M/s. Shri Vedavyas Co-Operative Credit Society Limited, Hubli V. The Income Tax Officer, Ward - 2(1), Hubli

ITA 823/BANG/2022

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The case revolves around the disallowance of a deduction claimed by Shri Vedavyas Co-operative Credit Society Ltd. under section 80P of the Income Tax Act, 1961. The assessee initially filed its return on 08.09.2018, which did not claim any deductions. A revised return was filed on 16.11.2018, claiming deductions and a refund. The return was processed by the CPC, which disallowed the deduction on the grounds that the return was filed beyond the due date. The assessee's appeal to the CIT(A) was dismissed, leading to the current appeal before the Tribunal. The Tribunal's decision was based on the interpretation of section 80AC, which mandates adherence to the due date for filing returns to claim deductions under section 80P.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 299826 (ITAT-BANGALORE)
• Duration Of Justice: 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 11-01-2023
• Assessment Year: 2018-2019
• Appeal Filed On: 18-09-2022
• Other Referred Cases: Veerappampalayam Primary Agricultural Cooperative Credit Society Ltd vs DCIT, Panja CA Bank Vs. ITO, PCIT Vs. Wipro Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Revised return
• Section: 63; 154; 139(5); 10B; 143(1); 80P; 250; 139(1); 44AB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “SMC - A” BENCH : BANGALORE BEFORESHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER ITA No.823/Bang/2022 Assessment Year : 2018-19 Shri Vedavyas Co-operative Credit Society Ltd., Laxmi Narain Squaredharwad, Hubli, Karnataka – 580 020. PAN : AAIAS 1833 N Vs. ITO, Ward – 2(1), Hubli. APPELLANTRESPONDENT Assessee by:Smt. Sheetal Borkar, Advocate Revenue by :Shri.Ganesh R. Gale, Standing Counsel Date of hearing:12.01.2023 Date of Pronouncement:30.01.2023 O R D E R This is an appeal filed by the assessee against the order passed by the National Faceless Appeal Centre (NFAC), Delhi, dated 20.09.2022, under section 250 the Income Tax Act, 1961 (hereinafter called ‘the Act’), rejecting the claim made by the assessee for deduction under section 80P of the Act. The assessee raised the following grounds of appeal : 1.The learned CIT (A) has erred in passing the order in the manner in which he did. 2.On the facts and circumstances of the case and in law, the Id. CIT (A) has erred in law by disallowing the claim u/s 80P(2)(a)(i) of the Act 3.The learned CIT (A) failed to appreciate thefact that the assessee has filed the OriginalReturn on 08-09-2018 which ITA No.823/Bang/2022 Page 2 of 11 is within the due date prescribed u/s 139(1) for the assessee in as much as the accounts of the society are subject to Audit as prescribed under section 63 of the Karnataka Cooperative Societies Act, 1959. 4.The learned CIT (A) failed in appreciating that appellant has claimed the deduction u/s 80P(2)(a)(i) by filling revised return well within the time allowed und er the statue hence there is mistake apparent in not considering the deduction as claimed by the appellant. 5.The l earned CIT (A ) further fa il ed t o apprec iate that th e appellant fil ed both Original and th e Rev ised R eturn with in time allow ed und er th e statue for allow ing th e claim of t he appell ant. 6.The learned CIT (A) further failed toap prec iat e t ha t t h e CP C err ed in co n sid erin g th e R E VI S ED R ETU R N a s "O R IGI NA L " w hil e in co m e ad o pt ed is as p er "R EVI S E D R ET UR N " 7.The learned CIT (A) further failed toa pprec iate t hat th e CPC err ed in c onsid ering th e d ue dat e for f il in g th e R eturn f or t he a ssessee is 3 1-08-201 8 ins tead of 31 -1 0- 20 18 as ap pl ic able to C oop er a tiv e S oc ieties as th eir bo ok s of a cco unt are required to be aud ited. 8.With out prejudic e the disallowances as confirmed by th e learned CIT (Appeals) a re arbitrary excessiv e and oug ht to be d elet ed . 9.The learned CIT (A) erred in upholding theinterest levied. 10.For these and such other ground s that may be urged at the time of hearing the Appellant prays that the appeal may be allowed. 