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Income Tax Appellate Tribunal, LUCKNOW BENCH “A”, LUCKNOW
PER ANADEE NATH MISSHRA, A.M.: The present appeal has been filed by the assessee challenging the impugned order dated 07/02/2024 passed by the learned Commissioner of Income Tax (Appeals), [“learned CIT(A)”] for the assessment year 2011-12.
2. In this appeal, the assessee has raised the following grounds: - “(1). That the Ld. C.I.T. (A), NFAC, erred on facts and in law in not allowing deduction u/s 80P of Chapter VI-A of I. T. Act of Rs. 11,07,25,716/- by incorrectly stating that the Return was filed beyond the time limit specified u/s 139(1) of I. T. Act and thereby invoking the provisions of section 80AC of I. T. Act , upheld the disallowance of deduction as incorrect claim by way of adjustment u/s 143(1)(a) of I. T. Act. (2) That Ld. C.I.T. (A) NFAC erred on facts and in law in not considering that the Return was filed within the due date extended by the CBDT vide order dated 27.09.2019 u/s 119 of the I. T. Act i.e. 31.10.2019.
1. Page 2 of 8 (3) That the present disallowance is highly excessive, contrary to the facts, law and principle of natural justice and without providing sufficient time and opportunity to have its say on the reasons relied upon by him.”
In this case, the assessee’s return showing nil income was processed by Centralized Processing Center (CPC) of Income Tax Department, u/s 143(1) of the Act, and intimation was issued by CPC to the assessee, u/s 143(1) of the Act, wherein the assessee’s claim for deduction u/s 80P of the Act was disallowed. The assessee filed appeal in the office of the Ld. CIT(A). Vide impugned appellate order dated 07/02/2024, the Ld. CIT(A) dismissed assessee’s appeal on the ground that the assessee failed to filed the return of income within the due date satisfied u/s 139(1) of the Act. The Ld. CIT(A) has also observed in his impugned appellate order that First Appellate Authority was not invested with powers of condoning the delay of filing of return of income. The relevant portion of the impugned appellate order dated 07/02/2024 of the Ld. CIT(A) is reproduced as under: - “4.1 Ground Nos. 1 to 5: The appellant has raised five grounds of appeal. However, the main issue raised by the appellant is the disallowance of deduction u/s 80P by the AO, - CPC, Bengaluru which has been challenged by the appellant on the following grounds. (i)The Return of Income was not filed within the due date. (ii)The disallowance u/s 80(P) was outside the scope and ambit of section 143(1)(a)(iv) for A.Y. 2019-20. It is seen from intimation order that the due date of filing of original return of income for the AY 2019-20 was 30/09/2019, however the appellant has filed its return of income on 27/10/2019. Thus, the return of income has not been filed within the due date as prescribed in section 139(1) of the Act. Accordingly, as per the provisions of section 80AC of the Act, the claim of “deduction u/s 80P has been rejected by CPC. As per the provisions of section 80AC(ii), no deduction under any provisions of Chapter VIA under the head “C-deduction in respect of certain incomes’ will be allowed w.e.f. 01/04/2018 unless an assessee filed the return of his income on or before the due date specified under sub section (1) of section 139. Since the said provision was effective from 01/04/2018, the assessment year. involved in the present case falls within the purview of amended section 80AC of the Act as the return of income was filed beyond the due date. Thus, since the return has: been filed beyond the due date u/s 139(1) of the Act, the appellant is not eligible to claim deduction u/s 80P rws 80AC, ‘the only remedy available lies in the machinery provisions of the Act rather seeking legal remedy. Such provisions are found in section 119(2)(b) which ‘enables an assessee to approach the Board for seeking relief in such cases. The provisions of section 119%2)(b) are reproduced below: Section 119: “Instructions to subordinate authorities.
The Board may from time to time...
