2024 (9) TMI 203 - AT - Income Tax

Denial of deduction u/s 80P - return of income was not filed within the due date prescribed u/s. 139(1) - assessee submitted that it is a belated return of income which is filed beyond the due date prescribed u/s 139(1) - HELD THAT - The assessee did not filed return of income on or before the due date as prescribed u/s 139(1), and it is only in the return of income filed in pursuance to notice u/s 148 which is filed beyond the due date prescribed u/s 139(1), the assessee filed said claim of deduction u/s 80P, which clearly is not admissible keeping in view substituted provisions of Section 80AC effective from assessment year 2018-19. The language of amended section 80AC is plain, clear and unambiguous, and literal reading of Section 80AC make it very clear that claim of deduction u/s 80P is admissible only when the claim of deduction u/s 80P is made in the return of income filed on or before the due date prescribed u/s 139(1). Thus, we do not find any merit in the appeal filed by the assessee. The decision relied upon by the assessee either concerns its self with pre-amended Section 80AC or concerns itself with adjustment made u/s 143(1)(a) while processing of the return wherein disallowance u/s 80P was made. We are not presently concerned with these disallowances. As have observed that CBDT in exercise of its power 119(2)(b) of the 1961 Act has issued Circular No.13/2023 dated 26.07.2023 in F.No. 173/21/2023-ITA-1, to deal with the cases where deduction u/s 80P could not be granted owing to return of income being filed beyond the due date specified u/s 139(1), and its condonation by merits by the Competent Authority as specified in the aforesaid Circular. Assessee, if may so advised, can file such application for condoning of the delay before Competent Authority as prescribed under the aforesaid circular, which shall be disposed off by the Competent Authority on merit in accordance with law. The Competent Authority while disposing such application for condoning the delay shall consider that the assessee was pursuing alternate remedy with appellate forums viz. ld. CIT(A) and ITAT. Thus, the appeal of the assessee stand dismissed.

Summary

Issues Involved:
1. Denial of deduction under Section 80P in the computation sheet.
2. Issuance of a notice of demand despite the assessment order being passed at Nil variation.
3. Disallowance of deduction under Section 80P for the assessment year 2019-20.

Detailed Analysis:

Issue 1: Denial of Deduction under Section 80P in the Computation Sheet (A.Y. 2018-19)
The assessee did not file a return of income for the assessment year 2018-19 within the due date prescribed under Section 139(1) of the Income-tax Act, 1961. The Assessing Officer (AO) reopened the assessment under Section 147/148 based on the information that the assessee had deposited significant cash and time deposits. The assessee subsequently filed a return declaring Nil income in response to the notice under Section 148. However, the AO denied the deduction under Section 80P amounting to Rs. 3,92,061/- in the computation sheet attached to the reassessment order and issued a demand notice under Section 156 for Rs. 2,58,357/-.

The CIT(A) upheld the AO's decision, citing that the return was not filed within the due date under Section 139(1), and therefore, the claim for deduction under Section 80P could not be allowed. This decision was based on the statutory scheme under Section 80A(5) and Section 80AC, which mandates that deductions under Section 80P are admissible only if the return is filed within the due date specified under Section 139(1).

Issue 2: Issuance of Notice of Demand Despite Nil Variation (A.Y. 2018-19)
The AO assessed the income at Nil but denied the deduction under Section 80P in the computation sheet, resulting in a demand notice under Section 156. The Tribunal noted that the AO's failure to mention the disallowance of deduction under Section 80P in the body of the assessment order was an irregularity. However, this irregularity did not invalidate the disallowance since the deduction was claimed in a return filed beyond the due date under Section 139(1), making it an ex-facie incorrect claim per the substituted provisions of Section 80AC, effective from the assessment year 2018-19.

Issue 3: Disallowance of Deduction under Section 80P (A.Y. 2019-20)
For the assessment year 2019-20, the facts were similar to those of the previous year, with the AO explicitly mentioning the disallowance of the deduction under Section 80P in the assessment order. The Tribunal applied the same reasoning as for the assessment year 2018-19, affirming that the deduction under Section 80P could not be allowed since the return was filed beyond the due date specified under Section 139(1).

Conclusion:
The Tribunal dismissed the appeals for both assessment years 2018-19 and 2019-20. The Tribunal emphasized that the statutory scheme under Section 80AC, as amended by the Finance Act, 2018, mandates that deductions under Section 80P are admissible only if the return is filed within the due date specified under Section 139(1). The Tribunal also highlighted a circular issued by the CBDT allowing for the condonation of delay in filing returns for claiming deductions under Section 80P, suggesting that the assessee could seek relief through this mechanism.

Final Order:
The appeals of the assessee in ITA Nos. 884 & 885/Ahd/2024 for the assessment years 2018-19 and 2019-20 were dismissed.