Shri Navaniya Seva Sahakari Mandali Ltd., Navaniya, Tal. Babra, Dist. Amreli V. The ACIT(CPC), Bangalore, Bangalore-560500

ITA 317/RJT/2022

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 4165 (ITAT-RAJKOT)
• Duration Of Justice: 1 year(s) 1 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-01-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 29-10-2023
• Assessment Year: 2019-2020
• Appeal Filed On: 22-12-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 148; 2; 142(1); 143(1); 80P; 139(1); 139(4)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT (Conducted through E-Court at Ahmedabad) BEFORE SMT. ANNAPURNA GUPTA, ACCOUNTANT MEMBER & SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER I .T .A . N o .3 1 7 /R j t /2 02 2 ( A s se ss m e nt Y e a r : 20 19- 2 0 ) Sh r i N a va ni ya S e v a Sa h a ka r i Ma n d ali , C/ o . D . R. A d h ia , “ O M S H I R PA D A ML A YA ”, N r . Tr ik a mr a yj i Ha we l i, 1 6 - J a gna th Pl o t , Dr . Ya gni k R o ad , O p p. I m pe r ia l Ho tel , R aj k ot - 3 6 0 0 0 1 V s . The A s s is ta nt C o m mi s s i on e r of I n c o me T a x ( C P C ), B a ng a lo re [P AN N o.A A F A S4 02 0 C] (Appellant) .. (Respondent) Appellant by : Written Submission Respondent by: Shri K. L. Solanki, Sr. DR D a t e of H ea r i ng 30.10.2023 D a t e of P r o no u n ce me nt 29.01.2024 O R D E R PER SIDDHARTHA NAUTIYAL, JM: This appeal has been filed by the assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals), (in short “Ld. CIT(A)”), National Faceless Appeal Centre (in short “NFAC”), Delhi in DIN & Order No. ITBA/NFAC/S/250/2022-23/1046834487(1) vide order dated 03.11.2022 passed for Assessment Year 2019-20. 2. The assessee has taken the following grounds of appeals:- “1. The Ld. CIT(A) has erred in confirming disallowance of Rs. 4,81,153/-. The same needs cancellation. ITA No.317/Rjt/2022 Shri Navaniya Seva Sahakari Mandali vs. ACIT Asst.Year –2019-20 - 2 - 2. The Ld. CIT(A) has erred in confirming disallowance of Rs. 4,81,153/- without cogent reason or cogent material brought on records. The same needs cancellation. 3. The Ld. CIT(A) has erred in confirming disallowance of Rs. 4,81,153 without giving proper opportunity and adequately considering the matter. The same needs cancellation. 4. The Ld. CIT(A) has erred in confirming disallowance of Rs. 4,81,153/- based on irrelevant consideration. The same needs cancellation. 5. The Ld. CIT(A) has erred in confirming disallowance of Rs. 4,81,153/- based on presumption and surmises. The same needs cancellation. 6. Taking into consideration legal, statutory, factual and administrative aspects no disallowance as made ought not to have been confirmed. The same needs cancellation. 7. The Ld. CIT(A) has erred in confirming not giving due deductions claimed u/s 80P while completing assessments. The same needs to be allowed. 8. Without prejudice the initiation of proceedings is bad in law needs cancellation. 9. Without prejudice, the Ld. CIT(A) has erred in not accepting the facts that the initiations of the assessment proceeding is itself beyond limitation as prescribe. The same needs to be quashed. 10. Without prejudice, no reasonable opportunity has been given by the Ld. CIT(A) while passing appeal order. The same needs annulment. 11. Without prejudice, there being no legal service of the notice of hearing issued and therefore the assessment needs annulment. 12. The appellant craves leave to add/alter/amend and/or substitute any or all grounds of appeal before the actual hearing takes place.” 3. The brief facts of the case are that the assessee is a resident AOP/BOI and filed its return of income on 05.11.2021 declaring total income at rupees “Nil” and claiming deduction under Section 80P of the Act. The return was processed under Section 143(1) of the Act on 11.01.2021, and total income was assessed at Rs. 4,81,153/– as ITA No.317/Rjt/2022 Shri Navaniya Seva Sahakari Mandali vs. ACIT Asst.Year –2019-20 - 3 - deduction under Section 80P of the Act was denied to the assessee on the ground that it did not file its return of income within the due stipulated date. 4. In appeal, CIT(Appeals) dismissed the appeal of the assessee with the following observations: “From the above decision, it is clear that in order to claim deduction under - Chapter VIA return has to be filed as per mandatory section of 80AC of the Act. The explanation given u/s. 143(1)(a) of the Act cannot curtail or restrict the main thrust or scope of the provisions and due weightage as well as meaning has to be attributed to the purposes of Section 143(1)(a) of the Act. The due date of filing of return is very much apparent on the face of return and upon perusal thereof while - processing the return it would be clear whether the return