2022 (10) TMI 1237 - AT - Income Tax

Denial of claim u/s 80P by prima facie adjustment u/s 143(1)(a)(v) - HELD THAT - Amendment has been introduced in section 143(1)(a)(v) of the Act to provide that the claim of deduction u/s 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 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. Whether the case of the assessee would 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? - 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). 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 u/s 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) 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 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) - Appeal of the assessee is allowed.

Summary

Issues:
- Denial of deduction under section 80P of the Income Tax Act for not filing the return within the due date specified under section 139(1).
- Scope of prima facie adjustment under section 143(1)(a)(v) and (a)(ii) of the Act.
- Interpretation of statutory provisions regarding deduction under section 80P.

Analysis:
1. The case involved an appeal by the assessee against the order denying the claim of exemption under section 80P of the Income Tax Act. The assessee, a cooperative society, filed its return of income after the due date and claimed a deduction of Rs. 5,13,568 under section 80P. The issue was whether the deduction could be denied due to the late filing of the return.

2. The appellate order dismissed the assessee's appeal, citing section 80AC which requires filing the return on time for claiming deductions. It referenced a previous decision by ITAT Mumbai and held that the deduction claimed under section 80P was rightly denied due to the late filing of the return. The order relied on the explanation to section 143(1) to support the disallowance of the deduction.

3. The Tribunal analyzed the statutory provisions, noting that section 80AC mandates timely filing for deductions from the assessment year 2018-19 onwards. However, the amendment to section 143(1)(a)(v) disallowing deductions for late filing was effective from 01-04-2021 and did not apply to the assessment year in question (2019-20). The Tribunal also discussed the scope of adjustment under section 143(1)(a)(ii) for incorrect claims, emphasizing the specific instances mentioned in the explanation.

4. Referring to judicial precedents, the Tribunal highlighted cases where deductions were allowed even if the return was filed late but within the permissible period. It cited instances where claims made in revised returns were accepted, emphasizing the importance of filing the return under section 139(1) for claiming deductions. The Tribunal concluded that the deduction under section 80P could not be denied solely based on the late filing of the return within the due date under section 139(1).

5. In the interests of justice, the Tribunal allowed the appeal, overturning the previous order and remanding the case back to the CIT(A) for fresh adjudication on the merits after providing the assessee with a fair hearing. The decision was pronounced in open court on 31-10-2022.