Without prejudice to the generality of the foregoing power, (b) the Board may, if it considers it desirable 6F expedient so to do for avoiding. genuine hardship in any case or class, by general or special order, authorize (any income tax authority, not being a Commissioner (Appeals) to admit an application or claim for any exemption, deduction, refund, or any other relief under this Act after expiry of the period specified by or under this Act for making such application or claim and deal with the some on merits in accordance with law.” From the above, it is clear that the first appellate authorities have not been entrusted with powers of condoning delay in such cases. The intention of legislature with respect to such cases is very clear that the remedy in such situation lies in the section 119 of the Act. 4.2 At this stage, it will be relevant to reproduce the relevant provisions of section 143(1) of the Act which is as under:
(a) The total income or loss shall be computed after making the following adjustment, 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 sub-section (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 section 10AA, 80-IA, 80IAB, 80-IB, 80IC, 80ID or section 80-IE 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; “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: 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, Provided further that the response received from the assessee, any, shall be considered before making any adjustment, and in a case where no ‘response is received within thirty days of the issue of such intimation, such adjustments shall be made-] 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, A perusal of clause (iv) to section 143(1)(a) of the Act would show that it ‘provides for disallowance of expenditure indicated in the audit report, but not taken into account in computing the total income in the return. 4.3 On perusal of the above section it is seen that section an incorrect claim ‘can be disallowed as per the provisions of section 143(1)(ii) of the Act. Therefore the AO, CPC, Bengaluru had rightly disallowed the deduction u/s 80P by following the provisions of section 80AC of the Act. 4.4 The Hon'ble Madras High Court in the case of Veerappampalayam Primary Agricultural Co-op Society Ltd. Vs DCIT [138 taxmann.com 571] dealt the similar issue in WP No. 7038 of 2020 and has decided the matter in favour of the revenue. The Hon'ble Court has held as under: “Section 80AC of the Income Tax Act, 1961DeductionNot to be allowed unless return furnished (Belated Return)Assessment Year 2018-19Whether provisions of section 80AC(ii) make it clear that any deduction that is claimed under Part C of Chapter VIA would be admissible only if return of income in that case were filed within prescribed due date Held, yes, whether thus, no - Claim under any provisions of Part C of Chapter VIA would be admissible in case of a belated return Held, Yes. Section 143 of the Income Tax Act, 1961AssessmentGeneral (Intimation under section 143(1)(a))Assessment Year 2018-19, Whether scope of an intimation under section 143(1)(a), extends only to making adjustments based upon errors apparent from return of income and patent from record Held, yes (in favour of revenue).” The Hon'ble Court has noted that the provisions of section 80AC are very clear in the sense that the any deduction claimed under Part C of Chapter VIA would be admissible only if return of income is filed within prescribed due - date. As the date of filing of return of income is apparent from the return itself, the AO CPC, could easily draw an inference whether the claim of deduction is admissible in accordance with the provisions of section 80AC of the Act which is a basically a mechanical exercise and falls within purview of section 143(1)(a) of the Act. Further, in a latest decision in the case of Janki Vaishali Co-op Housing Society Ltd. Vs CIT(A), NAFAC, the Hon’ble ITAT Mumbai Bench in AY 2018-19) has also laid the similar position of law and upheld the decision of the Ld.CIT(A) wherein the disallowance u/s 80P of the Act was upheld for the reason that the return of income was filed beyond the due date as specified in section 139(1) of the Act. 4.5 Further, at this juncture, it would not be irrelevant to discuss the decision of the Hon’ble Apex Court in the case of CC v. Dilip Kumar & Company [2018] 95 taxmann.com 327/69 GST 239, wherein the Hon'ble Court has laid down following principles: (a) Exemption notification/provisions should be interpreted strictly, the burden of proving applicability would be on the assessee to show that his case comes within the parameters of exemption clause or exemption notification. (c) In case of ambiguity in a charging provision, the benefit must necessarily go in favour of subject/assessee but the same is not true for an exemption notification wherein the benefit of ambiguity must be strictly interpreted in favor of the revenue/state ‘From the principle laid down by the Hon'ble Apex Court in the above case, it is _amply clear that the provisions of exemption as well as deduction provided in the Statute are to be interpreted strictly and onus always lies with the claimer to Substantiate that there is no violation of governing provisions while claiming exemption/deduction as per the law. By following the ratio laid down by the Hon'ble ‘Apex Court in the case of Dilip Kumar, it is clear that the onus was on the appellant to Substantiate that the claim of deduction was admissible in accordance with the Governing provisions of the Act. However, it is clear that in the instant case, there is Clear violation of provisions of section 80AC(ii), therefore, the claim of deduction is also not admissible in the light of the provision of section 80AC(ii) and in view of the decision of Apex Court in the case of Dilip Kumar( Supra). 4.6 Further, the Hon’ble Apex court in the case of Principal Commissioner of Income Tax-lll, Bangalore and another Vs. M/s Wipro Limited (Judgment ‘dated 11.07.2022 in the Civil Appeal No. 1449 OF 2022) has applied strict construction to reverse the findings of the Hon'ble High Court (“HC”) of Karnataka which had earlier allowed carry forward of such losses. The Hon'ble SC held that the requirement of filing a declaration within a timeline is “mandatory” in nature as per the language of the provision. It reiterated the age-old principle that a taxing statute should be read as it is and held that the exemption/ deduction provisions should be “strictly” and “literally” complied with and, therefore, a strict interpretation should be adopted. 4.7 The appellant has relied on the following case laws (i) Order of the NFAC in Appeal no.NFAC/2018-19/10140506, dated 29/10/2020 in the case of Hardoi District Cane Growers Co-operative Society - Ltd for A.Y. 2019-20. (ii) Order of NFAC in Appeal no.NFAC/2018-19/10098136, dated 11/08/2023 in the case of Sahkari Ganna Vikas Samiti Ltd for A.Y.2019- 20. (iii) Order of NFAC in Appeal no.NFAC/2018-19/10014459, dated 12/04/2022 in the case of Sahkari Ganna Vikas Samiti Ltd, Puranpur for A.Y. 2018-19.
Page 6 of 8 However in view of the express provisions contained in section 119(2)(b) and the decision of the Hon. Madras High Court quoted above the decision relied upon by the appellant is not acceptable, In view of the above, I am of the considered opinion that the AO CPC has rightly disallowed the claim of deduction u/s 80P as the return of income was filed beyond the due date. Also for the fact that first appellate authorities have not been given the power to condone and relying upon the provisions of section 80AC and the judicial pronouncements referred above, these grounds of appeal are dismissed.
5. In the result, appeal of the appellant is Dismissed.”
4. Aggrieved, the assessee filed this present appeal in Income Tax Appellate Tribunal (ITAT) against the aforesaid impugned appellate order dated 07/02/2024 of the Ld. CIT(A). At the time of hearing before us, the Assessee was represented by Shri Shubham Rastogi, Authorized Representative for the Assessee and Revenue was represented by Shri Manu Chaurasia, Ld. CIT- DR. The Ld. Authorized Representative (“AR”) for the Assessee submitted that the due date for filing of the return was extended by the Central Board of Direct Taxes (CBDT) from 30/09/2019 to 31/10/2019. In this regard, he drew our attention to page no. 1 of u/s 143(1) of the Act, wherein categorically, it is mentioned that the extended due date of filing original return was 31/10/2019. Thus, he contended that the return of income filed by assessee on 27/10/2019 was well within the time as extended by CBDT. He submitted that the addition made u/s 143(1) of the Act be deleted and that the Assessing Officer be directed to allow the deduction under section 80P of the Act as claimed by the assessee.
4.A. The Ld. CIT-DR for Revenue left the matter to the discretion of the Bench.
It is not in dispute that the due date for filing of original return was extended by CBDT from 30/09/2019 to 31/10/2019; which is also acknowledged in the intimation u/s 143(1) of the
Since the assessee has filed return of income on 27/10/2019, which is well within the time having regard to extended due date for filing of original return (31/10/2019) u/s 139(1) of the Act, the assessee is not hit by the provisions of Section 80AC(ii) of the Act. The CPC as well as the Ld. CIT(A) have clearly erred in disallowing assessee’s claim u/s 80P of the Act on the ground that the assessee’s return of income was filed belatedly. Therefore, we set aside the impugned appellate order dated 07/02/2024 of the Ld. CIT(A), and we direct the Assessing Officer to allow the deduction u/s 80P of the Act to the assessee in accordance with law. The grounds of appeal are treated as disposed of in accordance with aforesaid direction.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open Court on 24/10/2024.