SOLAPUR DIST M S K SAMITI H MASTER T AND N T PATH MYDT PANDHARPUR, PANDHARPUR V. ITO, WARD 2, PANDHARPUR

ITA 804/PUN/2023

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 3455 (ITAT-PUNE)
• Duration Of Justice: 7 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2024
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 14-02-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 09-07-2023
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Section: 144; 142(1); 10AA; 80IB; 10B; 80P; 250; 80IA; 139(1); 139(4)

Judgement Text

।आयकर अपीलीय अिधकरण ”बी” Ɋायपीठ पुणेमŐ। IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES “B” :: PUNE BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND DR. DIPAK P. RIPOTE, ACCOUNTANT MEMBER आयकर अपील सं. / ITA No.804/PUN/2023 िनधाᭅरण वषᭅ / Assessment Year : 2017-18 Solapur Dist M S K Samiti H Master T and N T Path MydtPandharpur, 3980, Station Road, Pandharpur. Maharashtra – 413304. PAN: AANAS9890E V s The Income Tax Officer, Ward-2, Pandharapur. Appellant/ Assessee Respondent /Revenue Assessee by None Revenue by Shri Sourabh Nayak – Addl.CIT(DR) Date of hearing 15/02/2024 Date of pronouncement 08/03/2024 आदेश/ ORDER PER DR. DIPAK P. RIPOTE, AM: This is an appeal filed by the assessee against the order of Ld.Commissioner of Income Tax(Appeals)[NFAC], passed under section 250 of the Income Tax Act, 1961 dated 11.05.2023 emanating from assessment order dated 30.07.2019passed under section 144 r.w.s 144A of the Income Tax Act, 1961. The assessee has raised the following grounds of appeal : “1. The assessee was in presumption that Co Operative Societies income is Exempt under 80P Generally maximum co ITA No.804/PUN/2023 Solapur Dist M S K Samiti H Master T and N T Path Mydt Pandharpur [A] 2 operativesocieties are under this presumption. So that they have not Tiled Income Tax return The statutory audit for FY 2016 17 was carried out by the Society as required by the Co-Operative Department and there was no proper guidance with regard to filing of income tax returns. Therefore, not filing of income tax return was unintentional and same may be condoned, 2. The provisions of Section 8OA (5) of the Act are directory and not mandatory and therefore deduction under Section MOP cannot be denied by making the provision section 80A (5) of the Act We relied upon decision of ITAT Delhi in case of the Fibre fill Engineers Vs. CIT (2017) 177 TTJ 556 (Del.) wherein it was held that the provision of Sec 80A (5) are directory in nature and not mandatory. The said section cannot be evoked for denying the deduction u/s 80Peven if ITR is nor filed. 3. Also, Section 80AC was amended wef 01.04.2018 prospectively. Before 31.03.2018 Section 80AC was applicable to any deduction is admissible under section 80-lA or section 80-1AB or section 80-1B or section 80-IC or section 80-ID or section 80-iE only. The Current case of Society is for FY 2016-17 so we are in presumption that 80P is allowable to us. 4. Also, In Current Decision of 1TAT-SMC-C-BENCH- BANGLORE (ITA No.614/Bang/2021) The Tribunal has allowed the deduction under section 80P even if return is not filed. The copy of Order is attached herewith. 5. The assessee has given notice details to their tax consultant but due to tax consultants delay response not given to 142 (1) 6. "On the facts and circumstances of the case, the order passed by the learned AO is bad, both in the eye of law and on facts. 7. On the facts and circumstances of the ease, the ld.AO has erred, both on facts and in law in confirming the addition made on the basis of the material collected. 8. On the facts and circumstances of the case, the Id. AO has erred, both on facts and in law in confirming the said action of the A.O. ignoring the fact that the failure to file return under Section 139(1),139(4) cannot denying deduction under section 80P. 9. AO failed provide explanation that addition made of Rs 7022690 /- under which head of income. 10. On the fact and circumstances of the case id. AO has erred both fact and law by Addition of surplus Amount to Rs 7022690/- By ITA No.804/PUN/2023 Solapur Dist M S K Samiti H Master T and N T Path Mydt Pandharpur [A] 3 absence of proper explanation by supporting section in given order. 