Shree Lunidhar Seva ... v. Assessing Officer (C..., Income Tax Appellate Tribunal, Judgment, Law, casemine.com

Citation Codes

Equivalent Citations

citation codes

Case Number

ITA 202/RJT/2022

Disposition

allowed

Attorney(S)

Acts

SECTION 139 INCOME TAX ACT
section 143(1) of the Income Tax Act, 1961; in short "the Act". 1 I.T.A No. 202/Rjt/2022 A.Y. 2019-20 Page No2
section 142(1) or section 148 can 7 I.T.A No. 202/Rjt/2022 A.Y. 2019-20 Page No8
section 80-IA
sub-section (1) of section 139.
provisions of sub- clause (v) of section 143(1)

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Smart Summary

Factual and Procedural Background

The appellant, Shree Lunidhar Seva Sahkari Mandali Ltd., a co-operative society, filed its return of income for Assessment Year 2019-20 on 30-11-2020 declaring nil total income and claiming a deduction of ₹2,22,704 under section 80P of the Income Tax Act, 1961 ("the Act"). The return was filed after the due date prescribed under section 139(1) but within the extended time under section 139(4). Subsequently, the Assessing Officer (CPC), Bengaluru, issued an intimation under section 143(1)(a) disallowing the claimed deduction on the ground that the return was not filed within the due date under section 139(1). The National Faceless Appeal Centre (NFAC), Delhi, upheld the disallowance. The appellant then appealed to the Income Tax Appellate Tribunal (ITAT), Rajkot Bench, challenging the denial of the deduction under section 80P on the basis that the statutory amendments relied upon by the Revenue did not apply to the year under consideration.

Legal Issues Presented

Whether the claim of deduction under section 80P of the Income Tax Act can be denied to the assessee on the ground that the return of income was filed beyond the due date prescribed under section 139(1) but within the time allowed under section 139(4) for Assessment Year 2019-20?
Whether the adjustment made by the Assessing Officer under section 143(1)(a)(v) of the Act to deny the deduction on the basis of late filing of return was valid for the assessment year in question?
Whether the disallowance of deduction under section 80P can be treated as a prima facie adjustment under sections 143(1)(a)(ii) or 143(1)(a)(v) of the Act for the assessment year 2019-20?

Arguments of the Parties

Appellant's Arguments

The deduction under section 80P cannot be denied merely because the return was filed beyond the due date under section 139(1) but within the time allowed under section 139(4), as the relevant amendment to section 143(1)(a)(v) was effective only from 01-04-2021 and thus does not apply to AY 2019-20.
The adjustment made by CPC under section 143(1)(a)(v) was beyond its scope for the year under consideration.
The definition of "incorrect claim" under section 143(1)(a)(ii) does not include denial of deduction due to late filing of return.
The learned CIT(A) erred in dismissing the appeal by upholding the disallowance without proper appreciation of the law and the amendments.

Respondent's Arguments

The Departmental Representative relied on the observations of the CIT(A) that the deduction under section 80P is not allowable if the return is not filed within the due date under section 139(1), based on the amendment to section 80AC.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Chirakkal Service Co-Operative Bank Ltd. Kannur v. CIT [2016] 68 taxmann.com 298 (Kerala)	Acceptance of return filed beyond prescribed periods under sections 139(1), 139(4), 142(1), or 148 for entertaining claims under the Act when proceedings are pending.	The court relied on this precedent to support the proposition that a belated return filed within the permissible period under section 139(4) can be acted upon for claim of deductions.
ASR Engg. & Projects Ltd. [2019] 111 taxmann.com 49 (Hyderabad - Trib.)	Eligibility to claim deduction under Chapter VI-A requires filing return under section 139(1); claim allowed if return filed under 139(1) even if claim made in revised return.	Used to highlight that filing under section 139(1) is generally a precondition for claiming deductions under Chapter VI-A, but the facts differ for the year in question.
Lanjani Co-Operative Agri Service Society Ltd. (CPC) v. DCIT [2023] 146 taxmann.com 468 (Chandigarh - Trib.)	Disallowance of deduction under section 80P due to late filing of return not justified for AYs prior to amendment effective 01-04-2021.	The court relied on this decision to conclude that disallowance of deduction under section 80P for late filing of return was unjustified for AY 2019-20.

