DIVYADATTA DIGAMBER NAGARI SAHAKARI PATSANSTHA LIMITED SATARA, KOREGAON V. INCOME TAX OFFICER, SATARA

ITA 651/PUN/2024

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 0137 (ITAT-PUNE)
• Duration Of Justice: 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 24-07-2024
• Assessment Year: misc
• Appeal Filed On: 31-03-2024
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: UMASHANKAR PRASAD LD.
• Assessee Lawyers: PR MO SCNAT L.
• Keywords: Revision of order; Period of limitation; Revised return; Co-operative Credit Society
• Section: 154; 139(5); 143(1); 80P; 250; 264; 139(1); 139(4); 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, PUNE ‘SMC’ BENCH, PUNE ITAT-Pune Page 1 of 16 BEFORE HON’BLE SHRI G. D. PADMAHSHALI, ACCOUNTANT MEMBER AND SHRI VINAY BHAMORE, JUDICIAL MEMBER आयकर अपऩल स ं . / ITA No. 651/PUN/2024 निर्धारण वषा / Assessment Year : 2013-14 Divyadatta Digamber Nagari Sahakari Patsanstha Moti Heights, Azaad Chowk, New ST-Stand, Koregaon, Satara-415501 PAN: AAEAS1871L . . . . . . . अपीलार्थी / Appellant बिधम / V/s The Income Tax Officer, Ward-3, Satara . . . . . . . प्रत्यर्थी / Respondent द्वधरध / Appearances Assessee by : Mr Pr[mo^ Scnat_ [‘L^. AR’] Revenue by : Mr Uma Shankar Prasad [‘Ld. DR’] स ु नवाई की तारीख / Date of conclusive Hearing : 25/07//2024 घोषणा की तारीख / Date of Pronouncement : 13/08/2024 आदेश / ORDER Per G. D. Padmahshali, AM; By this appeal the assessee impugns DIN & Order No. ITBA/NFAC/S/250/2023-24/1061312058(1) dt. 22/02/2024 passed u/s 250 r.w.s. 254 of Income-t[x A]t, 1961 [‘tb_ A]t’ b_r_[`t_r] by N[tcon[l F[]_l_ss App_[l C_ntr_, D_lbc [‘NFAC’ b_r_[`t_r] which in turn upheld the order of rejection to rectify passed u/s 154 of the Act for assessment year 2013-14 [‘AY’ b_r_cn[`t_r]. Divyadatta Digamber Nagari Sahakari Patsanstha Vs ITO ITA No.651/PUN/2024 AY:2013-14 ITAT-Pune Page 2 of 16 2. The long and short of the case is that; 2.1 The appellant assessee is a co-operative credit society registered under the provisions of Maharashtra State Co-op. Societies Act. For the year under consideration the assessee filed its original return on income u/s 139(1) of the Act on 27/09/2013 declaring total income of ₹34,39,055/- with a claim of refund for ₹110/-. The said return was processed summarily u/s 143(1) of the Act on 27/04/2014 by determining net tax payable at ₹12,13,170/- as against the refund claimed by the assessee. 2.2 On finding that while processing return of income, the Ld. CPC did not allow the claim u/s 80P(2) deduction, the assessee filed an application for rectification u/s 154 of the Act on 03/01/2015. The L^. CPC’s rejection to rectify its action in not allowing 80P(2) deduction to the assessee was unsuccessfully challenged by it in appeal before Ld. Commissioner of Income Tax-Appeals(4).Pune. 2.3 In first round of appeal when the matter travelled up to this Tribunal, the Co-ordinate Bench dismissed the main appeal of the assessee in 1306/PUN/2019 dt. 01/06/2022 and subsequently in MA No. 363/PUN/2022 dt. 25/04/2023 recalled its earlier order on the Divyadatta Digamber Nagari Sahakari Patsanstha Vs ITO ITA No.651/PUN/2024 AY:2013-14 ITAT-Pune Page 3 of 16 premise that the provisions of section 80AC(ii) of the Act cannot be made applicable to case, and by such recall it ultimately remanded the file back to the Ld. CIT(A) with a direction to adjudicate the issue fresh on merits as per law. 2.4 On a remand the Ld. NFAC by solidifying the fact that assessee did fail to make former claim in return of income originally filed by it on 27/09/2013 u/s 139(1) of the Act, reiterated forerunner first appellate findings in light of section 80A(5) of the Act and by pl[]cna r_lc[n]_ on Hon’\l_ Jurcs^c]tcon[l Bombay High Court’s decision in ‘EBR Enterprises Vs UOI’ [2019, 415 ITR 139 (Bom)] dismantled the assessee’s pl_[ `or 