11. Firstly C1T(A) has while disallowing Appeal has placed reliance on the Case “Shree Datta Prasad SahakariPatsnathsa Ltd Vs. ITO (Mumbai ) 2022" - In this case we observed that Assessee has filed the return but not claimed deduction u/s 80P. Our case not similar to above. Also in order at Point no.10 the in case of ITO vs MSEB Employees Co-operative Credit Society Ltd (supra), the co- ordinate bench has held that even if the assessee has not claimed a deduction in 9 ITA 6029/Mum/2019 the return of income, the appellate authorities have power to allow deduction which is allowable under the provisions of the Act So we request Appelate Authority to Allow us to File Income Tax Return and Claim deduction under section 80P. 12. Secondly CIT(A) has while disallowing Appeal has placed reliance on the Case "Medi Seva SahakariMandali Ltd.,... vs The Adit (Cpc), Bangalore,... on 31 October, 2022" - In this we observed that the Case is basically relates to AY 2019-20 and the Appelate Tribunal disallowed the deduction u/s 80P on the basis of section 80AC of income Tax Act 1961. But our case relates to AY 2017-18. Section 80AC was amended wef 01.04.2018 prospectively. Before 31.03.2018 Section 80AC was applicable to any deduction is admissible under section 80-IA or section 80-IAB or section 80-1B or section 80-IC or section 8Q-1D or section 80-IE only. The Current case of Society is for FY 2016-17 so we are in presumption that 80P is allowable to us. 13. Thirdly has while disallowing Appeal has placed reliance on the Case "The Lanjani Co-Operative Agri... vs Dcit,Cpc/Ito-Ward” - In this case we observed that the Case is basically relates to AY 2019- 20 and the Appelate Tribunal disallowed the deduction u/s SOP on the basis of section 80AC of income Tax Act 1961. But our case relates to AY 2017-18. And Section 80AC was amended wef 01.04.2018 prospectively. 14. We also keep reliance on the following cases also where deduction under section 80P was allowed even if Return was not filed or filed in response to 148. a) Prathamika Krishi Pattina, Sahakara Sangha Ltd VS. ITO, ITA No.614/Bang/2021 b)M/S.Kodiyeri Service Co-Op Bank VS ITO ITA No 340/Coch/2012 c) Chirakkal service co-operative bank ltd. kannur vs. CIT 15. The assessee request to allow us to file the IT Return for the relevant AY and Claim 80P. Since the CIT(A) in his order that they ITA No.804/PUN/2023 Solapur Dist M S K Samiti H Master T and N T Path Mydt Pandharpur [A] 4 are not having powers to allow us to file return. 16. The assessee request to add, delete or change grounds of appeal before 1TAT Appeal. 17. Likely to attend person ally/video call for further submission.” Submission of ld.Authorised Representative(ld.AR) : 2. No one appeared on behalf of the assessee. Case called twice. 2.1 On 08/02/2024, the case was adjourned as no one had appeared for hearing on behalf of the assessee. Similarly case was adjourned on 13/02/2024 as no one appeared on behalf of the assessee. Submission of Ld.Departmental Representative (DR) : 3. The Ld.DRfor the Revenue relied on the order of the ld.CIT(A) and the AO. Findings and Analysis : 4. We have heard the Ld.DR for the Revenue and perused the records. 4.1 In this case, the Assessee had not filled Return of Income for A.Y.2017-18. It is mentioned in the assessment order that the Assessee had not filed return of Income for earlier years also. The Assessing Officer(AO) received information that the assessee had ITA No.804/PUN/2023 Solapur Dist M S K Samiti H Master T and N T Path Mydt Pandharpur [A] 5 deposited cash of Rs.34,11,000/- in the accounts with Solapur District Central Co Operative Bank Ltd, Pandharpur. Since assessee had not filed return of Income for AY 2017-18. The AO issued notice u/s 142(1) of the Act, on 12/12/2017 asking the assessee to file the return of Income for A.Y.2017-18. The said notice u/s 142(1) was duly served on the assessee on 20/12/2017. Subsequently various notices were issued to the assessee. The Assessee filed submission on 08/11/2019. AO noted in the assessment order that it was observed from the Profit and Loss account of the assessee that Assessee had earned Net Profit of Rs.70,22,686/- . The AO accordingly passed assessment order Assessing the Total Income of the assessee at Rs.70,22,686/-. (i.e. as per the Net Profit Shown in the Profit and Loss account by the assessee). 