2024 (1) TMI 1184 - AT - Income Tax

Adjustment done by the CPC u/s 143 (1)(a)(v) - Deduction u/s 80P disallowed treating the return filed by the assessee as belated return - As argued accounts of the assessee are required to be audited u/s 64 of the U.P. Cooperative Societies Act, 1965 and as such the due date of the return fails within Explanation 2(1)(ii) to section 139 (1) and the return filed on 01.10.2018 by the assessee was not a belated return - whether the adjustment done by the CPC u/s 143 (1)(a)(v) of the Act is correct or not? HELD THAT - As noted that prior to amendment in deduction u/s 143(1)(a)(v) by Finance Act on 01.04.2021, the disallowance of deduction was limited to sections 10AA, 80IA, 80IAB, 80IB, 80IC, 80ID and 80IE. Thus, the deduction claimed u/s 80P was not mentioned there. Hence, we are of the opinion that ld. CIT (A) has erred in interpreting the amendment. We are of the opinion that assessee is correct in saying that the impugned adjustment by the CPC was not permissible u/s 143(1)(a)(v) of the Act at the extant time. Accordingly, we set aside the orders of the authorities below and decide the issue in favour of the assessee.

Issues Involved:
1. Disallowance of deduction under section 80P as a belated return.
2. Requirement of audit under section 64 of the U.P. Cooperative Societies Act for determining due date of return.
3. Permissibility of adjustment under section 143(1)(a) for the impugned year.

Issue 1: Disallowance of deduction under section 80P as a belated return

The appeal was against the order disallowing the deduction under section 80P within provisions of Part C of Chapter VIA of the Income Tax Act, 1961, treating the return filed by the assessee as a 'belated return' for the assessment year 2018-19. The assessee, a Co-Operative Society, filed its return on 01.10.2018 declaring total income of Rs. Nil after claiming a deduction under section 80P. The deduction was not allowed by the assessing officer under section 143(1) of the Act. The CIT (A) upheld the disallowance, stating that any deduction claimed under Part C of Chapter VIA would be admissible only if the return of income was filed within the prescribed due date. The tribunal found that the action taken by the assessing officer was correct as it involved a simple verification of whether the return along with the audit report was filed by the due date, confirming the action of the AO and dismissing the appeal.

Issue 2: Requirement of audit under section 64 of the U.P. Cooperative Societies Act for determining due date of return

The second issue revolved around the requirement of audit under section 64 of the U.P. Cooperative Societies Act, 1965, for determining the due date of the return filed by the assessee. The CIT (A) had not appreciated that the accounts of the assessee were required to be audited under this provision, and thus, the return filed on 01.10.2018 was not a 'belated return'. However, the tribunal did not find this argument persuasive and upheld the action of the assessing officer, stating that the late filing of the audit report by the appellant necessitated the disallowance of the deduction under section 80P.

Issue 3: Permissibility of adjustment under section 143(1)(a) for the impugned year

The third issue centered on the permissibility of adjustment under section 143(1)(a) for the impugned year by the assessing officer. The tribunal noted that the disallowance of deduction under section 80P was not permissible under section 143(1)(a)(v) of the Act at the time of the impugned adjustment by the CPC. The amendment brought in by the Finance Act on 01.04.2021 did not include section 80P for disallowance under section 143(1)(a)(v). Therefore, the tribunal set aside the orders of the authorities below and decided the issue in favor of the assessee, allowing the appeal.

In conclusion, the tribunal ruled in favor of the assessee, setting aside the disallowance of deduction under section 80P and allowing the appeal against the order of the assessing officer.

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