80P(2) deduction raised by it first- time through application for rectification u/s 154 of the Act, 3 Pained by the actions of tax authorities below, the assessee instituted the present appeal with a sole & substantive ground for claim of 80P(2) deduction as under (reproduced); On the facts and in the circumstances of the case and in law the learned Assessing Officer erred in not granting the claim u/s 80 P for a sum of Rs. 34,39,060, without appreciating the fact that appellant is credit co-operative society and is eligible for such deduction, further erred in applying provision of section 80A (5) of the IT Act 1961. for not allowing the legal claim of the appellant. Divyadatta Digamber Nagari Sahakari Patsanstha Vs ITO ITA No.651/PUN/2024 AY:2013-14 ITAT-Pune Page 4 of 16 4 During the course of physical hearing, the Ld. AR Mr Shingte after coalescing the former facts contended that; if the 80P(2) claim of deduction was not made by the assessee in its original return of income filed by it u/s 139(1) of the Act, then the acknowledgement generated by the Revenue after the return was uploaded/filed on the web-portal would have determined the tax liability equal to the one determined by the Ld. CPC after denying the claim. Adverting to the copy of acknowledgment of return filing (Pg-54 of P/B filed on 22/05/2024) it is also submitted that; the acknowledgement undisputedly confirms two things; (i) in the respective column/row of deduction u/c VI-A (sr. no 2) there appears ‘Z_ro’ figure/amount and (ii) the total taxes paid by the assessee being excess over the tax liability computed, resulted into tax refund. Although the actual figure of deduction ₹30,85,941/-claimed u/s 80P(2) in the return of income did not transpose correctly into chapter VI-A deduction, however the tax liability, prepaid taxes and net refund as reported in the return remained unchanged even after filing of return. This seemingly proves beyond any iota of doubt that, the assessee indeed claimed 80P(2) deduction in the return of income originally filed by it. Drawing our attention to rectification manual pulled-out from IT- Divyadatta Digamber Nagari Sahakari Patsanstha Vs ITO ITA No.651/PUN/2024 AY:2013-14 ITAT-Pune Page 5 of 16 Portal, the Ld. AR without prejudice to earlier plea further submitted that, for rectifying any data from return filed earlier, assessee is required to upload fresh / rectified return u/s 154 of the Act without which no rectification is possible. Admittedly, the portal allowed the assessee to rectify the claim of 80P deduction, and availing said option the appellant rectified 80P(2) deduction by substituting ‘0’ (zero) to ₹30,85,941/-. Since the rectification of claim is sought within prescribed time limit of four years from the processing of return u/s 143(1) of the Act, the Ld. CPC was duty bound to accept the rectified data and allow the claim. However, the authorities simply denied the claim holding that the correction of claim figure is beyond the scope of rectification. Neither the Ld. CPC nor the Ld. NFAC could appreciate facts correctly before denial. Per contra, the Ld. DR Mr Prasad submitted that, first of all, the subject matter of claim is debatable in nature which requires verification thus falls outside the purview of u/s 154 of the Act. Secondly since the claim of deduction was not made in the original return of income filed by the assessee, the action rejecting to allow the deduction by the both the authorities below is perfectly in tune with the provisions of section 80A(5) of the Act, hence cannot be faulted with. Divyadatta Digamber Nagari Sahakari Patsanstha Vs ITO ITA No.651/PUN/2024 AY:2013-14 ITAT-Pune Page 6 of 16 5 We have heard the rival p[rtc_s’ submission; and subject to provision of rule 18 of ITAT-Rules, 1963 perused material placed on record, case laws relied