is a valid return which is filed within the statutory time limit or a belated one. This verification exercise can very much be carried out by CPC and hence is very much within the scope of Section 143(1)(a)(i)of the Act. The conduct of the appellant is also to be seen as he has filed his return beyond the statutory dates and has not bothered to respond to the defect notices sent by CPC. This factor has also to be taken into account while deciding the applicability of the sections. The appellant has not filed return of income u/s. 139(1) and as per provisions of Section 80AC it is mandatory for the appellant to file the return of income under 139(1) to be eligible to claim deduction under Chapter VIA. The appellant is aware of. this provision. The procedural section of 143(1) cannot override the mandatory sections i.e. Section 80AC. In view of express provision of the Act, denial of deduction under Chapter VIA can be resorted to u/s. 143(1) of the Act as per overriding provision of mandatory section 80AC of the Income Tax Act, 1961. Hence, dismissing the grounds of the. appellant. Grounds of appeal No. 1 to 7 are therefore dismissed. 5. The assessee is in appeal before us against the aforesaid order passed by CIT(Appeals). Before us, the Counsel for the assessee submitted that this issue is directly covered in favour of the assessee by the decision of jurisdictional Rajkot ITAT in the case of Chakargarh Seva Sahakari Mandali vs. The CIT in ITA No. 187/Rjt/2022 (154 ITA No.317/Rjt/2022 Shri Navaniya Seva Sahakari Mandali vs. ACIT Asst.Year –2019-20 - 4 - taxmann.com 228 (Rajkot - Trib.) and he accordingly submitted that relief may be granted to the assessee in light of the above ruling. 6. It would be useful to reproduce the relevant extracts of the aforementioned ruling for ready reference: In the instant case, admittedly the assessee did not file return of income within the time permissible under section 139(1). However, the assessee filed its return of income belatedly on 28-11-2020 and claimed deduction under section 80P. The issue for consideration is that whether once the return of income is filed beyond the prescribed date under section 139(1), can the deduction under section 80P be denied to the assessee, by way of adjustment under section 143(1). On going through the statutory provisions, we observe that section 80AC provides that no such deduction under section 80P shall be allowed to an assessee unless he furnishes a return of his income on or before the due date specified under section 139(1) with effect from assessment year 2018-19 onwards. However, section 143(1)(a)(v) provides that disallowance of deduction claimed under any of the provisions of Chapter VI-A under the heading 'C.— Deductions in respect of certain incomes' (which includes deduction under section 80P), can be made if the return is furnished beyond the due date specified under sub-section (1) of section 139. This amendment has been introduced with effect from 1-4-2021. Accordingly, the above amendment would not apply to the impugned assessment year. Further, section 143(1)(ii) permits adjustment in case of an incorrect claim, if such incorrect claim is apparent from any information in the return. However, Explanation to the aforesaid section specifies the following cases where the claim made in the return of income can be said to be 'incorrect'. [Para 7] A joint reading of the above provisions makes it evident that the claim of deduction under section 80P cannot be allowed the assessee, if the assessee does not file its return of income within the due date stipulated under section 139(1) with effect from assessment year 2018-19 onwards. However, amendment has been introduced in section 143(1)(a)(v) to provide that the claim of deduction under section 80P 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) with effect from 1-4-2021 and does not apply to the impugned assessment year i.e. assessment year 2019-20 relevant to financial year 2018-19. Accordingly, denial of claim under section 80P would not come within the purview of prima facie adjustment under section 143(1)(a)(v), for the simple reason that the section was not in force during the period under consideration i.e. assessment year 2019-20. [Para 7.1] The second issue for consideration is that 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 ITA No.317/Rjt/2022 Shri Navaniya Seva Sahakari Mandali vs. ACIT Asst.Year –2019-20 - 5 - 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). 