M/S.PUZHATHI SERVICE CO-OP BANK LTD,KANNUR vs. ITO, KANNUR

PER GEROGE GEORGE K, JM:

This appeal is restored to the Tribunal by the Hon’ble Kerala High Court

vide judgment dated 7th April 2016 in ITA No 57 of 2016.

2 Brief facts of the case are as follows:

The assessee is a cooperative society registered under the Kerala

Cooperative Societies Act, 1969. The assessee had failed to file return of

income for the AY 2009-10; the AO issued a notice u/s 142(1) requiring the

assessee to file return of income. The assessee neither complied with this notice

nor filed return of income in terms of section 139 or 142(1) of the Act and

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hence, best judgment assessment u/s 144 of the Act was completed by

denying the benefit of deduction u/s 80P of the I T Act. The AO held that by

virtue of section 80A(5) of the Act, the assessee was not entitled to the benefit

of deduction claimed u/s 80P of the Act, since the return of income was not

furnished within the time limit prescribed u/s 139 of the Act.

3 Aggrieved by the assessment, the assessee preferred an appeal to the

first appellate authority. The CIT(A) confirmed the assessment order.

4 Aggrieved by the above order of the CIT(A), the assessee preferred

appeal to the Tribunal. The Tribunal, vide order dated 31.1.2013 dismissed the

appeal of the assessee. The Tribunal held that since the return was not filed

within the time prescribed u/s 139(1)or u/s 139(4), the assessee was not entitled

to the benefit of deduction u/s 80P of the Act in view of section 80A(5) of the

Act.

5 Aggrieved by the order of the Tribunal, the assessee preferred further

appeal u/s 260A of the Act. The Hon’ble Kerala High Court, vide judgment

dated 7th April 2016 in ITA No 57 of 2016, restored the matter to the Tribunal. It is

in this context, the case was heard on 15th March 2017.

regards the belated filing of return, the Hon’ble High Court in the case of

Chirakkal Service Co-op Bank Ltd vs CIT reported in 384 ITR 490 has decided

the issue in favour of the assessee. The Hon’ble High Court had held that the

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Tribunal was not justified in denying the benefit of exemption u/s 80P of the Act

on the mere ground of belated filing of return of income. The Hon’ble High

Court was considering the following substantial question of law:

“B Whether the Tribunal is justified in denying the exemption u/s 80P of the I T Act 1961 on the mere ground of belayed filing of return by the assessee? C. Whether a return filed by the assessee beyond the period stipulated u/s 139(1)/(4) or section 142(1)/148 can be held as non-est in law and invalid for the purpose of deciding exemption u/s 80P of the I T act, 1961?” 6.1 In considering the above substantial question of law, the Hon’ble High

Court rendered the following findings:

“18. Questions B & C relate to denial of exemption on ground referable to belated filing of return, that is to say, returns filed beyond the period stipulated under section 139)1) or section 139(4) as the case may be as well as section 142 (1) or section 148, as the case may be. There are no cases among these appeals where returns were not filed. There are cases where claims have been made along with the returns and the returns were filed within time. Still further, there are cases where returns were filed belatedly, that is to say, beyond the period stipulated under sub section 1 or 4 of section 139; and there are also returns filed after the period with reference to sections 142(1) and 148 of the I T Act.

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section 80A would operate by itself. In cases where returns have been filed, the question of exemptions or deductions referable to section 80P would definitely have to be considered and granted if eligible.

20 Hence, question would arise as to whether belated returns filed beyond the period stipulated under section 139(1) or section 139(4) as well as following sections 142(1) and 148 proceedings could be considered for exemption. If those returns are eligible to be accepted in terms of law, going by the provisions of the statue and the governing bind precedents, it goes without saying that the claim for exemption will also stand effectuated as a claim duly made as part of the returns so filed, for due consideration.

21 When a notice under section 142(1) is issued, the person may furnish the return and while doing so, could also make claim for deduction referable to section 80P. Not much different is the situation when pre-assessment enquiry is carried forward by issuance of notice under section 142 (1) or when notice 1 s issued on the premise of escaped assessment referable to section 148 of the IT Act. This position notwithstanding, when an assessment is subjected to first appeal or further appeals under the IT Act or all questions germane for concluding the assessment would be relevant and claims which may result 1n modification of the returns already fi1ed could also be entertained, particularly when it relates to claims for exemptions. This is so because the fina1iy of assessment would not be achieved in all such cases, until the termination of all such appellate remedies. Under such circumstances, the Tribunal was not justified in denying exemption under section 80P of the I T act on the mere ground of belated filing of return by the assessee concerned. A return fi1ed by the assessee beyond the period stipulated under section 139(1) or 139(4) or under section 142(1) or section 148 can also be accepted and acted upon provided further proceedings in relation to such assessments are pending in the statutory hierarchy of adjudication in terms of the provisions of the IT Act. In all such situations, it cannot be treated that a return filed at any stage of such proceedings could be treated as non-est in law and invalid for the purpose of deciding exemption under section 80p o the IT Act. We thus, answer substantial questions of law Band C formulated and enumerated above.“

6.2 In light of the above judgment of the Hon’ble High Court, the belated

filing of return of income by the assessee does not disentitle it from the benefit

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of deduction u/s 80P(2) of the Act. Further, the assessee, in the instant case, is a

primary agricultural credit society registered under the Kerala Cooperative

Societies Act, 1969. The certificate has been issued by the Registrar of

Cooperative Societies to the above said effect and the same is on record. The

Hon’ble High Court, in assessee’s own case and other batch of cases, had held

that primary agricultural credit society, registered under the Kerala

Cooperative Societies Act, 1969, is entitled to the benefit of deduction u/s

80P(2). Since there is a certificate issued by the Registrar of Cooperative

Societies, stating that the assessee is a primary agricultural credit society, we

hold that the assessee is entitled to the benefit of deduction u/s 80P(2) of the

Act. It is ordered accordingly.

7 No other issues were argued by the ld counsel for the assessee during the

course of hearing of these appeal.

8 In the result, the appeal filed by the assessee is partly allowed.

Order pronounced in the open Court on this 15th day of March 2017.

Sd/- Sd/- (ABRAHAM P GEORGE) (GEORGE GEORGE K) Accountant Member Judicial Member

Cochin: Dated 15th March 2017 Raj*

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Copy to: 1. Appellant – 2. Respondent – 3. CIT(A) 4. CIT, 5. DR 6. Guard File

By order

Assistant Registrar ITAT, COCHIN