2. The brief facts of the case are that assessee is a Co-operative Society. The assessee filed its return of income on 08.09.2018 declaring income of Rs.13,95,420/- and paid tax of Rs.4,77,790/- without claiming deduction under section 80P(2)(a)(i) of the Act. Subsequently, return was revised on 16.11.2018 declaring gross total income of Rs.23,02,007/- and the entire income was claimed as ITA No.823/Bang/2022 Page 3 of 11 deduction under section 80P of the Act and refund was claimed of Rs.4,77,790/-. In the revised return, there was income from business and profession declared at Rs.13,95,419/- and the assessee suomotu made disallowance under section 40(a)(ii) of the Act of Rs.9,06,588/- resultantly the income was Rs.23,02,007/-. The return was processed on 07.06.2019 denying the claim of deduction of Rs.23,02,007/- by observing that return of income was filed belatedly and demand was raised of Rs.3,49,319/-. Aggrieved from the above order, the assessee filed rectification application on 27.11.2021. The AO passed order under section 154 of the Act on 29.04.2022 rejecting the rectification request by observing that there is no mistake apparent on record as stated in the rectification application under section 154 of the Act. 3. Aggrieved from the above order, the assessee preferred an appeal before the CIT(A). The learned CIT(A) also dismissed the appeal of the assessee by observing as under: “5. I perused the grounds of appeal, Intimation u/s 154, Appellant's submission andmaterial available on record. My observations in respect of the grounds raised by the appellant are as follows: 6.1 In the Intimation u/s 143(1), CPC, Bangalore disallowed deduction ofRs.23,02,0071- claimed u/s 80P under Chapter VI-A. 6.2 In the grounds of appeal, the appellant contested that — (i) ITO erred in refusingto rectify the intimation passed u/s 143(1) holding that there is no mistake apparent from records (ii) Assessee being a cooperative society have claimed deduction ITA No.823/Bang/2022 Page 4 of 11 u/s 80(P)(2)(a)(i) for which they are eligible while the CPC has disallowed this claim without assigning any reason which obviously is apparent from the records which the learned Income Tax Officer failed to appreciate. 6.3 As per the Intimation u/s.143(1) dt.7/6/2019, due date for filing the original return was 31/08/2018 and the assessee filed the return of income on 16/11/2018. As per section 80AC deduction under any provision of the Chapter under the heading "C.—Deductions in respect of certain incomes" shall not be allowed to an assessee unless the assessee furnishes a return of income for such assessment year on or before the due date specified under sub-section (1) of section 139. The provisions of clause (ii) of section 80AC are applicable from A.Y 2018-19 onwards and hence the first return affected by the amended provision is the return related to the F.Y 2017-18 relevant to the A.Y 2018-19. 6.4 [2022] 138 taxmann.com 571 (Madras) AA520 Veerappampalayam Primary Agricultural Cooperative Credit Society Ltd vs DCIT (A.Y 208-19), Hon'ble High Court of Madras held - Provisions of section 80AC(ii) make it clear that any deduction that is claimed under Part C of Chapter VIA would be admissible only if return of income in that case were filed within prescribed due date. 6.5 In the present appeal, as stated above the appellant did not furnish the returnof income for the A.Y 2018-19 on or before the due date specified under sub-section (1) of section 139. Hence, the deduction u/s 80P cannot be allowed to the appellant. For the above stated reasons and respectfully following the above stated decision of the Hon'ble High Court of Madras, the disallowance of deduction claimed u/s 80P is upheld. ITA No.823/Bang/2022 Page 5 of 11 4. Aggrieved from the above order, the assessee filed appeal before the Tribunal. The learned AR submitted that the CIT(A) is not justified for accepting the claim of deduction under section 80P(2)(a)(i) of the Act since the assessee’s books of accounts were required to be audited under Karnataka State Co-operative Societies Act under section 63. The return was originally filed on 08.09.2018 which was and within the specified time limit because the books of accounts were audited under the Co-operative Societies Act. Therefore, the provision of section 139(1) explanation (ii) supports the case of the assessee and due date for filing the return of income is to be considered on 31.10.2018 (extended due date) as notified by the CBDT. The assessee duly revised the return of income within the time allowed and claimed the deduction. she also submitted that there was a mistake apparent on the record because the reasons were not assigned while disallowing the claim of the assessee during the course of processing of the return under section 143(1) of the Act. The learned AR relied on the judgment of