Court's Reasoning and Analysis

The Tribunal examined the statutory provisions relevant to the case, particularly sections 80P, 80AC, 139(1), 139(4), and 143(1) of the Income Tax Act. It noted that section 80AC was amended to deny deductions if the return is not filed within the due date under section 139(1) with effect from AY 2018-19 onwards. However, the amendment to section 143(1)(a)(v), which permits prima facie disallowance of deduction claims for late filing, was effective only from 01-04-2021 and thus does not apply to AY 2019-20.

The Tribunal further analyzed the scope of adjustments permissible under section 143(1)(a)(ii) relating to "incorrect claims" apparent from the return. The Explanation to this section enumerates specific cases constituting incorrect claims, none of which includes denial of deductions solely due to late filing of the return.

Considering judicial precedents, the Tribunal found that a return filed belatedly within the permissible time under section 139(4) can be accepted for claim of deductions. The Tribunal concluded that the denial of deduction under section 80P on the ground of late filing beyond section 139(1) due date but within section 139(4) does not constitute a valid prima facie adjustment under section 143(1) for AY 2019-20.

Holding and Implications

The appeal is allowed. The Tribunal held that the denial of deduction under section 80P of the Act for AY 2019-20 solely on the basis of return being filed beyond the due date under section 139(1) but within the extended period under section 139(4) was not justified. The amendments to section 143(1)(a)(v) relied upon by the Revenue to deny the deduction do not apply retrospectively to the assessment year under consideration.

The direct effect of this decision is that the appellant is entitled to claim the deduction under section 80P for AY 2019-20 despite belated filing of the return within section 139(4) time limit. No new precedent beyond the facts of the case was established.

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Shree Lunidhar Seva Sahkari Mandali Ltd., Lunidhar, Taluka Kunkavav, Dist. Amreli. v. Assessing Officer (CPC), , Bangalore

IN THE INCOME TAX APPELLATE TRIBUNAL

RAJKOT BENCH, RAJKOT

[CONDUCTED THROUGH VIRTUAL COURT]

Before: Shri Waseem Ahmed, Accountant Member And Shri Siddhartha Nautiyal, Judicial Member

ITA No. 202/Rjt/2022 Assessment Year 2019-20
Lunidhar Seva Sahkari Mandali Ltd., Lunidhar, Kundavav Amreli-365460 PAN: AABAL9846M (Appellant)	Vs	The Assessing Officer (CPC), Bengaluru (Respondent)

Assessee by: Shri D.M. Rindani, A.R. Revenue by: Shri B.D. Gupta, Sr. D.R.

Date of hearing : 07-02-2023 Date of pronouncement : 22-02-2023

आदेश/ORDER PER : SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER:-

This assessee's appeal for A.Y. 2019-20, arises from order of National Faceless Appeal Centre (NFAC), Delhi dated 16-06-2022, in proceedings under section 143(1) of the Income Tax Act, 1961; in short "the Act".

I.T.A No. 202/Rjt/2022 A.Y. 2019-20 Page No² Shree Lunidhar Seva Sahkari Mandali Ltd. vs. A.O.

