MYSORE DISTRICT JUDICIAL EMPLOYEE CREDIT CO-OPERATIVE SOCIETY LIMITED,MYSORE V. INCOME TAX OFFICER, WARD-1(1), MYSORE

ITA 1271/BANG/2024

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The case involves the Mysore District Judicial Employee Credit Co-operative Society Limited, which appealed against the disallowance of a deduction claimed under section 80P of the Income Tax Act for the assessment year 2020-21. The assessee had filed an updated return under section 139(8A) after the due date, which was declared invalid by the CPC due to non-compliance with procedural requirements. Subsequently, the CPC disallowed the deduction through an intimation under section 143(1). The assessee's appeal to the CIT(A) was unsuccessful, leading to the current appeal before the Tribunal. The Tribunal held that the CPC's intimation was based on an invalid return and thus had no legal basis.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 126091 (ITAT-BANGALORE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2020-2021
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GANESH R GALE; STANDING COUNSEL DEPT
• Assessee Lawyers: PRANAV KRISHNA
• Keywords: Set aside
• Section: 143(1); 139(1); 80P; 139(4)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL ‘SMC’ BENCH, BANGALORE BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER ITA No.1271/Bang/2024 Assessment Year: 2020-21 Mysore District Judicial Employee Credit Co-operative Society Limited, Mysore Law Court Premises, Chamrajpuram, Mysore – 570 005. PAN – AACAM 7977 M Vs. The Income Tax Officer, Ward – 1(1), Mysore. APPELLANT RESPONDENT Assessee by : Shri Pranav Krishna, Advocate Revenue by : Shri Ganesh R Gale, Standing Counsel for Dept. (DR) Date of hearing : 19.02.2025 Date of Pronouncement : 21.04.2025 O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: This is an appeal filed by the assessee against the order passed by the Addl/JCIT(A)-2, Mumbai dated 16/05/2024 in DIN No.ITBA/APL/S/250/2024-25/1064929499(1) for the assessment year 2020-21. ITA No.1271/Bang/2024 Page 2 of 5 . 2. The assessee has raised as many as 12 grounds of appeal which are interconnected and pertain to the disallowance of the claim of deduction u/s 80P of the Act amounting to Rs. 35,86,483/- only. 3. The relevant facts are that the assessee is a cooperative society and engaged in the business of providing credit facility to the members. The assessee for the year under consideration i.e. A.Y. 2020-21 did not file return of income as per section 139(1) of the Act. The time limit for filing the belated return as per section 139(4) of the Act was also lapsed. Hence, the assessee filed updated return as per the provision of section 139(8A) of the Act as on 26th September 2022 wherein declared total income at NIL after claiming deduction under section 80P(2)(a(i) of the Act for Rs. 35,86,483/- only. 4. The return filed under section 139(8A) was held invalid by the CPC vide intimation dated 28th March 2023 for the reason that tax as per section 140B of the Act not paid and Part-B-ATI was also not filed. 5. Subsequently, the CPC vide communication/intimation dated 25th December 2023 sought clarification from the assessee regarding the incorrect claim under section 80P of the Act for the reason that return was not filed under section 139(1) of the Act. Thereafter, the CPC passed intimation order under section 143(1) of the Act dated 29-12- 2023 disallowing the assessee’s claim of deduction under section 80P(2)(a(i) of the Act for Rs. 35,86,483/- only. 6. The aggrieved assessee preferred an appeal before the learned CIT(A). ITA No.1271/Bang/2024 Page 3 of 5 . 7. The assessee before the learned CIT(A) raised various grounds challenging the action of the CPC. However, the learned CIT(A) confirmed the disallowances made by the CPC. 8. Being aggrieved by the order the learned CIT(A) the assessee is in appeal before the Tribunal. 9. The learned AR before me filed a written submission, paper book and case law compilation running from pages 1 to 13, 1 to 23 and 1 to 98 and contended that once the return has been held invalid, the same cannot be used for drawing any adverse inference against the after processing under section 143(1) of the Act. 10. On the other hand, the learned DR before me supported the order of the authorities below by making refence to various case laws. It was contended by the ld. DR that the assessee has paid the requisite tax in compliance to Part-B-ATI of the updated return of income. 11. I have heard the rival contentions of both the parties and perused the materials available on record. In the present appeal, the core issue relates to the disallowance of the assessee’s claim for deduction under section 80P of the Act, amounting to ₹ 35,86,483/-, as processed under section 143(1) of the Act. The assessee is a cooperative society engaged in the business of providing credit facilities to its members. For the assessment year 2020-21, the assessee failed to file its return within the due date prescribed under section 139(1) of the Act. Furthermore, the time limit for filing a belated return under section 139(4) had also lapsed. Consequently, the assessee filed an updated return under ITA No.1271/Bang/2024 Page 4 of 5 . section 139(8A) of the Act on 26th September 2022, declaring a total income of Rs. NIL after claiming the said deduction under section 80P(2)(a)(i) of the Act. However, this updated return was held invalid by the Centralized Processing Centre (CPC) through an intimation dated 28th March 2023, citing non-compliance with section 140B of the Act, particularly the failure to pay tax under the updated return scheme and omission to file Part B-ATI in the return of income. 11.1 Subsequently, the CPC issued another intimation on 25th December 2023, raising a query on the correctness of the deduction claimed under section 80P of the Act, reasoning that such a claim is not admissible when a return is not filed under section 139(1) of the Act. Thereafter, CPC passed an intimation under section 143(1) of the Act on 29th December 2023, disallowing the entire deduction claimed by the assessee. The assessee’s appeal before the learned CIT(A) was unsuccessful, as the ld. CIT(A) upheld the CPC’s view and sustained the disallowance. 11.2 Upon a careful and thorough examination of the facts and applicable law, I find that the intimation issued under section 143(1) of the Act is without jurisdiction, as it was based on a return that was already held invalid by CPC itself. A foundational requirement for processing a return under section 143(1) of the Act is that such return must be a valid return as per the Act. Once the updated return filed under section 139(8A) of the Act was declared invalid by CPC for non- compliance with procedural requirements, it ceased to exist for legal purposes, and therefore could not form the basis for any further intimation or adjustment under section 143(1) of the Act. I further ITA No.1271/Bang/2024 Page 5 of 5 . observe that where no valid return exists, any disallowance of claims must be undertaken through regular assessment proceedings under section 144, not through summary processing under section 143(1) of the Act. Accordingly, the impugned intimation dated 29th December 2023 issued by CPC is held to be bad in law and void ab initio. The disallowance made therein is therefore liable to be set aside. Consequently, the appeal of the assessee is allowed, and the orders of the CPC as well as the learned CIT(A) are reversed. Hence, the ground of appeal of the assessee is hereby allowed. 12. In the result, the appeal of the assessee is hereby allowed. Order pronounced in court on 21st day of April, 2025 Sd/- (WASEEM AHMED) Accountant Member Bangalore Dated, 21st April, 2025 / vms / Copy to: 1. The Applicant 2. The Respondent 3. The CIT 4. The CIT(A) 5. The DR, ITAT, Bangalore. 6. Guard file By order Asst. Registrar, ITAT, Bangalore "