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TMI Blog2023 (2) TMI 158X X X X Extracts X X X X X X X X Extracts X X X X ..... sing the return is correct. CPC has rightly not accepted the deduction claimed u/s 80P of the Act. The reference made by the ld. AR for amendments made in section 143(1)(a) by the Finance Act 2020 2021 will not comply. Assessee has relied the judgments of coordinate bench of Tribunals and in any of the judgments, the judgment of Hon ble Kolkata High Court SUOLIFICIO LINEA ITALIA (INDIA) (P) LTD. [ 2018 (5) TMI 638 - CALCUTTA HIGH COURT] has not been considered in regard to mandatory requirement for filling return of income within due date, therefore, these judgments are not applicable in the present case on hand. Dismiss the appeal of the assessee. - ITA No.1043/Bang/2022 - - - Dated:- 27-1-2023 - Shri Laxmi Prasad Sahu, Accountant For the Assessee : Smt. Ravishankar, Advocate For the Revenue : Shri Ganesh R Gale, Standing Counsel ORDER This is an appeal filed by the assessee against the order passed by the National Faceless Appeal Centre (NFAC), Delhi, dated 20.09.2022, on the following grounds: 1. The order passed by the Hon'ble Commissioner of Income Tax (Appeals), NFAC, passed under section 250 of the Income Tax Act, 1961 ( the Act ) in so f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct ). The return was processed on 31.05.2019 denying the deduction claimed under Chapter VI-A in section 80P and raised a demand of Rs.1,93,840/-. 3. Aggrieved from the above addition, the assessee filed appeal before the CIT(A) and the CIT(A) dismissed the appeal of the assessee by observing as under:- 6. Decision: The appellant in its ground of appeal has assailed the AO-CPC in disallowing the deduction of Rs. 509329/- under intimation u/s 143(1) of the Act as the return was filed within, the time provided u/s 139(4) of the Act. The appellant further stated that the said adjustments does not fall within the purview of the prima facie adjustments permissible u/s 143(1)(a) of the Act.The appellant in its ground of appeal has assailed AO-CPC in denying the exemption u/s 80P of the Act. The appellant alleged that the order u/s 143(1) of the Act passed by the AO-CPC is bad in law as provisions of Sec. 143(1)(a)(v) do not provide for denial of deduction u/s 80P of the Act when the return of income is not filed within time limit as provided u/s 139(1) of the Act but u/s 139(4). 6.1 The submission of the appellant is examined. The appellant in its submission has s:ated t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al are dismissed. 4. Aggrieved from the above order, the assessee filed appeal before the Income Tax Appellate Tribunal. 5. The learned AR submitted that the CIT(A) is not justified in not allowing deduction under section 80P of the Act by observing that the return has been filed belatedly. The adjustment cannot be made as per section 143(1)(a) of the Act because the enabling provision for making disallowance under section 143(1) of the Act was not in statute and it was brought into the Income Tax Act by the Finance Act, 2021 and he also submitted that the Finance Act, 2020 inserted the provision under section 143(1)(v) of the Act, in which, section 80P was not included and section 80P was included for making disallowance as per section 143(1)(a)(v) of the Act by the Finance Act, 2021, therefore, the CPC had no power for making disallowance under Chapter VI-A in section 80P of the Act. The assessee, however made claim as per section 80P of the Act by filing return of income. The CPC has wrongly invoked section 80AC of the Act. It is only a directory in nature but not mandatory and there was sufficient reason for delay in filing return of income. The accounts of the society ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r exemption/deduction/rebate/relief. In support of his arguments, he relied on the following judgments: CIT Vs. Shelcon Properties (P.) Ltd., [2014] 44 taxmann.com 170 (Calcutta) Janki Vs. CIT (A) NFAC ITA No.944/Mum/2022 M/s. Syndicate Bank Staff Co-operative Society Ltd., Vs. DCIT, CPC, ITAT, Bengaluru Bench, ITA No.1062/Bang/2022, Assessment Year 2018-19. Wipro Ltd. vs Pr. CIT , [2022] 140 taxmann.com 223 (SC) 6.1. The learned DR further submitted that as per the judgment of Hon ble Madras High Court, it has been relied by the Co-ordinate Bench of the Tribunal in ITA No.1062/Bang/2022, in which Hon ble Court has decided that the CPC can make adjustment while processing the return under section 143(1)(a) of the Act. The CPC also given information to the assessee before making any adjustments. He further submitted that as per Hon ble High Court of Calcutta cited supra, compliance of section 80AC is a mandatory provision for claiming deduction under section 80P of the Act but in the impugned case, the assessee did not file his return of income within the due date as specified under section 139(1) of the Act. 6.2. He further submitted that as