2023 (1) TMI 752 - AT - Income Tax

Denial of deduction u/s 80P - Intimation u/s 143(1) - return of income is not filed within time limit as provided u/s 139(1) of the Act but u/s 139(4) - HELD 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. 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 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. 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 under section 143(1)(a)(v). 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) of the Act , in light of the discussion and judicial precedents highlighted above - Decided in favour of assessee.

Summary

Issues:
1. Denial of deduction under section 80P of the Income Tax Act for filing return beyond due date under section 139(1).
2. Scope of prima facie adjustment under sections 143(1)(a)(v) and 143(1)(a)(ii) in relation to deduction claims.

Analysis:

Issue 1: Denial of deduction under section 80P
The appeal concerns the denial of a deduction claimed under section 80P of the Income Tax Act for the assessment year 2019-20 due to the late filing of the return of income by a cooperative society. The National Faceless Appeal Centre (NFAC) upheld the adjustment made under section 143(1)(a) disallowing the deduction. The Commissioner (Appeals) dismissed the appeal, citing the provisions of section 80AC and the amendment introduced by the Financial Act, 2018. The amendment extended the requirement of filing the return by the due date for claiming deductions under Chapter VIA, including section 80P. However, the Tribunal noted that the amendment was not applicable to the relevant assessment year. The Tribunal analyzed the statutory provisions and concluded that denial of the claim under section 80P was not justified as the relevant provisions did not permit such adjustment for the assessment year in question.

Issue 2: Scope of prima facie adjustment under sections 143(1)(a)(v) and 143(1)(a)(ii)
The Tribunal examined whether the case of the assessee fell within the purview of prima facie adjustment under sections 143(1)(a)(v) and 143(1)(a)(ii). Section 143(1)(a)(v) allows for disallowance of deductions under Chapter VI-A if the return is furnished beyond the due date specified under section 139(1). However, the Tribunal noted that the amendment to this section was effective from 1st April 2021 and did not apply to the assessment year in question. Regarding section 143(1)(a)(ii), which deals with an incorrect claim apparent from the return, the Tribunal found that the denial of the deduction based on late filing of the return did not fall within the scope of this provision. The Tribunal also referred to judicial precedents highlighting that a delay in filing the return, as long as it was within the permissible time under section 139(4), should not result in the denial of the deduction claimed under section 80P. Consequently, the Tribunal allowed the appeal and remanded the case to the Commissioner (Appeals) for fresh adjudication on the merits after providing the assessee with a hearing opportunity.

In conclusion, the Tribunal's detailed analysis focused on the specific provisions of the Income Tax Act, the applicability of amendments, and judicial precedents to determine the eligibility of the assessee for claiming the deduction under section 80P. The decision highlighted the importance of considering the statutory framework and legal principles in assessing tax matters.