THACHANATTUKARA FARMERS PRODUCERS COMPANY,PALAKKAD vs. ITO WARD 1, PALAKKAD

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN Before Shri Sanjay Arora, AccountantMemberand Shri Manomohan Das, JudicialMember Coch/2023 (Assessment Year: 2019-20) Kollad Service Co-Operative The Income Tax Officer Bank Ltd. Ward – 2, Kottayam vs. Kollad, Kottayam 686004 [PAN:AAAAK2083Q] (Appellant) (Respondent) ITA No. 995/ /Coch/2022 (Assessment Year: 2019-20) Thachnattukara Farmers The Income Tax Officer Producer Company Ltd. Ward – 1, Palakkad 9/38, KTA Complex, Palode vs. Mannarkkad, Palakkad 678583 [PAN:AAFCT3538G] (Appellant) (Respondent) ITA No. 47/ /Coch/2023 (Assessment Year: 2019-20) Olavanna Service Co-Operative The Income Tax Officer Bank Ltd. Ward – 2(3), Kozhikode vs. Olavanna P.O., Kozhikode [PAN:AAAAO3624P] (Appellant) (Respondent) Appellants by: S/Shri Suresh Kumar, R. Krishnan, CAs & Ms. Lakhmi Menon, Adv. Respondents by: Smt. J.M. Jamuna Devi, Sr. D.R. Date of Hearing: 07.07.2023 Date of Pronouncement: 25.09.2023 O R D E R Per Bench , 995 & 47/Coch/2023 Kollad Service Co-Operative Bank Ltd. &Ors. vs. ITO The captioned appeals agitate the same issue. The same were accordingly heard together, and are being decided per a common order for the sake of convenience.

5.2 There was before us no dispute, nor could possibly be, qua the first two propositions, advanced with reference to the decision in Dilipkumar and Co. Section 143(1) is not a computational provision, but a procedural provision with a view to give effect to s. 80AC, on the statute w.e.f. 01/4/2006, and in the amended form w.e.f. 01/4/2018, the mandate of which is clear, i.e., for a valid claim u/s. 80P (r/w ss. 80A & 80AB), or any other provision to which it relates, the assessee has to necessarily do so per a return of income furnished within the time specified u/s. 139(1). Section 143(1)(a)(v) allows the Revenue to effectuate the condition for a valid claim, inter alia, u/s. 80P r/w s. 80AC, on the processing of a return. This would obviate the need to invoke s. 147 in cases where claims are pressed without complying with the said condition. There is thus no mismatch or incongruity between the charging and the procedural provisions, but only enhancing the scope of the summary procedure for vetting returns of income; the assessing authority being fully competent to give effect to the relevant provisions under the regular 4 , 995 & 47/Coch/2023 Kollad Service Co-Operative Bank Ltd. &Ors. vs. ITO assessment. This, rather, gives rise to a piquant situation as substantive law would apply differently to assessees, similarly placed, depending on whether their returnsare selected for being subject to the verification procedure under the Act or the summary procedure there-under, violating Art. 141 of the CoI, even as observed by the Bench during hearing. It is one thing to limit the scope of or enquiry under a certain procedure, but quite another to include the same, and yet not make it applicable for a period; ss. 80AC and 143(1)(a)(v) being in harmony prior to 01/4/2018 and, then, again from 01/4/2021 onwards.

5.3 Sure, there is no discussion quathe retrospective operation of section 143(1)(a)(v) of the Act as amended by Finance Act, 2021 in the decisions cited. However, as afore-noted, s.143(1)(a) is not a computational but a procedural provision. It is s.80AC, prescribing the condition precedent for claiming deduction under any provision of Chapter VI-A(C), as section 80P (r/w ss. 80AA and 80AB), which is the computational provision, while sections 4 & 5 are the charging provisions. Being a procedural provision, s.143(1)(a)(v) would apply to any return processed on or after 01/4/2021, i.e., the date it comes into effect, irrespective of the year to which it pertains. That is, returns for even earlier years would be liable to be processed under the amended sec. 143(1)(a)(v) w.e.f. 01/4/2021.Per contra, processing of returns prior to 01/4/2021 could not be under the amended s. 143(1)(a)(v).

5.4 Continuing further, the question of a retrospective operation to a procedural provision does not arise inasmuch a procedure could apply w.e.f. a particular date and, besides, there being no vested right in procedure, it would apply irrespective of the year to which the return, to which it is applied, pertains. That is, is retroactive. Finance Act, 2021,received the assent of the Hon'ble President of India on 28.3.2021. As such, even assuming it to have a ‘retroactive’ operation, i.e., for assessment year commencing 01.4.2018 and subsequent years, on which aspect – it 5 , 995 & 47/Coch/2023 Kollad Service Co-Operative Bank Ltd. &Ors. vs. ITO being a procedural provision, there could be no doubt, being only to give effect to the statutory mandate of section 80AC, even as explained in the Finance Bill, 2021, also referred to during hearing, it could only be while processing a return of income on or after 28.3.2021, while it would in any case be applicable for any processing on or after 01.4.2021. In other words, the amendment has been given an almost immediate effect. We state so by way of a passing reference only, with a view to emphasize that the Legislature, conscious of the mismatch that obtainsresulting in substantive law applying differently across persons similarly placed, made the corrective applicable with immediate effect.Section 80AC, which provides for non- eligibility to deduction u/s. 80P under defined circumstances, being operative AY 2018-19 onwards, no prejudice is caused by the almost immediate operation of the amendment enhancing the scope of the enabling provision. In fact, the Memorandum explaining the provision itself admits to a disconnect between the substantive provision (section 80AC) and procedural provision [143(1)(a)(v)], which the amendment seeks to bridge by enhancing the scope of the latter provision. The amended s. 143(1)(a)(v) would apply only w.e.f. 01/4/2021, and not earlier. Further, the legal basis for effecting the disallowance of deduction u/s. 80P (or for that matter under any provision included per the 2021 amendment to s. 143(1)(a)(v)), i.e., s. 80AC, being on the statute w.e.f. 01/4/2018, the retroactive operationof s. 143(1)(a)(v) afore-referred would thus extend to returns up to AY 2018-19 and not beyond.

