2021 (4) TMI 1169 - HC - Income Tax

Validity of recovery proceedings - Intimations under Section 143 (1) - challenge to the intimations is on the ground that they do not confirm to the prescription of Section 143(1) - Revenue would argue that the error arises from the fact that the returns of income have been filed belatedly and beyond the dates stipulated under Section 139 of the Act. There is no doubt or dispute in this regard. Hence, the claim under Section 80P could not have been putforth in the light of provisions contained in Section 80AC(ii) as it stood post amendment with effect from 01.04.2018 - HELD THAT - The scope of an 'intimation' under Section 143 (1) (a) of the Act, extends to the making of adjustments based upon errors apparent from the return of income and patent from the record.The explanation cannot curtail or restrict the main thrust or scope of the provision and due weightage as well as meaning has to be attributed to the purposes of Section 143(1)(a) The provisions of Section 80AC(ii) make it clear that any deduction that is claimed under Part C of Chapter VIA would be admissible only if the return of income in that case were filed within the prescribed due date. Thus no claim under any of the provisions of Part C of Chapter VIA would be admissible in the case of a belated return. There is no dispute on this position. The date of filing of a return of income would be apparent on the face of return and upon a perusal thereof, it would be clear as to whether the return is a valid return, having been filed within the statutory time limit, or a belated one. This is mechanical exercise and one that can be carried out by the CPC, very much within the scope of Section 143 (1) (a) (ii) of the Act. The conduct of the petitioners is also relevant. Not only have the returns been filed belatedly but the petitioners have also chosen not to co-operate in the conduct of assessment. They are admittedly in receipt of the defect notices from the CPC, but have not bothered to respond to the same. The writ petitions have themselves been filed belatedly and after the elapse of more than six to eight months from the dates of impugned orders, in all cases. It is only when the Revenue has initiated proceedings for recovery by attachment of bank accounts have the petitioners approached this Court. This factor also strengthens my resolve that these are not matters warranting interference in terms of Article under Section 226 of the Constitution of India, quite apart from the decision that I have arrived at on the legal issue. These writ petitions are dismissed and connected Miscellaneous Petitions are also closed.

Summary

Issues:
Challenge to intimations under Section 143(1) of the Income Tax Act, 1961 by Co-operative Societies for the year 2018-19.

Analysis:
1. Challenge to Intimations: The writ petitions filed by various Co-operative Societies challenge intimations under Section 143(1) of the Income Tax Act, 1961. The petitioners argue that the intimations do not conform to the requirements of Section 143(1)(a) of the Act. They contend that the provisions of Section 143(1)(a) can only be invoked in specific cases such as arithmetical errors, incorrect claims, disallowance of loss or expenditure, and additional income not accounted for. The petitioners claim that there are no errors of such nature in their filed returns, thus questioning the validity of the intimations.

2. Contentions of the Revenue: On the contrary, the Revenue argues that the errors in the returns arise from the belated filing by the petitioners. The Revenue asserts that the claim under Section 80P could not be accepted due to amendments in Section 80AC(ii) effective from 01.04.2018. The Revenue emphasizes that the belated filing of returns affects the admissibility of certain deductions under the Act, and the petitioners' failure to respond to notices further strengthens the Revenue's position.

3. Interpretation of Section 143(1)(a): The interpretation of Section 143(1)(a) is crucial in this case. The provision outlines specific scenarios where adjustments can be made to the total income or loss, including arithmetical errors and incorrect claims apparent from the return. The explanation of "incorrect claim" is debated, with the petitioners arguing that the date of return does not constitute an "entry" for adjustment purposes. However, the court opines that the scope of incorrect claims should not be restricted by technicalities and must be interpreted in line with the provision's intent.

4. Application of Section 80AC(ii): Section 80AC(ii) clarifies that deductions under Part C of Chapter VIA are allowable only for returns filed within the due date. The court affirms that the date of filing a return is a clear indicator of its timeliness, and the CPC can easily determine the validity of the return within the scope of Section 143(1)(a)(ii).

5. Judicial Decision: The court dismisses the writ petitions, citing the petitioners' belated filing of returns, lack of cooperation in assessment proceedings, and delayed approach to the court as factors against interference under Article 226 of the Constitution of India. The court emphasizes the importance of timely compliance and responsiveness in tax matters. The connected Miscellaneous Petitions filed by the Revenue seeking to vacate stays are also closed without costs.

In conclusion, the judgment upholds the Revenue's position based on the belated filing of returns by the Co-operative Societies and emphasizes the importance of adherence to statutory timelines and cooperation in tax assessment processes.