SAGARA VIKASA MUTUALLY AIDED COOP THRIFT SOCIETY LTD ,VISAKHAPATNAM vs. INCOME TAX OFFICER, WARD-2(1), VISAKHAPATNAM

1. This appeal is filed by the assessee against the order of Commissioner of Income Tax (Appeals) [CIT(A)], National Faceless Appeal Centre (NFAC), Delhi vide DIN & Order No.ITBA/NFAC/S/250/2022-23/1046186894(1) dated 06.10.2022 for the Assessment Year (A.Y.) 2018-19.

Brief facts of the case are that the assessee is a cooperative society, filed it’s return of income for the A.Y.2018-19 on 25.03.2019 beyond the due date, 31.08.2018 u/s 139 of the Income Tax Act, 1961 (in short “Act”) and claimed deduction u/s 80P of the Act. The return was processed by the CPC on 25.06.2019 and the deduction claimed u/s 80P was disallowed as the return was filed beyond the due date specified u/s 139(1) of the Act.

On being aggrieved, the assessee preferred an appeal before the CIT(A). The CIT(A) held that in order to claim deduction u/s 80P of the Act, the assessee was required to file it’s return of income within the time specified u/s 139(1) of the Act, which he failed to do so. The CIT(A) dismissed the appeal of the assessee, holding that the decision of Hon’ble Bombay High Court relied by the assessee in the case of Trustees of Tulsidas Gopalji 207 ITR 368 is in relation to allowability of exemption u/s 11 of the Act which does not come under part-C of Chapter VI and hence, not applicable.

On being aggrieved, the assessee preferred an appeal before the Tribunal and raised the following grounds :

The order of the learned Commissioner of Income Tax (Appeals) is contrary to the facts and also the law applicable to the facts of the case.

Ground Nos. 2 to 4 relate to disallowance of deduction claimed u/s 80P of the Act. At the outset, the Ld.AR filed paper book and reiterated the written submissions filed before the Ld.CIT(A). The Ld.AR contended that the disallowance is outside the scope of adjustment that could be made in intimation u/s 143(1) of the Act. The Ld.AR submitted that though the return was not filed within the time specified u/s 139(1) of the Act, but filed within the time allowed u/s 139(4) of the Act, which is Sagara Vikasa Mutually aided Coop Thrift Society Ltd., Visakhapatnam not an independent provision, but an extension of section 139(1) of the Act. The Ld.CIT(A) is not justified in upholding the disallowance of deduction made u/s 80P of the Act, since the income of the assessee is eligible for exemption even on the “Principle of Mutuality”. Hence, pleaded to set aside the order passed by the Ld.CIT(A) and allow the appeal of the assessee.

Per contra, the Ld.DR argued that, in order to be eligible to claim deduction u/s 80P of the Act, the assessee was required to file its return of income within the time specified u/s 139(1) of the Act. As per section 143(1)(a) clause(v) of the Act, the total income or loss shall be computed after making disallowance of deduction claimed u/s 10AA or under any of the provisions of Chapter VI-A under the heading “C-Deductions in respect of certain incomes”, if the return is furnished beyond the due date specified under sub-section(a) of section 139 of the Act. Since the assessee has filed the return of income beyond the time specified u/s 139(1) of the Act, the Ld.DR held that the AO has correctly applied the provision of section 143(1)(a) clause(v) to disallow the deduction claimed u/s 80P and the Ld.CIT(A) has correctly upheld the disallowance made. The Ld.DR relied on the decision of coordinate bench of ITAT in the case of Unagatla Large Sized Co-operative Credit Society Ltd.,

I have heard both the parties and perused the material available on record. It is undisputed fact that the assessee filed it’s return of income beyond the due date specified u/s 139(1) of the Act and claimed exemption u/s 80P of the Act. The Ld.AR contended that the disallowance is outside the scope of adjustment that could be made in intimation u/s 143(1) of the Act. The Ld.AR relied on the decision of Hon’ble Bombay High Court in the case of Trustees of Tulsidas Gopalji 207 ITR 368 and contended that section 139(4) is only an extension of section 139(1) of the Act, therefore, the delay in filing the return is to be condoned. The Ld.DR relied on the decision of coordinate bench of ITAT in the case of Unagatla Large Sized Co-operative Credit Society Ltd., Chagallu Mandal vide I.T.A.No.255/Viz/2021 dated 08.03.2023. The said case law is not applicable to the case on hand, because the case law pertains to section 143(1)(a)(ii), but, in the instant case, the AO has adopted the provisions of 143(1)(a)(v). The AO has specifically mentioned that the provision i.e. 143(1)(a)(v) which was inserted and w.e.f. A.Y.2020-21. Therefore, I am inclined to set aside the order passed by the Ld.CIT(A) and remit the Sagara Vikasa Mutually aided Coop Thrift Society Ltd., Visakhapatnam matter back to the Ld.CIT(A) with a direction to re-examine the case on merits. The assessee is also directed to adhere to the notices issued by the department and furnish relevant information / documents sought by the department for adjudication of the issue on merits.

In the result, appeal of the assessee is allowed for statistical purpose . Order pronounced in the open court on 29th March, 2023.