5.5 The processing of the returns of income in the instant cases has been in July/August, 2020. Section 143(1)(a)(v), which could not have been made applicable prior to 28/3/2021, i.e., the date the Finance Act, 2021 became law, is made applicable w.e.f. 01/4/2021. The provision in the amended form was thus not on the statute at the time of processing of the relevant returns. There is thus no , 995 & 47/Coch/2023 Kollad Service Co-Operative Bank Ltd. &Ors. vs. ITO question of the same having been invoked for effecting the disallowance, as being claimed before us. Why, the processing of the return being machine-made, which could not possibly have been updated for the revised procedure prior to 28/3/2021, there is no question of disallowance under section 80AC of the Act being carried out by the AO u/s. 143(1)(a)(v) of the Act prior to 01/4/2021. The only manner, therefore, whereby the impugned disallowance could be made on processing of a return u/s.143(1)(a) of the Act is under sub-clause (ii) thereof, which is to be read along with Explanation below section 143(1) of the Act. We consider this aspect for two interrelated reasons: (i) the same, though stands adverted to the Tribunal per it’s decision above, is only cursorily so, without dwelling into any interpretative exercise,and which has led us to state of it being found as prima facie inapplicable; (ii) Ms. Devi, the ld. Sr. D.R., was emphatic that it is this provision which has been invoked by the Revenue, and not section 143(1)(a)(v) of the Act, as being stated by the appellants. We find merit in the assertion by Ms.Devi, as the processing is by the Central Processing Centre (CPC), i.e., machine made, which runs on a software. The scope of section 143(1)(a)(v) could not possibly have been extended prior to 28.3.2021, only whereby it became law. In fact, disallowance in and47/Coch/2023 was admitted as u/s.143(1)(a)(ii), and only for95/Coch/2023 it was stated by Shri Suresh, the ld. counsel for the assessee, as made under sub- clause (v), even as there is nothing on record to exhibit so. This we may though add would be of no consequence as where there is power to justify the action, a non- mention or wrong mention of the provision would be of no moment [Hukumchand Mills Ltd. vs. State of Madhya Pradesh [1964] 52 ITR 583 (SC); IshaBeevi vs. TRO [1975] 101 ITR 449 (SC)] 5.6 We, accordingly, next examine s. 143(1)(a)(ii), reproduced supra. Explanationthereto, which only makes its reading complete, reads as under: - , 995 & 47/Coch/2023 Kollad Service Co-Operative Bank Ltd. &Ors. vs. ITO “Explanation.—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 (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; (b) the acknowledgement of the return shall be deemed to be the intimation in a case where no sum is payable by, or refundable to, the assessee under clause (c), and where no adjustment has been made under clause (a).” The definition, in view of it being exhaustive, as apparent from the adoption of the word “means”, is to be strictly read. The date of filing the return, it was submitted by Shri Suresh, is not an information required to be furnished under this Act to substantiate any entry. It cannot therefore be regarded as aninvalid claim on the basis of inconsistency u/s.143(1)(a)(ii) of the Act r/wExplanation thereto. The date of filing the return, he would add, appears only in the acknowledgement to the return, which cannot be regarded as part of the return. We agree. The return form has been scrutinized. The date of filing the return is not required to be entered to substantiate any entry in respect of any claim of deduction and, in fact, cannot possibly be. A return would stand to be regarded as complete in all respects, ready for being filed, on it being verified, and which would therefore only be prior to it’s filing. For the purpose of giving effect to s. 143(1)(a)(v), however, it is permissible to travel outside the return. This further clarifies of sub-clauses (ii) and (v) of section 143(1)(a) as operating in different fields, i.e., without any overlap. The orders by the Tribunal relied upon by the Revenue are w.r.t. the strict interpretation of s. 80AC, which aspect is not disputed, and do not concern the applicability of s. 143(1)(a). The same would therefore not assist it in the matter. , 995 & 47/Coch/2023 Kollad Service Co-Operative Bank Ltd. &Ors. vs. ITO 5.7 The invocation of s.143(1)(a)(ii) of the Act for effecting a disallowance u/s.80P r/ws. 80AC for processing a return prior to 01.4.2021 is, thus, not valid in law. We decide accordingly, and the appeals succeed.