upon by both the rival parties and considered the facts in light of settled legal position which are forewarned to parties present. It is the plea of the appellant that, while filing return of income the claim for 80P(2) deduction in respective column/row of chapter VI-A deduction was made/raised by it, however due to system glitches the claim of 80P(2) ultimately emptied out wctb ‘0’ (zero) figure. By an application u/s 154 of the Act the assessee souabt to r_pl[]_ ‘0’ wctb ]orr_]t [mount of ₹30,85,941/-. The Ld. CPC however did not favour this version of assessee for a gunshot reasons that, there was ‘no’ [mount o` claim in the return of income filed by the assessee and thus there was no mistake apparent on record which could have been be rectified by it in response to [ss_ss__’s [pplc][tcon. In effect, the Ld. CPC denied to rectify the intimation finding no error in not allowing deduction u/s 80P(2) of the Act while processing the return u/s 143(1) of the Act. In an appeal, the Ld. NFAC echoed the view of Ld. AO in denying the claim \y pl[]cna r_lc[n]_ on tb_ ^_]cscon o` Hon’\l_ Ap_x Court cn ‘Goetze (India) Ltd. Vs CIT’ [2006, 284 ITR 323]. Divyadatta Digamber Nagari Sahakari Patsanstha Vs ITO ITA No.651/PUN/2024 AY:2013-14 ITAT-Pune Page 7 of 16 6 In the present case there is no dispute between the rival parties that; (a) the assessee is a co-operative credit society, (b) the assessee is in receipt of income eligible for deduction u/s 80P(2) of the Act and (c) the assessee has filed its return of income within the due date prescribed u/s 139(1) of the Act. The dispute is over raising of claim in the return of income filed by the assessee. The solitarily issue of allowability of deduction u/s 80P(2) of the Act in the present appeal brings out twofold dispute; (a) applicability of provisions of s/s (5) of section 80A of the Act and (b) scope of section 154 to rectify claim of deduction made in the return of income filed u/s 139(1) of the Act. We shall deal therewith in same chronological order. 7 Applicability of section 80A(5) of the Act; 7.1 Without the need of reproduction of section in verbum, it shall suffice to state that, for allowability of claim un^_r p[rt ‘C- Deduction in respect of certain income’ u/c VI-A of the Act, the assessee has to raise/make a claim in return of income. Failure to claim deduction in return of income would disentitle assessee from raising/making it anytime otherwise than in return. Thus, deduction cn r_sp_]t o` ]_rt[cn cn]om_ u/] ‘C’ o` ]b[pt_r VI-A of the Act available to assessee is allowed only if same is raised/made in either Divyadatta Digamber Nagari Sahakari Patsanstha Vs ITO ITA No.651/PUN/2024 AY:2013-14 ITAT-Pune Page 8 of 16 original return filed u/s 139(1) or belated return u/s 139(4) or revised return filed u/s 139(5) of the Act. However, this time luxury was allowed to assessee upto the AY 2018-19 and not thereafter. W.e.f. AY 2019-20 the former claim of deduction is permissible subject to twin riders viz; (a) claim must be raised/made in return and (b) return must have been filed within the due date prescribed u/s 139(1) of the Act. Since we are concerned with AY 2013-14 the only rider applicable for allowability of claim in relation to ‘C-Deduction in respect of certain income’ u/c VI-A of the Act to the present assessee is that claim to be made/raised in return of income and not otherwise but such return may it be original, or belated or revised return. 