2024 (2) TMI 152 - AT - Income Tax

Deduction u/s 80P - claim denied as delay in filing the return of income - scope of amendment brought is in by Finance Act from 01.04.2021 w.e.f. 1.4.21 - prima facie adjustment - HELD THAT - From perusal of the said amendment, we note that before 01.04.2021 there was no mechanism for the CPC to prima facie disallow the claim u/s. 80P of the Act. It was only from 01.04.2021 that such powers have been conferred with the CPC to make prima facie disallowance in case of the claim made u/.s 10AA or deduction claimed under any of the provisions in Chapter VIA which, inter alia, includes 80P of the Act. We note that section 80AC of the Act puts a bar against claiming of deduction in respect of certain income provided under the head (C) of Chapter VIA which includes section 80P of the Act also if the return of income are not filed before the due date prescribed u/s. 139(1) of the Act. Had it been a case of scrutiny proceeding u/s. 143(3) of the Act, the situation certainly would have been against the assessee subject to the approval by the authorities for condonation of delay in filing the return. As before us, the issue is regarding prima facie adjustment made u/s. 143(1)(a)(v) of the Act and as discussed above, such power of making the prima facie adjustment towards deduction u/s. 80P of the Act came to CPC only from 1.4.2021 and thus, the alleged disallowance by CPC is beyond its jurisdiction . Therefore, the assessee deserves relief. We are thus inclined to hold that the Ld. CIT(A) erred in denying the deduction u/s 80P - Decided in favour of assessee. Penalty u/s. 272A(1)(d) - no compliance made to notices u/s. 142(1) within the stipulated time - HELD THAT - From the documents on record, we observe that the demand notice for imposition of penalty is not available. We find it proper to consider the submissions made by the Ld. Counsel for deleting the penalty since the assessment has been completed u/s. 143(3) of the Act and it not being an ex parte order u/s. 144. We find that there is a reasonable cause to delete the penalty so imposed. Thus, the penalty imposed of Rs. 20,000/- is deleted. Grounds taken by the assessee are allowed.

Summary

Issues Involved:
- Condonation of delay in filing appeals
- Disallowance of deduction u/s 80P of the Income-tax Act
- Imposition of penalty u/s 271A(d)

Condonation of Delay in Filing Appeals:
The appeals filed by the assessee were time-barred by 14 days. The assessee provided an affidavit explaining the reasons for the delay, citing the non-existence of the board and its reconstitution. The delay was condoned due to the circumstances presented.

Disallowance of Deduction u/s 80P of the Income-tax Act:
The issue revolved around the disallowance of deduction u/s 80P for delay in filing the return of income. The Central Processing Centre disallowed the deduction solely based on the late filing of the return. The Tribunal noted that before a certain date, there was no mechanism for the CPC to disallow the claim u/s 80P. It was observed that the CPC's power to make prima facie disallowances came into effect after a specific amendment. As the disallowance was beyond the CPC's jurisdiction, the assessee was granted relief, and the order of the Ld. CIT(A) was set aside.

Imposition of Penalty u/s 271A(d):
The penalty was imposed on the assessee for non-compliance with notices issued under section 142(1). The assessee contended that the notices were not served, and the assessment for the relevant year had been completed under section 143(3), making the penalty imposition unwarranted. It was argued that no demand notice accompanied the penalty order, which was against the provisions of the law. The Tribunal found merit in the arguments presented, noting the absence of the demand notice and the completion of assessment under section 143(3). Consequently, the penalty of Rs. 20,000 was deleted, and the appeals of the assessee were allowed.