2022 (11) TMI 128 - AT - Income Tax

Deduction u/s 80P - Assessee received intimation u/s 143(1)(a) making adjustment in the returned income and not granting deduction claimed in the return of income u/s 80P - as per CPC claim of assessee was incorrect u/s 143(1)(a)(ii) since the return of income was not filed within the due date prescribed u/s 139(1) - assessee submitted that the adjustment made by the CPC was beyond the scope of section 143(1)(a)(v) - 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 can be denied to the assessee, in case the assessee does not file its return of income within the time prescribed u/s 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. 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. Whether the case of the assessee would 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)? - 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) of the Act. We note that the instant case, there was a few-month delay in filing the return of income by the assessee for the assessment year 2019-20 and return of income was filed within due date permissible u/s 139(4) of the Act, in which the claim for deduction u/s 80P was made. 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. Therefore, we are restoring the case to the file of the Ld. CIT(Appeals) for fresh adjudication on merits of the case after giving due opportunity of hearing to the assessee. Appeal of the assessee is allowed.

Summary

Issues Involved:
1. Denial of deduction under section 80P of the Income Tax Act for filing return after due date.

Comprehensive Analysis:
The judgment pertains to an appeal for the assessment year 2019-20, arising from an order of the National Faceless Appeal Centre (NFAC) under section 143(1) of the Income Tax Act, 1961. The assessee, a cooperative society, filed a return of income claiming a deduction of Rs. 2,12,008 under section 80P of the Act. However, the intimation under section 143(1)(a) made an adjustment disallowing this deduction as the return was filed after the due date prescribed under section 139(1) of the Act.

The Commissioner (Appeals) dismissed the assessee's appeal, citing the amended provisions of section 80AC introduced by the Finance Act 2018, which mandated filing the return on time to avail deductions under Chapter VIA, including section 80P. The Ld. CIT(A) held that the appellant was not eligible to claim the exemption under section 80P due to the late filing of the return.

In the appeal before the ITAT, the counsel for the assessee argued that the adjustment made by the CPC was beyond the scope of section 143(1)(a)(v) and that the action was not permissible under section 143(1)(a)(ii) of the Act. The ITAT analyzed the statutory provisions and observed that denial of the deduction under section 80P was not applicable for the assessment year 2019-20 as the relevant amendment came into effect from 01-04-2021.

The ITAT further examined whether the case of the assessee fell within the purview of prima facie adjustment under section 143(1)(a)(ii) for an incorrect claim apparent from the return. It concluded that the denial of the deduction under section 80P could not be justified under this provision as per the Explanation provided in the Act.

Referring to judicial precedents, the ITAT highlighted cases where deductions were allowed even if the return was filed belatedly but within the permissible time under the Act. Considering the totality of facts, the ITAT allowed the appeal, restoring the case to the Ld. CIT(A) for fresh adjudication on the merits after providing a hearing to the assessee.

In conclusion, the ITAT allowed the appeal, emphasizing that denial of the deduction under section 80P was not justified for the assessment year 2019-20 due to the specific provisions and amendments in the Income Tax Act.