2 . The assessee has taken the following grounds of appeal:-

Grounds of Appeal	Tax effect relating to each Ground of appeal
1.	The learned Commissioner (Appeals), National Faceless Appeal Centre, Delhi erred in confirming action of CPC Bengaluru by disallowing claim of deduction of Rs.2,22,704/- by failing to appreciate that provisions of Sec. 143{l)(a)(v) do not provide for denial of deduction u/s SOP of the Act when the return of income is not filed within time allowed u/s 139(1) of the Act but u/s 139(4).	66,362/-
2.	The learned Commissioner (Appeals), National Faceless Appeal Centre, Delhi erred in upholding action of the CPC Bengaluru in making adjustment to the returned income of the Appellant by way of an intimation u/s 143(1) and in denying the benefit of Sec. SOP of the Act of Rs.2,22,704/-to the Appellant by failing to appreciate that this was not a prima facie adjustment permissible u/s 143(l)(a) of the Act.	66,362/-
3.	The learned Commissioner (Appeals), National Faceless Appeal Centre, Delhi, erred in not adjudicating ground of disallowance of claim of deduction of Rs.2,22,704/- u/s SOP of the Act on merits.	66,362/-
4.	The learned Commissioner (Appeals), National Faceless Appeal Centre, Delhi, erred in holding that in view of amendment in Sec. 80AC, benefit of deduction u/s SOP has been denied by CPC by failing to appreciate that this was not a prima facie adjustment permissible u/s 143(l)(a of the Act during the year under appeal.
5.	The appellant craves leave to add, amend, alter and withdraw any ground of appeal anytime up to the hearing of this appeal.	"
Total tax effect	66,362/-

I.T.A No. 202/Rjt/2022 A.Y. 2019-20 Page No³ Shree Lunidhar Seva Sahkari Mandali Ltd. vs. A.O.

3 . The brief facts of the case are that the assessee is a co-operative society, who filed return of income on 30-11-2020 declaring total income of

Nil and claimed deduction of

2,22,704/- under section 80P of the Act. Thereafter, the assessee received intimation under section 143(1)(a) of the Act making adjustment in the returned income and not granting deduction of

2,22,704/- claimed in the return of income under section 80P of the Act, since the return of income was not filed within the due date prescribed under section 139(1) of the Act. 4. The assessee filed appeal against the order of Ld. CIT(A), who dismissed assessee's appeal with the following observations: "4.4 Adjudication The submission has been considered but cannot be accepted. The due date for filing the return of income under Sec. 139(1) was 31.08.20.19. The due date for filing the return of income under Sec.139(4) was 31.03.2021. Even though, the due date for filing the return of income for this year was extended Upto 30.09.2020 under Sec.119 by the Board due to covid pandemic. The appellant filed the return of income on 30.11.2020 which is within one year from the end of the relevant Assessment Year. Hence, it has to be construed as a belated return under Sec. 139(4) of the Act. Whether deduction under Sec.80P can be denied for not filing the return of income before the due date prescribed under sec. 139(1) is the moot point for consideration. In this regard, the amendment to Sec. 80AC in the Finance Bill 2018 reads as under: "With an objective of bringing uniformity in all income-based deductions, the government vide Budget 2018 has proposed that the scope of section 80AC be extended to all similar deductions which are covered under the heading "C—Deductions in respect of certain incomes" under Chapter VIA i.e. from Sections 80IA to 80RRB. The impact of such an amendment

I.T.A No. 202/Rjt/2022 A.Y. 2019-20 Page No⁴ Shree Lunidhar Seva Sahkari Mandali Ltd. vs. A.O. shall be that no deduction would be allowed to a taxpayer under these provisions if the income-tax return is not filed on or before the due prescribed under Section 139(1) of the Income Tax Act."

5. In view of the above amendment in Sec. 80AC, the benefit of deduction under Sec. 80P has been denied by the CPC as the return was filed beyond the due date i.e., on 05.11.2020 and hence the denial of deduction under Sec. 80P is upheld.

In the result, the appeal is Dismissed."

5. The assessee is in appeal before us against the aforesaid order passed by Ld. CIT(A) denying assessee's claim of exemption under section 80P of the Act.