per sub-clause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h conditions of furnishing declaration to Assessing Officer in writing and to file same before due date of filing original return of income under section 139(1), are mandatory in nature, thus, assessee would not be entitled to benefit under section 10B(8) on non-compliance of twin conditions as provided under section 10B(8) - Whether there was no error apparent from record which would warrant reconsideration of said order, thus, review petition was to be dismissed - Held, yes [Para 2] [In favour of revenue] 7. After hearing the rival contentions, we note that the assessee is a Co-operative Society, declaring income of is Rs.5,09,329/- and the assessee claimed deduction under section 80P of the Act on the entire income during the year but the CPC did not allow the deduction u/s 80P of the Act by observing that it has not filed return of income within the due date as per section 139(1) of the Act. On appeal before the CIT(A), he also dismissed the appeal of the assessee by observing as noted supra . On going through the section 80AC(ii) of the Act, it has been observed that for getting deduction under Chapter VI-A, the assessee was required to file return of income as per sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... smissed. While mandatory rule must be strictly observed, substantial compliance might suffice in the case of a directory rule. 26. Whenever the statute prescribes that a particular act is to be done in a particular manner and also lays down that failure to comply with the said requirement leads to severe consequences, such requirement would be mandatory. It is the cardinal rule of interpretation that where a statute provides that a particular thing should be done, it should be done in the manner prescribed and not in any other way. It is also settled rule of interpretation that where a statute is penal in character, it must be strictly construed and followed. Since the requirement, in the instant case, of obtaining prior permission is mandatory, therefore, non-compliance with the same must result in cancelling the concession made in favour of the grantee, the respondent herein. This was also reaffirmed in a number of judgments, such as CIT v. Ace Multi Axes Systems Ltd. [2017] 88 taxmann.com 69/[2018] 252 Taxman 274/400 ITR 141 (SC)/[2018] 2 SCC 158. 50. The Constitution Bench, in Commissioner of Customs v. Dilip Kumar Co. [2018] 95 taxmann.com 327/69 GST 239 (SC)/[2018] 9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... islature's failure to express itself clearly.' The above judgment was rendered in respect of disallowance of employees contribution to P.F. ESI for not complying as per the provisions of section 36(1)(va) r.w.s. 2(24)(x) and 43B of the I.T.Act, but the ratio decided in regard to interpretation of exemption deduction compliance provisions will apply in this case also. 7.1 From the above cited decision it is clear that the prima facie adjustments can be made while processing the return of income if there were an incorrect claim and if such incorrect claim is apparent from any information in the return. The provision of section 80AC of the Act has to be complied strictly. 7.2. The learned DR also relied on the judgment of Hon ble High Court of Calcutta in the case of Suolificio Linea Italia (India) (P.) Ltd. v. Joint Commissioner of Income-tax, Circle-8 Kol reported in 2018] 93 taxmann.com 462 (Calcutta), in which it has been held a under:- 10. The ratio is utterly inapplicable when the statute confers a benefit and imposes a condition for the enjoyment of the benefit. The dictum would not be applicable, particularly, since the embargo is couched in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -tax reported in (2022) 138 taxmann.com 571 (Madras). The relevant part is as under:- 6. Section 143 (1) (a) of the Act reads thus:- '143.( ) Where a return has been made under section 139, or in response to a notice under sub-section (1) of section 142, such return shall be processed in the following manner, namely:- (a) the total income or loss shall be computed after making the following adjustments, namely:- (i) any arithmetical error in the return; (ii) an incorrect claim, if such incorrect claim is apparent from any information in the return; (iii) disallowance of loss claimed, if return of the previous year for which set off of loss is claimed was furnished beyond the due date specified under sub-section (1) of section 139; (iv) disallowance of expenditure indicated in the audit report but not taken into account in computing the total income in the return; (v) disallowance of deduction claimed under sections 10AA, 80- IA, 80-IAB, 80-IB, 80-IC, 80-IDorsection 80-1E, if the return is furnished beyond the due date specified under sub-section (1) of section 139; or (vi) addition of income appearing in Form 26AS or Form 16A or Form ..... 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