5. Aggrieved by the Assessment Order, the Assessee filed Appeal before the Ld.Commissioner of Income Tax(Appeal).The main grievance of the assessee before the Ld.Commissioner of Income Tax appeal was that the AO had denied benefit of deduction under section 80P of the Act. The Ld.CIT(A) upheld the Assessment Order. ITA No.804/PUN/2023 Solapur Dist M S K Samiti H Master T and N T Path Mydt Pandharpur [A] 6 6. Aggrieved by the order of the Ld.CIT(A), the assessee has filed appeal before this ITAT. 6.1 The assessee has raised total 8 grounds but the issue is denial of benefit of deduction under section 80P of the Act. 7. We have perused the Assessment Order and Ld.CIT(A)’s order, nowhere it is mentioned that Assessee had made a claim for deduction u/s 80P of the Act for a particular Income. Before us, the Assessee had not filed a single document to demonstrate that the Assessee had made claim for Deduction u/s 80P of the Act. It means the assessee had never claimed any deduction u/s80P of the Act. It is a fact that the Assessee had not filed Return of Income. Hence, the AO has rightly not allowed the deduction u/s 80P of the Act as the assessee had never claimed it before the AO during the assessment proceedings as it appears from the assessment order. 7.1 The Section 80A(5) is reproduced here under for ready reference: “Deductions to be made in computing total income. 80A. (1) In computing the total income of an assessee, there shall be allowed from his gross total income, in accordance with and subject to the provisions of this Chapter, the deductions specified in sections 80C to 80U. (2) The aggregate amount of the deductions under this Chapter shall not, in any case, exceed the gross total income of the assessee. (3) ........ ITA No.804/PUN/2023 Solapur Dist M S K Samiti H Master T and N T Path Mydt Pandharpur [A] 7 (4) ............... (5) Where the assessee fails to make a claim in his return of income for any deduction under section 10A or section 10AA or section 10B or section 10BA or under any provision of this Chapter under the heading "C.—Deductions in respect of certain incomes", no deduction shall be allowed to him thereunder.” 7.2 Thus, as per Section 80A(5) assessee has to make a claim for deduction u/s 80P of the Act in the Return of Income. In this case it is an admitted position that No Return of Income had been filed by the assessee. Also we have mentioned in earlier paragraph that no document has been filed by the assessee to prove that Assessee had made a claim for deduction u/s 80P of the Act before the AO. 7.3 The Hon’ble Supreme in the case of Pr.CIT Vs. Wipro Ltd., [2022] 288 Taxman 491 (SC)has observed as under : Quote“ ... in a taxing statute the provisions are to be read as they are and they are to be literally construed, more particularly in a case of exemption sought by an assessee.” Unquote. 7.4 The Hon’ble Bombay High Court in the case of EBR Enterprises Vs. Union of India 415 ITR 139 (Bombay), dated 4 th June, 2019 has held as under : Quote, “ 5. As per this provision, where the assessee fails to make a claim in his return of income for any deduction under Section 10A or Section 10AA or Section 10B or Section 10BA or under any provision of the said Chapter - VI A under the heading "C.-Deduction in respect of certain incomes", no deduction would be allowed to him under the said provision. In plain terms, this Sub Section (5) of Section 80A of the Act imposes an additional condition for claim of deduction in relation to income under any of the provisions mentioned therein. Apart from the requirement of fulfillment of individual set of respective conditions for the purpose of claiming the concerned deduction, this plenary condition requires that the claim ought to have ITA No.804/PUN/2023 Solapur Dist M S K Samiti H Master T and N T Path Mydt Pandharpur [A] 8 made in the return of income by the assessee and if the assessee fails to make such claim in the return of income, such deduction shall not allowed to him under the relevant provision. Admittedly, in the present case, the Petitioners had not raised any such claim in the return of income. In plain terms, the claim of the Petitioners under Section 80-IB (10) of the Act would be hit by Sub Section (5) of Section 80A of the act. .......................... .......... What Sub Section (5) of Section 80A of the Act mandates is that, if the assessee fails to make a claim in his return of income for any deduction under the provisions specified therein, the same would not be granted to the assessee. This condition or restriction is not relatable to the Assessing Officer or the Income Tax Authority. This condition attaches to the claim of the assessee and has to be implemented by the Assessing Officer, CIT or the Appellate Tribunal as the case may be. There is no indication in Sub Section (5) of Section 80A of the Act as to why the restriction contained therein amounts to limiting the power of Assessing Officer but not that of Commissioner.” Unquote. 7.5 Thus, the Hon’ble Jurisdictional High Court categorically held that as per Section 80A(5) of the Act, to claim deduction under section 80IB assessee had to make the claim of impugned deduction in the Return of Income. It means to claim Deduction under Chapter VIA under the heading "C.