the C-ordinate Bench of the Tribunal in the case of Panja CA Bank Vs. ITO in ITA No.136/Bang/2022. She also submitted that provision of section 80AC of the Act will not apply in this case. The CPC should have considered the date of filing of return on 08.09.2018 instead of 16.11.2018. She further submitted that the there was mistake apparent from the record to which the CIT (A) has not considered, 5. The learned DR supported the order of the lower authorities and he submitted that the CPC has rightly disallowed the claim of ITA No.823/Bang/2022 Page 6 of 11 the assessee as per section 80AC(ii) of the Act. The assessee was required to file return of income within the due date specified as per section 139(1) of the Act. The assessee will not get benefit of the extended due date which is 31.10.2018 because the books of accounts of the assessee has not been audited as required u/s 44AB as per notification issued by the CBDT. He also submitted that in the ITR-V which is an income tax return form in which the assessee has mentioned that the books of accounts that is not liable for audit under section 44AB of the Act (under the audit information) and he has also left blank column No.D and E. The coloumn No. E directs as under: “If liable to audit under any Act other than Income Tax Act, mention the Act, section and date of furnishing the Audit Report”. 5.1. The assessee has not mentioned anything even in the original return filed by the assessee. He has not given any information about the audit under any other law as per column No. E in original return also. The assessee has mentioned that it is not liable for audit under section 44AB of the Act. Once the assessee himself accepted that it is not covered in other Act for and till date, no audit report furnished by the assessee under section 44AB of the Act or under any other law, the assessee has submitted small Paper Book containing pages 1 to 9 in which the Profit and Loss Account has been enclosed dated 114.11.2018 even it has not been signed by any of the auditor. The ITA No.823/Bang/2022 Page 7 of 11 learned DR further submitted that in the revised return of income filed by the assessee. He has made first time claim of deduction under section 80P of the Act which was not made in the original return of income. Therefore, from the judgment of Hon’ble Supreme Court of India in the case of PCIT Vs. Wipro Ltd.,in Civil Appeal No.1449/2022 [arising out of SLP (Civil No.7620/2021)] the assessee cannot make fresh claim of deduction in the revised return of income. The revised return of income substitutes the original return of income, for making claim of deduction should be taken the date on which the assessee filed revised return which is beyond due date as per section 80AC of the Act. Only the omission and wrong statement can be made through the revised return as per the judgment of the Hon’ble Supreme Court of India cited supra. He further submitted that before disallowing the CPC sends an information thereafter CPC makes addition/disallowance, therefore the arguments advanced by the ld. AR in this regard is baseless. 6. After hearing the rival contentions, the assessee filed original return of income on 08.09.2018 without claiming deduction and duly paid taxes later on its revised return of income on 16.11.2018 after claiming deduction on the entire profit computed as per Income Tax Act of Rs.23,02,007/- and claimed refund on the self assessment tax paid by it. In the revised return the assessee suomotu disallowed of Rs.9,06,588/- under section 40(a)(ii) of the Act and this amount is included in the gross total income of ITA No.823/Bang/2022 Page 8 of 11 Rs.23,02,007/- to which the assessee claimed deduction u/s 80P. The CPC did not accept the claim of the assessee and observed that return was filed on 16.11.2018 and due date for filing of return was 31.08.2018. The AO rejected the rectification application filed by the assessee under section 154 of the Act and CIT(A) also dismissed the appeal of the assessee by observing as noted supra. On perusal of the income tax return filed by the assessee in which it has itself accepted that its books of accounts are not required to be audited under section 44AB of the Act and is also not required for audit under any other law as time being force. Even during the course of hearing, the assessee did not submit the audit report as per section 63 of the Karnataka State Co-operative Society Act, 1959. The Trading, Proft & Loss Account and Balance Sheet submitted by the