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2022 (10) TMI 1236 - AT - Income TaxDenial of claim u/s 80P within the purview of prima facie adjustment u/s 143(1)(a)(v) - HELD THAT - The claim of deduction u/s 80P of the Act cannot be allowed the assessee if the assessee does not file its return of income within the due date stipulated u/s 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 u/s 139(1) of the Act with effect from 01-04-2021 and does not apply to the impugned assessment year i.e. assessment year 2019-20 relevant to financial year 2018-19. Accordingly in our considered view denial of claim u/s 80P of the Act would not come within the purview of prima facie adjustment u/s 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. 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)? - The case of the assessee would also not fall within the purview of prima facie adjustment u/s 143(1)(a)(ii) (an incorrect claim if such incorrect claim is apparent from any information in the return). We also observe that the counsel for the assessee has filed copies of orders passed by Commissioner (Appeals) NFAC in many other cases of cooperative societies having similar issues in which it has been held that section 143(1)(a)(ii) of the Act does not deal with disallowance of deduction for deed filing of return of income and also the said adjustment is not permissible under section 143(1)(a)(v) of the Act. We note that the instant case there was a few-month 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) in which the claim for deduction u/s 80P of the Act was made. Therefore we are of the view that claim of deduction u/s 80P 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). Therefore in the interests of justice we are restoring the case to the file of the CIT(Appeals) for fresh adjudication on merits of the case after giving due opportunity of hearing to the assessee. Appeal of the assessee is allowed.
Issues Involved:
1. Disallowance of deduction under Section 80P of the Income Tax Act due to late filing of return. 2. Validity of adjustments made under Section 143(1)(a) of the Act. 3. Denial of adjournment application by the Commissioner (Appeals). Detailed Analysis: 1. Disallowance of Deduction under Section 80P: The primary issue was the disallowance of a deduction claimed by the assessee under Section 80P of the Income Tax Act, amounting to Rs. 4,11,630/-, due to the late filing of the return. The assessee, a co-operative society, filed its return on 30-11-2020, beyond the due date prescribed under Section 139(1). The CPC Bengaluru made an adjustment under Section 143(1)(a) denying the deduction, which was upheld by the Commissioner (Appeals), citing the amendment to Section 80AC by the Finance Act 2018. This amendment mandated that deductions under Chapter VIA, including Section 80P, are not allowable if the return is filed after the due date specified under Section 139(1). 2. Validity of Adjustments under Section 143(1)(a): The assessee contended that the adjustment made by CPC was beyond the scope of Section 143(1)(a)(v) of the Act, which was amended effective 01-04-2021. They argued that the amendment did not apply to the assessment year 2019-20. The Tribunal noted that the amendment to Section 143(1)(a)(v) allowing disallowance of deductions for late returns was not applicable for the assessment year in question. Furthermore, the Tribunal observed that the definition of "incorrect claim" under Section 143(1)(a)(ii) did not include the scenario where a deduction is denied due to late filing of the return. Therefore, the Tribunal concluded that the denial of the deduction under Section 80P did not fall within the permissible adjustments under Section 143(1)(a) for the relevant assessment year. 3. Denial of Adjournment Application: The assessee also raised an issue regarding the denial of their adjournment application dated 26-11-2021 by the Commissioner (Appeals), which was neither rejected nor considered, leading to an ex-parte order. The Tribunal noted this procedural lapse and emphasized the importance of providing a fair opportunity of hearing to the assessee. Conclusion: The Tribunal concluded that the denial of the deduction under Section 80P was not justified for the assessment year 2019-20, as the relevant amendments to Section 143(1)(a)(v) were not applicable. Additionally, the Tribunal highlighted the procedural unfairness in not considering the adjournment application. Consequently, the Tribunal restored the case to the file of the Commissioner (Appeals) for fresh adjudication on merits, ensuring the assessee is given a fair opportunity of being heard. Result: The appeal of the assessee was allowed, and the case was remanded for fresh adjudication by the Commissioner (Appeals).
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