—Deductions in respect of certain incomes the Assessee has to claim the deduction in the Return of Income. 7.6 The Hon’ble High Court of Kerala in the case of Kuthuparamba Range Kalluchethu Vyavasaya Thozhilali Sahakarana Sangham Ltd Vs. CIT 257 Taxman 151 (Kerala) [20- 06-2018] held as under : ITA No.804/PUN/2023 Solapur Dist M S K Samiti H Master T and N T Path Mydt Pandharpur [A] 9 Quote, “The question raised in one of the appeals [I.T.A.No.273 of 2015] is whether the Society-assessee can claim a deduction when no return was filed. . 5. ...... Section 80P comes under sub-chapter 'C' "Deduction in respect of certain incomes". A claim for such deduction has to be made in the return of income inter alia of the deduction permissible under Section 80P for reason of it being allowed to Co-operative Societies. We also notice a Division Bench decision of this Court in Chirakkal Service Co-operative Bank Ltd. v. CIT [2016] 68 taxmann.com 298/239 Taxman 417/384 ITR 490 (Ker.), which relied on the aforesaid provision to decline exemption insofar as a similar situation in which no return was filed. In such circumstance, the failure to file a return under Section 139; even when a notice was issued under Section 142(1), is not a technical defect. We also do not think that the decision in Yokogawa India Ltd. applies, since deduction as spoken of in Section 80A(1) with reference to the provision under sub-chapter 'C' being 80P, is with respect to the institution being a Co-operative Society. Only when a return is filed claiming deduction under Section 80P, the AO will be enabled to first consider the question of eligibility of the assessee and then consider the allowability of deduction from the total income. We, hence, answer the question of law framed in I.T.A.No.273 of 2015 against the assessee and in favour of the Revenue.” Unquote. 7.7 The Hon’ble Kerala High Court in the case of Nileshwar Rangekallu Chethu Vyavasaya Thozhilali Sahakarana Sangham Vs. CIT 459 ITR 730 (Kerala) [14-03-2023], has held as under : Quote, “ 1. On a consideration of the rival submissions and on a perusal of the statutory provisions, we find that a reading of section 80A(5) and Section 80AC of the IT Act as they stood prior to 1-4- 2018, when the latter provision was amended by Finance Act 2018, would reveal that the statutory scheme under the IT Act was to admit only such claims for deduction under section 80P of the IT Act as were made by the assessee in a return of income filed by him. That return can be under sections 139(1), 139(4), 142(1) or section 148, and to be valid, had to be filed within the due date contemplated under those provisions. Under section 80A(5), the claim for deduction under section 80P could be made by an assessee in a return filed within the time prescribed for filing such returns under any of the above provisions. The amendment to Section 80AC with effect from 1- 4-2018, however, mandated that for an assessee to get a deduction under section 80P of the IT Act, he had to furnish a return of his income for such assessment year on or before the due date specified in ITA No.804/PUN/2023 Solapur Dist M S K Samiti H Master T and N T Path Mydt Pandharpur [A] 10 section 139(1) of the IT Act. In other words, after 1-4-2018, even if the assessee makes his claim for deduction under section 80P in a return filed within time under sections 139(4), 142(1) or section 148, he will not be allowed the deduction, unless the return in question was filed within the due date prescribed under section 139(1). Thus, it is clear that the statutory scheme permits the allowance of a deduction under section 80P of the IT Act only if it is made in a return recognised as such under the IT Act, and after 1-4-2018, only if that return is one filed within the time prescribed under section 139(1) of the Act. As the return in these cases, for the assessment years 2009-10 and 2010-11, were admittedly filed after the dates prescribed under sections 139(1) and 139(4) or in the notices issued under section 142(1) and section 148, the returns were indeed non-est and could not have been acted upon by the Assessing Officer even though they were filed before the completion of the assessment. 12. There is yet another aspect of the matter. The requirement of making the claim for deduction in a return of income filed by the assessee can be seen as a statutory pre-condition for claiming the benefit of deduction under the IT Act. It is trite that a provision for deduction or exemption under a taxing Statute has to be strictly construed against the assessee and in favour of the Revenue. Thus viewed, a failure on the part of an assessee to comply with the pre- condition for obtaining the deduction cannot be condoned either by the statutory authorities or by the courts. 