assessee has been certified signed by a Chartered Account Shri. S. G. Kulkarni but not Tax Audit Report. I found substance on the submission of the learned DR. and relying on the judgment of Hon’ble Supreme Court of India cited by the learned DR, the assessee cannot make fresh claim in the revised return which was not claimed in the original return of income, only the omission or wrong statement may be revised as stated in section 139(5) as held in pra No. 09 of judgment which is as under :- 9.In such a situation, filing a revised return under section 139(5) of the IT Act claiming carrying forward of losses subsequently would not help the assessee. In the present case, the assessee filed its original return under section 139(1) and not under section 139(3). Therefore, the Revenue is right in submitting that the revised return filed by the assessee under section 139(5) can only substitute its original return under section 139(1) and cannot transform it into a return under section 139(3), in order to avail the benefit of ITA No.823/Bang/2022 Page 9 of 11 carrying forward or set-off of any loss under section 80 of the IT Act. The assessee can file a revised return in a case where there is an omission or a wrong statement. But a revised return of income, under section 139(5) cannot be filed, to withdraw the claim and subsequently claiming the carried forward or set-off of any loss. Filing a revised return under section 139(5) of the IT Act and taking a contrary stand and/or claiming the exemption, which was specifically not claimed earlier while filing the original return of income is not permissible. By filing the revised return of income, the assessee cannot be permitted to substitute the original return of income filed under section 139(1) of the IT Act. Therefore, claiming benefit under section 10B (8) and furnishing the declaration as required under section 10B(8) in the revised return of income which was much after the due date of filing the original return of income under section 139(1) of the IT Act, cannot mean that the assessee has complied with the condition of furnishing the declaration before the due date of filing the original return of income under section 139(1) of the Act. As observed hereinabove, for claiming the benefit under section 10B (8), both the conditions of furnishing the declaration and to file the same before the due date of filing the original return of income are mandatory in nature. The above judgment is not directly for claiming deduction u/s 80P but in this case the assessee revised its return of income to withdraw the claim and subsequently claiming the carried forward or set-off of any loss but the ratio decided in respect of revising the return with the objective is squarely applicable in the case on hand. The omission or wrong statement has not been defined in the Income Tax Act. The assessee was well aware about the business carried on by it and is also aware about the filing of return of income and he has made provision for income tax in its books for preceding assessment years. The assessee will not get the benefit of extended due date for filling return of income as notified by the Ministry of Finance, I observed that it was applicable to those assessees whose books of accounts are required to be audited and filed Tax Audit ITA No.823/Bang/2022 Page 10 of 11 Report in the specified Form but in the assessee’s case he did not submit audit report as required by the relevant law for the time being in force. On perusal of the Income Tax Return filed I observed that the assessee has not given any information about the Audit in the appropriate coloumn. The CIT (A) has rightly dismissed the appeal of the assessee by following the judgment of Hon’ble Madras High Court cited supra. Considering the entire facts of the case Respectfully following the judgment of Hon’ble Supreme Court of India and case law relied by the CIT (A) I am not agreeing with the arguments made by the learned AR. Therefore, I dismiss the appeal of the assessee. The case law relied by the ld. AR is not applicable in the present facts of the case on hand. 7. In the result, appeal of the assessee is dismissed. Pronounced in the open court on the date mentioned on the caption page. Sd/- (GEORGE GEORGE K) Sd/- (LAXMI PRASAD SAHU) Judicial MemberAccountant Member Bangalore, Dated: 30.01.2023. /NS/* ITA No.823/Bang/2022 Page 11 of 11 Copy to: 1.Appellants 2. Respondent 3.CIT4.CIT(A) 5.DR, ITAT, Bangalore.6.Guard file By order Assistant Registrar, ITAT, Bangalore.