, 2018 mandated that even for claiming deduction claimed u/s 80P, the return of income was to be filed before the due date as specified under sub-section (1) of Section 139. However, for the AO to insist upon the compliance by way of making a disallowance, the power was vested in the said Authority only vide Finance Act, 2021. Hence, in the absence of the enabling provisions, the CPC Bangalore lacked the jurisdiction to make this disallowance in the order u/s 143(1). Accordingly, on facts, I find that the appeal of the assessee has to be allowed.
14.3 Before parting, it may also be relevant to refer to the decision of the Apex Court dated 30.07.2018 in the case of Commissioner of Customs (Import) Vs M/s Dilip Kumar & Co. & Ors. Civil Appeal No.3327 of 2007 relied upon by the ld. Sr.DR. On a reading therefrom, it is seen that the issue for consideration before the Hon'ble Court was whether the denial of benefit of Customs Notification No. 20/1999 was justified to the party who pleaded that the benefit of concessional rates for import of animal feed should also be available to import which admittedly contained chemical ingredients for animal feed. The concessional rate of duty under the extent Notification was being considered. The order of denial by the Customs Officer was reversed by Commissioner of Customs. This order was confirmed by Customs Excise & Service Tax Tribunal (CESTAT) which led to the filing of the appeal before the Hon'ble High Court and then the Apex Court. It is in that background that the Hon'ble Court held that 47-Chd-2024 – The Chaplah Co-operative Agriculture Service Society ltd, Distt. Kangra 14 exemption notification should be interpreted strictly and the burden of proving that the case comes within the parameters of the exemption clause or exemption notification would be on the assessee. In such circumstances, in case there is ambiguity, the Notification must be interpreted in favour of the Revenue. In the facts of the present case, there is no ambiguity. It is a case of absence of enabling provision. Hence, the ratio laid down therein has no applicability to the facts of the present case. 14.4 It is also necessary to refer to the decision of the Hon'ble Madras High Court in the case of Veerappampalayam Primary Agricultural Cooperative Credit Society Ltd. Vs DCIT (cited supra). A perusal of the same shows that the issue for consideration before the Hon'ble High Court in the Writ Jurisdiction invoked by the assessee was very fact specific. The assessee therein was canvassing that u/s 143(1)(a) for considering denial on the grounds of “incorrect claims” the scope was limited to “entry” in the return of income. The Court therein did not permit such a restrictive interpretation commenting variously on the conduct of the assessee. Hence, the decision is distinguishable. Further, before the Hon'ble High Court, the amendment carried out in Section 143(1)(a) by the Finance Act 2021 was neither argued nor referred to for consideration of the Hon'ble Court.
14.5 It is further seen that the decision of the Apex Court in the case of CIT Vs B.C. Srinivasa Shetty 128 ITR 294 fully supports the view taken. The Court therein at page 299 has held as under : " …………..The character of the computation provisions in each case bears a relationship to the nature of the charge. Thus, the charging section and the computation provisions together constitute an integrated code . When there is a case to which the computation provisions cannot apply at all, it is evident that such a case was not intended to fall within the charging section. Otherwise one would be driven to conclude that while a certain income seems to fall within the charging section there is no scheme of computation for quantify it…………….. (emphasis supplied)
47-Chd-2024 – The Chaplah Co-operative Agriculture Service Society ltd, Distt. Kangra 15 14.6 In the facts of the present case, admittedly the provision enabling the AO to pass an order relying upon sub-clause (5) of Section 143(1)(a) was not on the Statute for 2018-19 assessment year. Accordingly, for the detailed reasons hereinabove, setting aside the impugned order, the appeal of the assessee is allowed.”
For the above discussion, finding merit in the grievance raised by the Assessee, the same is accepted. The order under appeal is accordingly reversed. Consequently, the disallowance of Rs. 7,35,190/- is cancelled.
We have also perused the decisions referred to by the ld. CIT DR in defense of her arguments during the course of hearing. We observe that in the case of Wipro Ltd vs. Pr. CIT (supra) is distinguishable on facts as it does not deal with provisions u/s 143(1) (a)(v) of the Act. The decisions of the Coordinate Benches in the cases of Janki Vaishali Cooperative Housing Society Ltd, Mumbai vs. CIT Delhi and M/s Rushi Sanskruti Vividoddeshagal Souhard Sahakari Niyamit Bagalkot vs. DCIT, (supra) are against the assessee in which the coordinate benches have held that the AO has power to make disallowance of deduction u/s 80P even in the order passed u/s 143(1) in the impugned assessment year but we respectfully disagree with the conclusion reached by the Coordinate Benches in view of the above facts, legal position and the decision discussed above.
47-Chd-2024 – The Chaplah Co-operative Agriculture Service Society ltd, Distt. Kangra 16 Accordingly we are inclined to set aside the order of the CIT(A) and direct the A.O. to delete the disallowance.
In the result, appeal of the Assessee is allowed. Order pronounced on 04.10.2024.