13. It is in the backdrop of the aforesaid discussion that we must consider the findings of a Division Bench of this Court in Chirakkal Service Co-operative Bank Ltd. [supra]. The findings therein, that appear to suggest that a claim for deduction under section 80P can be entertained even if it is made in a return filed beyond the time permitted under the IT Act, ignores the perspective that sees the requirement of the claim for deduction being made in a valid return as a pre-condition for obtaining the benefit of the statutory deduction. The said findings also fly in the face of the express statutory provisions that requires the claim to be made in a return filed by the assessee, by which term is meant a valid return under the Act, and therefore have necessarily to be seen as per incuriam. We also find that the subsequent amendments to section 80AC by the Finance Act 2018 fortifies the view that we have taken for, it makes the claim for deduction under section 80P conditional on filing a return within the due date prescribed under section 139(1) of the IT Act. In other words, the pre-condition for claiming the deduction under section 80P of the IT Act has now been made more stringent by reducing the time available to an assessee for making the claim .............. ITA No.804/PUN/2023 Solapur Dist M S K Samiti H Master T and N T Path Mydt Pandharpur [A] 11 In the light of the aforesaid discussion, we find that the above questions of law have to be answered in favour of the Revenue and against the assessee, and we do so. Thus, these I.T. Appeals are disposed by answering the substantial questions of law raised therein, in favour of the Revenue and against the assessee.” Unquote. 7.8 The Hon’ble Gujarat High Court in the case of Rachna Infrastructure Pvt. Ltd., Vs. Pr.CIT 138 taxmann.com 416 (Gujarat)[15-02-2022] held that assessee was not eligible for deduction u/s 80IA as per Section 80A (5) of the Act as Assessee had not claimed the deduction in the Return of Income. 7.9 Thus, the Law laid down by the Hon’ble Jurisdictional High Court(supra) and Hon’ble Kerala High Court is that Assessee has to claim Deduction Under Chapter VIA of the Act under the heading "C.—Deductions in respect of certain incomes” in the Return of Income. Also Hon’ble Keral High Court (supra) further held that the Return of Income has to be filed within the time mentioned in the Section 139(1) of the Act to claim the impugned deduction. 8. In these facts and circumstances of the case, as the Assessee had not filed the Return of Income for A.Y.2017-18, respectfully following the Hon’ble High Courts(supra), we hold that the assessee is not eligible for deduction under section 80P of the Act. ITA No.804/PUN/2023 Solapur Dist M S K Samiti H Master T and N T Path Mydt Pandharpur [A] 12 Accordingly we uphold the Assessment Order.Accordingly, all the grounds raised by the assessee are dismissed. 9. The Assessee has relied on following decisions of ITAT : Fibre fill Engineers Vs. CIT (2017) 177 TTJ 556 (Del.) 1TAT-SMC-C-BENCH-BANGLORE (ITA No.614/Bang/2021) a) Prathamika Krishi Pattina, Sahakara Sangha Ltd VS. ITO, ITA No.614/Bang/2021 b) M/S.Kodiyeri Service Co-Op Bank VS ITO ITA No 340/Coch/2012 c) Chirakkal service co-operative bank ltd. kannur vs. CIT 9.1 All the decisions relied by the assessee are of ITAT, wherein they have not considered the above referred decisions of the Hon’ble Bombay High Court, the Hon’ble Kerala High Court and the Hon’ble Gujarat High Court. Therefore, as per law of precedence, we have to follow the Law laid down by the Hon’ble High Court(supra).Therefore, assessee’s reliance on the ITAT Decisions is of no use to assessee. 10. In the result appeal of the assessee is dismissed. Order pronounced in the open Court on 8 th March, 2024. Sd/- Sd/- (S.S.GODARA) (DR. DIPAK P. RIPOTE) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / Pune; ᳰदनांक / Dated : 8 th Mar, 2024/ SGR* ITA No.804/PUN/2023 Solapur Dist M S K Samiti H Master T and N T Path Mydt Pandharpur [A] 13 आदेशकᳱᮧितिलिपअᮕेिषत / Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant. 2. ᮧ᭜यथᱮ / The Respondent. 3. The CIT(A), concerned. 4. The Pr. CIT, concerned. 5. िवभागीयᮧितिनिध, आयकरअपीलीयअिधकरण, “बी” बᱶच, पुणे / DR, ITAT, “B” Bench, Pune. 6. गाडᭅफ़ाइल / Guard File. आदेशानुसार / BY ORDER, // TRUE COPY // Senior Private Secretary आयकरअपीलीयअिधकरण, पुणे/ITAT, Pune.