7.2 In the instant case, we observed from the records that, while computing the taxable income the appellant assessee did raise a claim of ₹30,85,941/- u/s 80P(2) of the Act, which during the uploading of electronic return transposed to ‘0’ (zero) owning to system glitches. The copy of computation of income or statement of income [‘COI / SOI’ b_r_[`t_r] pl[]_^ on Pa55-59 of paper book also confirms the former fact. This COI or SOI being an integral part of return of income leaves no doubt unturned in proving the fact that claim for deduction was indeed raised in return of income filed. Divyadatta Digamber Nagari Sahakari Patsanstha Vs ITO ITA No.651/PUN/2024 AY:2013-14 ITAT-Pune Page 9 of 16 7.3 We note that, on shifting of the regime of filing of return from physical mode to electronic mode, rule 12(2) of IT-Rules, 1962 specifically bars an assessee from filing any document along with the return of income. Such documents are required to be filed on receiving notice u/s 143(2)/142(1) selecting the return for scrutiny & not otherwise. The corollary of the aforesaid procedure is that the accompanying documents that is to say ‘statement of income or computation of income’ cs deemed to have been filed alongwith the electronic return of income. While deciding the similar issue the Hon'ble Delhi High Court in the case of ‘CIT Vs Nav Sansar Agro Products’ [2017, 392 ITR 399 (Del)] and by the Hon'ble Punjab and Haryana High Court in ‘Amritsar Transport Co. (P.) Ltd. Vs CIT’ [2005, 272 ITR 403 (P&H)] categorically held that not only the computation/statement of income but also notes appended/attached thereto forms integral part of the return filed by assessee. 7.4 In view of admitted factual matrix & former judicial precedents, there is hardly any sea to cross to come to a rightful & settled conclusion that, the assessee indeed claimed the 80P(2) in the return of income filed by it therefore dehors the Revenue from application of provisions of s/s (5) of section 80A of the Act. Divyadatta Digamber Nagari Sahakari Patsanstha Vs ITO ITA No.651/PUN/2024 AY:2013-14 ITAT-Pune Page 10 of 16 8 Scope of section 154 of the Act;, cognition 8.1 Without literal reproduction of section, it shall be purpose to state that, subject to other provisions of the Act, the income tax authorities are duty bond to amend any order or intimation passed under the Act with a view to rectify any mistake apparent from record either suo-motto under s/s (1) or when it is brought to notice by assessee under s/s (2) of section 154 of the Act. Such rectification is however can be carried out anytime within four years from the end of financial year in which order sought to be rectified was passed. Ostensibly the scope of rectification is bounded on threefold elements viz; (1) there must of a mistake or error (2) such mistake or error must be patent, bald-faced that is to say must be obvious & apparent on face of the record (3) the mistake or error be such whose discovery must not trigger any investigation. 8.2 The continuous software up-dation/development may bound leave out certain system glitches which may impact the details filled in the return of income. May due to such prevailing circumstances the deduction claimed in the return of income was not correctly transposed in the system which resulted into denial while e- processing the same. However it is also on record that, the Divyadatta Digamber Nagari Sahakari Patsanstha Vs ITO ITA No.651/PUN/2024 AY:2013-14 ITAT-Pune Page 11 of 16 acknowledgement of filing of e-return generated by the software resulted into NIL demand (keeping refund claimed by the assessee intact) which can impliedly be possible when claim of deduction is considered & allowed to the assessee. 