6. Before us, the counsel for the assessee submitted that CPC made adjustment to income of the assessee by denying assessee's claim of deduction of

2,22,704/- under section 80P of the Act on the ground that the claim of assessee was incorrect under section 143(1)(a)(ii) of the Act since the return of income was not filed within the due date prescribed under section 139(1) of the Act. The counsel for the assessee submitted that the adjustment made by the CPC was beyond the scope of section 143(1)(a)(v) of the Act. The counsel for the assessee submitted that 143(1)(a)(v) of the Act was amended w.e.f. 01-04-2021 and hence any prima facie adjustment relating to denial of deduction when the return of income was not filed within due date, was not possible for the year under consideration. Further,

"incorrect claim" u/s 143(1)(a)(ii) of the Act is defined by way of an Explanation to section 143(1) of the Act which does not state that the claim would be "incorrect" if return of income is not filed within the due date.

I.T.A No. 202/Rjt/2022 A.Y. 2019-20 Page No⁵ Shree Lunidhar Seva Sahkari Mandali Ltd. vs. A.O. Hence, the action of CPC is bad in law and therefore Ld. CIT(A) erred in facts and in law in holding that the assessee is not eligible for claiming deduction under section 80P of the Act for not filing return within the due date prescribed under section 139(1) of the Act. In response, Ld. Departmental Representative relied upon the observations made by Ld. CIT(A) in the appellate order.

7. We have heard the rival contentions and perused the material on record. In the instant facts, admittedly the assessee did not file return of income within the time permissible under section 139(1) of the Act. However, the assessee filed its return of income belatedly on 30-11-2020 and claimed deduction of

2,22,704/- under section 80P of the Act. The issue for consideration before us is that whether once the return of income is filed beyond the prescribed date under section 139(1) of the Act, can the deduction under section 80P of the Act be denied to the assessee, by way of adjustment under section 143(1) of the Act. On going through the statutory provisions, we observe that 80AC of the Act provides that no such deduction under section 80P of the Act shall be allowed to an assessee unless he furnishes a return of his income on or before the due date specified under section 139(1) w.e.f. assessment year 2018-19 onwards. However, section 143(1)(a)(v) of the Act provides that disallowance of deduction claimed under any of the provisions of Chapter VI-A under the heading "C.— Deductions in respect of certain incomes" (which includes deduction under section 80P of the Act), can be made if the return is furnished beyond the due date specified under sub-section (1) of section 139. This amendment has been introduced w.e.f. 1-4-2021. Accordingly, the above amendment would

I.T.A No. 202/Rjt/2022 A.Y. 2019-20 Page No⁶ Shree Lunidhar Seva Sahkari Mandali Ltd. vs. A.O. not apply to the impugned assessment year. Further, section 143(1)(ii) of the Act permits adjustment in case of an incorrect claim, if such incorrect claim is apparent from any information in the return. However, Explanation to the aforesaid section specifies the following cases where the claim made in the return of income can be said to be "incorrect" 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

7.1 A joint reading of the above provisions makes it evident that the claim of deduction under section 80P of the Act cannot be allowed the assessee, if the assessee does not file its return of income within the due date stipulated under section 139(1) of the Act w.e.f. assessment year 2018-19 onwards. However, we also note that amendment has been introduced in section 143(1)(a)(v) of the Act to provide that the claim of deduction under section 80P of the Act can be denied to the assessee, in case the assessee does not file its return of income within the time prescribed under section 139(1) of the Act with effect from 01-04-2021 and does not apply to the impugned

I.T.A No. 202/Rjt/2022 A.Y. 2019-20 Page No⁷ Shree Lunidhar Seva Sahkari Mandali Ltd. vs. A.O. assessment year i.e. assessment year 2019-20 relevant to financial year 2018-19. Accordingly, in our considered view, denial of claim under section 80P of the Act would not come within the purview of prima facie adjustment under section 143(1)(a)(v) of the Act, for the simple reason that the section was not in force during the period under consideration i.e. assessment year 2019-20.

