2022 (8) TMI 121 - AT - Income Tax

Deduction u/s.80P - Claim not made in Return of Income - Whether if the assessee has not claimed deduction under section 80P of the Act in the return of income, can it be permitted to claim the same during the course of assessment proceedings by way of filing a revised computation in response to notice issued by the assessing officer? - HELD THAT - It is well-settled law and when the language of the Statute is plain and unambiguous, the same represents the legislative intent. In the instant case, the language of section 80A(5) of the Act is plain and unambiguous in its wordings and the same is not open to interpretation. It is an undisputed fact, that the assessee did not make a claim for deduction under section 80P in its return of income. The said claim was made by way of filing revised computation during the course of assessment proceedings. Without prejudice to the above, CIT(Appeals) has also observed that the assessee was engaged in selling petrol to outside parties, not forming part of the society and was unable to provide any explanation during the course of assessment/appellate proceedings as to how it is eligible to claim benefit of section 80D of the Act. While we are aware of the fact that in various cases it has been held that beneficial provisions should be construed liberally and legitimate claim of the assessee should be allowed, even if the assessee has failed to claim the same in its return of income. However, in our considered view, if the language of the Statute is plain and unambiguous and is not open to interpretation so that two views may be possible, then the same represents the legislative intent. Here, section 80A(5) of the Act states that for an assessee to be able to make a claim under Chapter -VI of the Act, such a claim has to be made in the return of income. In view of the plain language of the Statute, and respectfully following the decision of the Gujarat High Court in the case of Rachna Infrastructure (P.) Ltd. 2022 (3) TMI 256 - GUJARAT HIGH COURT we are of the view that Ld. CIT(Appeals) has not erred in facts and in law in confirming the order of the assessing officer. In the result, appeal of the assessee is dismissed

Summary

Issues Involved:
1. Ex-parte dismissal of appeals by CIT(A).
2. Disallowance of deduction under section 80P of the Income Tax Act, 1961.
3. Charging of interest under section 234.
4. Initiation of penalty proceedings under section 254 read with section 271(1)(c).

Issue-wise Detailed Analysis:

1. Ex-parte Dismissal of Appeals by CIT(A):
The assessee contended that the CIT(A)-3 Rajkot erred in law by dismissing the appeals ex-parte, alleging that the appellant was not interested in pursuing the appeal despite filing written submissions. The Tribunal noted that the CIT(A) dismissed the appeal without considering the written submission filed by the appellant. However, this procedural aspect did not change the outcome as the substantive issues were adjudicated based on the merits.

2. Disallowance of Deduction under Section 80P of the Income Tax Act, 1961:
The core issue was whether the assessee could claim deduction under section 80P during the assessment proceedings despite not claiming it in the original return. The assessee, a cooperative society, had claimed deductions under section 80P for interest income received from providing credit facilities to its members. The AO rejected this claim since the deduction was not claimed in the original return but only in a revised computation after a show-cause notice was issued. The CIT(A) upheld this disallowance, citing section 80A(5), which mandates that deductions must be claimed in the return of income. The Tribunal supported this view, referencing multiple judicial precedents, including the Gujarat High Court's decision in Rachna Infrastructure (P.) Ltd., which held that claims not made in the return cannot be granted later. Additionally, the Tribunal noted that the assessee's petrol pump sales to the general public further disqualified it from section 80P benefits.

3. Charging of Interest Under Section 234:
The assessee argued against the charging of interest under section 234, stating the absence of specific instructions in the assessment order. The Tribunal found this ground to be consequential and did not require separate adjudication since the main issue of deduction under section 80P was already decided against the assessee.

4. Initiation of Penalty Proceedings Under Section 254 Read with Section 271(1)(c):
The assessee contended that the CIT(A) erred in initiating penalty proceedings under section 254 read with section 271(1)(c). The Tribunal did not provide a detailed discussion on this ground, deeming it consequential to the primary issue of deduction disallowance. Since the main appeal was dismissed, the initiation of penalty proceedings was upheld.

Conclusion:
The Tribunal dismissed all three appeals for the assessment years 2012-13, 2013-14, and 2014-15, upholding the CIT(A)'s order. The Tribunal reinforced that claims for deductions under section 80P must be made in the return of income as per section 80A(5) and that procedural lapses in filing revised computations during assessment proceedings cannot rectify this statutory requirement. The appeals were dismissed on both procedural and substantive grounds, with the Tribunal emphasizing the plain and unambiguous language of the statute.