2023 (2) TMI 1012 - AT - Income Tax

Deduction u/s 80P - return of income was not filed within the due date prescribed under section 139(1) - assessee received intimation u/s 143(1)(a) - Applicability of adjustment u/s 143(1)(a)(v) for current AY - whether once the return of income is filed beyond the prescribed date u/s 139(1) of the Act, can the deduction under section 80P of the Act be denied to the assessee, by way of adjustment under section 143(1)? - HELD THAT - Claim of deduction u/s 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 - we also note that 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. 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 scope of the adjustments that can be made under the said provision has been elaborated in the Explanation to the aforesaid section, which does not include denial of deduction claimed by the assessee in case the assessee does not furnish its return of income within the date stipulated under section 139(1) of the Act. The Explanation to the said section specifically provides for cases/instances when the claim made by the assessee could be said to be incorrect . Therefore, in our considered view, the case of the assessee would also not fall within the purview of prima facie adjustment u/s 143(1)(a)(ii) (an incorrect claim, if such incorrect claim is apparent from any information in the return). In the case of Lanjani Co-Operative Agri Service Society Ltd. 2022 (9) TMI 345 - ITAT CHANDIGARH ITAT held that the enabling provisions of subclause (v) of section 143(1) providing for disallowance of deduction under section 80P due to late filing of return having been introduced by Finance Act, 2021 effective from 1-4-2021, disallowance of deduction claimed under section 80P during relevant years 2018-19 and 2019-20 on grounds of late filing of return was unjustified In the instant case, there was a 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 of the Act was made. Therefore, looking into the totality of facts, we are of the view that 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) - Appeal of assessee allowed.

Summary

Issues:
1. Denial of deduction under section 80P of the Income Tax Act due to late filing of return.
2. Interpretation of statutory provisions regarding denial of deduction under section 80P.
3. Applicability of prima facie adjustment under section 143(1)(a)(v) and (ii).
4. Impact of amendment in Section 80AC on denial of deduction.
5. Judicial precedents on late filing of returns and claim of deductions.

Analysis:

1. The appeal concerned the denial of a deduction under section 80P of the Income Tax Act due to the late filing of the return by the assessee for the assessment year 2019-20. The National Faceless Appeal Centre upheld the denial based on the late filing, leading to the appeal before the ITAT Rajkot.

2. The ITAT analyzed the statutory provisions, noting that Section 80AC requires the return to be filed on or before the due date specified under Section 139(1) for deductions to be allowed. However, the amendment in Section 143(1)(a)(v) allows disallowance of deductions if the return is filed beyond the due date under Section 139(1), but this amendment was not applicable for the relevant assessment year.

3. Regarding prima facie adjustment under Section 143(1)(a)(ii), the ITAT found that the denial of deduction for late filing did not fall within the scope of such adjustments as per the Explanation provided in the Act, which specifies cases of "incorrect claims."

4. The ITAT discussed the impact of the amendment in Section 80AC, which denied the benefit of deductions if the return was not filed on time. However, the ITAT concluded that this amendment was not applicable to the assessment year in question, thus supporting the assessee's claim for deduction under Section 80P.

5. Citing judicial precedents, including cases from the Kerala High Court, Hyderabad Tribunal, and Chandigarh Tribunal, the ITAT highlighted that filing a return beyond the due date did not automatically disqualify the assessee from claiming deductions, especially when the return was filed within the extended period under Section 139(4).

6. Considering the totality of facts and the legal provisions, the ITAT allowed the appeal of the assessee, emphasizing that the claim of deduction under Section 80P could not be denied solely based on the late filing of the return under Section 139(1) for the assessment year 2019-20.

This detailed analysis of the judgment provides a comprehensive understanding of the issues involved and the ITAT's reasoning in allowing the appeal of the assessee.