7.2 The second issue for consideration is that whether the case of the assessee would fall within the purview of prima facie adjustment under section 143(1)(a)(ii) (an incorrect claim, if such incorrect claim is apparent from any information in the return). In our view, the scope of the adjustments that can be made under the said provision has been elaborated in the Explanation to the aforesaid section, which does not include denial of deduction claimed by the assessee in case the assessee does not furnish its return of income within the date stipulated under section 139(1) of the Act. The Explanation to the said section specifically provides for cases/instances when the claim made by the assessee could be said to be "incorrect".

Therefore, in our considered view, the case of the assessee would also not fall within the purview of prima facie adjustment under section 143(1)(a)(ii) (an incorrect claim, if such incorrect claim is apparent from any information in the return).

7 .3 We note that in the case of Chirakkal Service Co-Operative Bank Ltd. Kannur v. CIT 2016] 68 taxmann.com 298 (Kerala), the Kerala High Court held that a return filed by assessee beyond period stipulated under section 139(1) or 139(4) or under section 142(1) or section 148 can

I.T.A No. 202/Rjt/2022 A.Y. 2019-20 Page No⁸ Shree Lunidhar Seva Sahkari Mandali Ltd. vs. A.O. also be accepted and acted upon for entertaining claim raised under section

8 0P provided further proceedings in relation to such assessments are pending in statutory hierarchy of adjudication in terms of provisions of Act. In the case of ASR Engg. & Projects Ltd. [2019] 111 taxmann.com 49 (Hyderabad - Trib.), the ITAT held that to be eligible to make claim under section 80-IA or any other section of Chapter VI A, assessee should have filed return of income under section 139(1) and even if it did not make claim for deduction in original return and subsequently file revised return making such claim, its claim for deduction under section 80-IA is maintainable. Therefore, where assessee had filed return under section 139(1), it was entitled to claim deduction under section 80-IA even if such claim was not made in original return but subsequently in revised return filed in response to notice issued under section 153A. In the case of Lanjani Co-Operative Agri Service Society Ltd. (CPC) v. DCIT [2023] 146 taxmann.com 468 (Chandigarh - Trib.), the ITAT held that the enabling provisions of sub- clause (v) of section 143(1) providing for disallowance of deduction under section 80P due to late filing of return having been introduced by Finance Act, 2021 effective from 1-4-2021, disallowance of deduction claimed under section 80P during relevant years 2018-19 and 2019-20 on grounds of late filing of return was unjustified 7.4 We note that the instant case, there was a delay in filing the return of income by the assessee for the assessment year 2019-20 and return of

income was filed within due date permissible u/s 139(4) of the Act, in which the claim for deduction u/s 80P of the Act was made. Therefore, looking into the totality of facts, we are of the view that claim of deduction u/s 80P

I.T.A No. 202/Rjt/2022 A.Y. 2019-20 Page No⁹ Shree Lunidhar Seva Sahkari Mandali Ltd. vs. A.O. of the Act cannot be denied to the assessee only on the basis that the assessee did not file return of income its return of income within due date u/s 139(1) of the Act, in light of the discussion and judicial precedents highlighted above.

8. In the result, appeal of the assessee is allowed. Order pronounced in the open court on 22-02-2023

Sd/- Sd/-

(WASEEM AHMED) (SIDHHARTHA NAUTIYAL)

ACCOUNTANT MEMBER JUDICIAL MEMBER

Ahmedabad : Dated 22/02/2023 आदेश क तल प अे षत / Copy of Order Forwarded to:-

1. Assessee

2. Revenue

3. Concerned CIT

4. CIT (A)

5. DR, ITAT, Ahmedabad

6. Guard file. By order,

Assistant Registrar, Income Tax Appellate Tribunal, Rajkot

Shree Lunidhar Seva ... v. Assessing Officer (C...