8.3 From the verification of COI/SOI as we already concluded that, the assessee did raise the claim for 80P(2) deduction in its return of income but for the sake of adjudication if it assumed that, through ov_rscabt or cn[^v_rt_ntly tb_ [ss_ss__ r[cs_^/]l[cm_^ ‘0’ (Z_ro) amount of deduction in its return instead of actual claim of ₹30,85,941/-, the assessee in our considered view is still very much entitled to rectify the same as it satisfy threefold conditions subscribed by section 154 of the Act. Tb_ ‘0’ `caur_ o` ]l[cm eventually appearing in the return of income instead of ₹30,85,941/- either on account of system glitches or owing to transcriptional error, is bare-faced, blatant & apparent on record when verified with COI/SOI whose discovery requires/triggers no long driven investigation hence is very much rectifiable u/s 154 of the Act. 8.4 We have also considered the user manual published / available on tb_ R_v_nu_’s port[l [https://www.incometax.gov.in/iec/foportal/help/how-to-perform-rectification] Divyadatta Digamber Nagari Sahakari Patsanstha Vs ITO ITA No.651/PUN/2024 AY:2013-14 ITAT-Pune Page 12 of 16 which provides for raising of rectification request. This manual does entitle & authorise the assessee to file/raise rectification request for correcting any claim u/s 80P of the Act under step 5.6a under the head ‘Income Tax Rectification: Return Data Correction (Offline)’. The manual intractably provides that the rectification is permissible by correcting the required data/figures from the return of income previously filed by filing / uploading a corrected or rectified xml file/return in offline mode. And availing the said option, the assessee admittedly corrected the erroneous ‘0’ (zero) figure of 80P(2) claim with correct figure of ₹30,85,941/-. However, while acting upon the aforestated rectification request the Revenue failed carry out any implicit test before coming to denial conclusion as to; ([) ‘whether the claim for 80P(2) deduction was made in the return of income? (b) ‘why ‘0’ amount of inadvertent/erroneous claim cannot be rectified u/s 154 of the Act?’ when the rectification manual in fact provides for the same. The Revenue in our considered view has simply sunk the issue without placing cognitive findings, on the other hand it could hardly displace the plea of the appellant regarding subsisting of such a technical issue in initial phase when electronic filings mandated for the class of the appellant assessee. Divyadatta Digamber Nagari Sahakari Patsanstha Vs ITO ITA No.651/PUN/2024 AY:2013-14 ITAT-Pune Page 13 of 16 8.5 This be apt to two things; (a) that, the assessee did raise/make a ]l[cm cn cts r_turn o` cn]om_ `cl_^ u/s 139(1) o` tb_ A]t [n^ (\) ‘0’ (zero) claim is also a claim which can be amenable for rectification on standalone basis u/s 154 of the Act. 8.6 Coming to amenability of transcription error occurred while e- filing the return of income or e-processing the return by the Ld. CPC we are mindful to the decision of co-ordinate benches in ‘Shrikant Real Estates (P.) Ltd. Vs ITO’ [2012, 26 taxmann.com 265] where a clerical error occurred in e-return filing as the short term capital gain had not been shown under schedule-CG of e-return filed by assessee, the co-ordinate bench held that ‘in the present system of e-filing of return which is totally dependent upon usage of software, it was possible that some clerical errors may occur at the time of entering the data in the electronic ITR/form, such errors/mistakes are to be rectified u/s 154 of the Act’. Advancing further in ‘ITO Vs MSEB Employees Credit Co-op. Society’ [2014, 50 taxmann.com 210] the co-ordinate bench also allowed the claim of 80P(2) deduction to the assessee made through rectified return filed u/s 154 of the Act where owning to system glitches assessee could not claim in the original return of income filed by it. Divyadatta Digamber Nagari Sahakari Patsanstha Vs ITO ITA No.651/PUN/2024 AY:2013-14 ITAT-Pune Page 14 of 16 8.7 Once it is on record that the assessee is a co-operative society engaged in providing credit facility to its member and the income earned by it during such business activities is qualified for deduction u/s 80P(2) o` tb_ A]t, [ ]l[cm _rron_ously tr[nspos_^ to ‘0’ (Z_ro) cn the return or inadvertently erred in claiming eligible