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2023 (4) TMI 687 - AT - Income TaxDeduction u/s 80P denied - return of income had been filed late - CPC jurisdiction to make the disallowance in question, in the order u/s 143 (1) - scope of amendment to section 143(1) (a)(v) brought in by Finance Act, 2021 - HELD THAT - It is not in question that section 80AC of the I.T. Act, as amended by Finance Act, 2018, stipulated that for claiming deduction u/s 80P of the Act, the return of income was required to be filed before the due date, as prescribed by section 139(1) and in the present case, the return was filed belatedly. It was only by the amendment to section 143(1) (a)(v) brought in by Finance Act, 2021, that the CPC can be said have been vested, exercising powers u/s 143(1)(a), to make disallowance on the ground of belated return. Prior to that, as per the un-amended provisions, the AO could disallow a claim u/s 143(1) (a) only on the grounds of arithmetical error or that the Assessee had made an incorrect claim, etc. See 'Fatehraj Singhvi Ors. v. UOI and Ors'; 2016 (9) TMI 964 - KARNATAKA HIGH COURT It goes without saying that in the absence of enabling powers, no disallowance can be made. As such, enabling provisions being absent, the CPC did not have the jurisdiction to make the disallowance in question, in the order u/s 143 (1) - we find support from 'The Lanjani Co-operative Agri Service Society Ltd., VPO Lanjani, Kangra (HP) 2022 (9) TMI 345 - ITAT CHANDIGARH Decided in favour of assessee.
Issues involved:
The issues involved in the judgment are (i) legality of orders under section 143 (1)(a) & 154, (ii) denial of deduction under section 80-P, (iii) constitutionality of section 80AC, and (iv) consideration of delay in audit completion. Issue (i) - Legality of orders under section 143 (1)(a) & 154: The Assessee's appeal challenged the order/intimation under section 143 (1)(a) & 154 passed by the Assessing Authority and the Appellate Authority. The Assessee argued that the orders were illegal, unjust, arbitrary, and opposed to the facts of the case. The appeal sought to quash the orders, delete the addition made, and reduce the tax and interest to nil. Issue (ii) - Denial of deduction under section 80-P: The Assessee claimed a deduction under section 80-P, which was denied during processing of the return under section 143(1) of the Income-tax Act. The Assessee contended that the deduction was wrongly denied, and the Authorities did not comply with the provisions of the Act. The Assessee argued that the provisions of section 80AC were wrongly given priority, and the principles of natural justice were not followed. Issue (iii) - Constitutionality of section 80AC: The Assessee challenged the constitutionality of section 80AC, alleging that it denied the benefits of the law disproportionately compared to other categories of assessees. The Assessee argued that the provisions were violative of the constitution and were not in line with the object of being advisory in nature. Issue (iv) - Consideration of delay in audit completion: The Assessee requested sympathetic consideration for a slight delay in completing the audit by the Government Department and the assessee. The Assessee argued that the delay was due to human nature and reasonable causes, without any deliberate malafide intent. The Appellate Tribunal considered the arguments presented by the Assessee and the Revenue. The Tribunal noted that section 80AC stipulated that for claiming deduction under section 80P, the return of income must be filed before the due date as prescribed by section 139(1). The Tribunal observed that the return in this case was filed belatedly, but prior to the amendment brought in by the Finance Act, 2021, the CPC did not have the jurisdiction to make disallowances on the ground of a belated return. The Tribunal referenced a previous case to support this finding. In conclusion, the Tribunal found merit in the Assessee's grievance and accepted the appeal. The order under appeal was reversed, and consequently, the disallowance of Rs. 2,27,994 was cancelled. Therefore, the appeal was allowed, and the order was pronounced on 05.04.2023.
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