2023 (7) TMI 859 - AT - Income Tax

Exemption u/s 80P - Adjustment u/s 143(1)(a)(ii) - return of income was not filed within the due date prescribed u/s 139(1) - HELD 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 Explanation to the said section 143(1)(a)(ii) 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 under section 143(1)(a)(ii) (an incorrect claim, if such incorrect claim is apparent from any information in the return). Denial of deduction u/s 80-P of the Act cannot come within the purview of a prima-facie adjustment u/s 143(1) of the Act, especially in light of absence of an enabling provision during the impugned assessment year, which came to be introduced only during the succeeding assessment year. 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, by way of prima facie adjustment u/s 143(1) of the Act - Decided in favour of assessee.

Summary

Issues Involved:
1. Denial of deduction under section 80P for filing return beyond the due date under section 139(1).
2. Scope of adjustments under section 143(1)(a) for incorrect claims.

Summary:

Issue 1: Denial of Deduction Under Section 80P for Late Filing
The assessee, a co-operative society, filed its return of income on 28-11-2020, claiming a deduction of Rs. 5,58,494 under section 80P of the Income Tax Act. The return was filed beyond the due date prescribed under section 139(1). The Centralized Processing Centre (CPC) disallowed the deduction, citing section 80AC, which mandates that deductions under section 80P are not allowable if the return is filed after the due date. The Commissioner of Appeals (CIT(A)) upheld this disallowance, referencing several Supreme Court judgments that emphasize strict adherence to statutory language and deadlines.

Issue 2: Scope of Adjustments Under Section 143(1)(a)
The assessee argued that the adjustment made by the CPC was beyond the scope of section 143(1)(a)(v) of the Act, which was amended effective from 01-04-2021, and thus not applicable for the assessment year 2019-20. The Tribunal noted that section 143(1)(a)(v) allows disallowance of deductions if the return is filed beyond the due date, but this amendment came into effect only from 01-04-2021. Therefore, for the assessment year 2019-20, such a disallowance could not be made as a prima facie adjustment under section 143(1)(a).

The Tribunal also considered whether the case falls under section 143(1)(a)(ii) for incorrect claims. The Explanation to this section defines "incorrect claim" but does not include late filing of returns as a basis for disallowance. The Tribunal referenced several judicial precedents, including the Kerala High Court and various ITAT rulings, which support the view that deductions under section 80P cannot be denied solely based on late filing of returns if the return is filed within the extended period under section 139(4).

Conclusion:
The Tribunal concluded that the denial of the deduction under section 80P of the Act by way of prima facie adjustment under section 143(1)(a) was not sustainable for the assessment year 2019-20. The appeal of the assessee was allowed, and it was held that the claim for deduction under section 80P could not be denied merely on the basis of late filing of the return.

Order Pronounced:
The appeal of the assessee was allowed, and the order was pronounced in the open court on 19-07-2023.