deduction which requires correction in accordance with law, then the tax authorities pursuant to binding circular and judicial precedents were duty bound to correct the same which unfortunate they failed. In view of the CBDT 14 (XL–35) 1955 circular dt. 11/04/1955, the mistake/error if any committed by assessee or crept out due to system glitches; it should be taken care properly by the Revenue Authorities. The ignorance or denseness of assessee cannot be the baton for silence on the part of Revenue Authorities. The scope of the former circular elaborately finds explained in ‘CIT Vs Ahmedabad Keiser-E-Hind Mills Co. Ltd’ [1981, 128 ITR 486 (Gud)], ‘Parekh Brothers Vs CIT’ [1984, 15 Taxman 539 (Ker)], ‘Dattatraya Gopal Shette Vs CIT’ [1984, 150 ITR 460 (Bom)], ‘Rajeev Biswas Vs UOI’ [2023, 459 ITR 36 (Cal)], which compels the tax authorities to allow the correct entitlements to the taxpayers assessee in accordance with law removing the error/mistake if any made in the return of income. Divyadatta Digamber Nagari Sahakari Patsanstha Vs ITO ITA No.651/PUN/2024 AY:2013-14 ITAT-Pune Page 15 of 16 9. Coming to R_v_nu_’s strona [v_rm_nt for application of ratio laid in ‘Goetze (India) Ltd. Vs CIT’(supra) to the present case, we respectfully state that, the assessee in that case was claiming deduction through a letter that is otherwise than revision of return, dissimilar to the present case where the appellant assessee in first place (a) did raise the claim in original return of income filed by it m[y ct \_ ‘0’ (zero) and further (b) the appellant assessee sought the rectification of claim towards deduction by filing rectified return which is pre-requisite in the present electronic regime, unlike then prevailing situation in ‘Goetze (India) Ltd. Vs CIT’(supra). 10. Insofar as the application of ration laid in ‘EBR Enterprises Vs UOI’ (supra) is concerned, we respectfully note that, the issue before their lordship in that case was also that, the assessee raised a 80IB(10) claim first-time before revisionary authority u/s 264 of the Act through application that is also otherwise than in return. Pressing s/s (5) of section 80A of the Act the revisionary authority denied the claim as it was not raised in the return of income. The factual difference in present case first of all is that; claim for deduction was made in the original return of income & error crept-in was corrected via permissible rectified return filed within the period of limitation. Divyadatta Digamber Nagari Sahakari Patsanstha Vs ITO ITA No.651/PUN/2024 AY:2013-14 ITAT-Pune Page 16 of 16 11. In upshot, the views canvassed vis-a-vis adopted by the tax authorities below in denying the deduction and rectification in our considered opinion are not in conformity with legal position and binding judicial precedents on both counts, hence deserves to be vacated. 12. Resultantly, we set-aside the impugned order and direct the Ld. CPC to reprocess the rectified return filed by the appellant assessee whereby it corrected the amount of claim for deduction u/s 80P(2) of the Act and allow the deduction in accordance with law. The sole & substantive ground thus accordingly stands allowed. 13. In result, the appeal of the assessee is ALLOWED in above terms. In terms of rule 34 of ITAT Rules, order pronounced in open court on this Tuesday 13th day of August, 2024. -S/d- -S/d- VINAY BHAMORE G. D. PADMAHSHALI JUDICIAL MEMBER ACCOUNTANT MEMBER प ु णे / PUNE ; ददना ां क / Dated : 13th day of August, 2024. आदेश की प्रनिनलनप अग्रेनषि / Copy of the Order forwarded to : 1.अपीलाथी / The Appellant. 2. प्रत्यथी / The Respondent. 3. The Pr.CIT, -Concerned 4. The NFAC, Delhi/CIT(A)Concerned 5. DR, ITAT, SMC Bench, Pune 6. गार्डफ़ाइल / Guard File. आदेशान ु सार / By Order वररष्ठ दनजी सदिव / Sr. Private Secretary आयकर अपीलीय न्यायादधकरण, प ु णे / ITAT, Pune