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, the case of the assessee would also not fall within the purview of prima facie adjustment under section 143(1)(a)(ii) as it applies only in case of an incorrect claim, if such incorrect claim is apparent from any information in the return. [Para 7.2] A return filed by assessee beyond period stipulated under section 139(1) or 139(4) or under section 142(1) or section 148 can also be accepted and acted upon for entertaining claim raised under section 80P provided further proceedings in relation to such assessments are pending in statutory hierarchy of adjudication in terms of provisions of Act. To be eligible to make claim under section 80-IA or any other section of Chapter VIA, assessee should have filed return of income under section 139(1) and even if it did not make claim for deduction in original return and subsequently file revised return making such claim, its claim for deduction under section 80-IA is maintainable. Therefore, where assessee had filed return under section 139(1), it was entitled to claim deduction under section 80-IA even if such claim was not made in original return but subsequently in revised return filed in response to notice issued under section 153A. The enabling provisions of sub-clause (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. Denial of claim under section 80P would not come within purview of prima facie adjustment under section 143(1)(a)(v) for reason that said section was not in force during period under consideration i.e. assessment year 2019-20. Further, the case of assessee would also not fall within purview of prima facie adjustment under section 143(1)(a)(ii), which specifies the list for disallowance under the said provision and prima facie adjustment for late filing of return of income is not specifically included therein. It was held that that since return of income was filed within due date permissible under section 139(4), in which claim for deduction under section 80P was made, therefore, deduction under section 80P could not be denied to assessee only on basis that assessee did not file its return of income within due date prescribed under section 139(1) by way of adjustment under section 143(1). Therefore, though section 80AC does provide for denial of deduction under section 80P in case return of income is filed beyond stipulated date under section 139(1), but various judicial precedents have also held that 'deduction' provisions need to be construed 'liberally'. Therefore, denial of deduction under section 80P cannot come within the purview of a prima facie adjustment under section 143(1), 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. However, the only concern for adjudicating is limited aspect of whether denial of deduction under section 80P can be sustained by way of prima facie adjustment under section 143(1), and Tribunal is not adjudicating or commenting on whether such deduction under section 80P can be disallowed during the course of regular assessment. [Para 7.3] ITA No.317/Rjt/2022 Shri Navaniya Seva Sahakari Mandali vs. ACIT Asst.Year –2019-20 - 6 - In the instant case, there was a delay in filing the return of income by the assessee for the assessment year 2019-20. However, claim of deduction under section 80P 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 under section 139(1), by way of prima facie adjustment under section 143(1). [Para 7.4] 7. We observe that the issue under consideration is directly covered by the above mentioned ruling rendered by the jurisdictional Rajkot Bench. Respectfully, following the above ruling, we hereby allow the appeal of the assessee. 8. In the result, the appeal of the assessee is allowed. This Order pronounced in Open Court on 29/01/2024 Sd/- Sd/- (ANNAPURNA GUPTA) (SIDDHARTHA NAUTIYAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 29/01/2024 TANMAY, Sr. PS TRUE COPY आदेश क त ल प अ े षत/Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent. 3. संबं धत आयकर आय ु त / Concerned CIT 4. आयकर आय ु त(अपील) / The CIT(A)- 5. वभागीय त न ध, आयकर अपील!य अ धकरण, राजोकट / DR, ITAT, Rajkot 6. गाड' फाईल / Guard file. आदेशान ु सार/ BY ORDER, उप/सहायक पंजीकार Dy./Asstt.Registrar) आयकर अपील य अ धकरण, राजोकट / ITAT, Rajkot 1. Date of dictation 29.01.2024(Dictation given on Dragon software by Hon’ble Member) 2. Date on which the typed draft is placed before the Dictating Member 29.01.2024 3. Other Member..................... 4. Date on which the approved draft comes to the Sr.P.S./P.S 29.01.2024 5. Date on which the fair order is placed before the Dictating Member for pronouncement .01.2024 6. Date on which the fair order comes back to the Sr.P.S./P.S 29 .01.2024 7. Date on which the file goes to the Bench Clerk 29 .01.2024 8. Date on which the file goes to the Head Clerk.......................................... 9. The date on which the file goes to the Assistant Registrar for signature on the order.......................... 10. Date of Despatch of the Order..........................................