VYAVASAYA SEVA SAHAKARI SANGHA NIYAMITA,KHARWA V. DEPUTY DIRECTOR OF INCOME TAX, BENGALURU

ITA 9/PAN/2025

AI Insights

The case involves Vyavasaya Seva Sahakari Sangh Niyamit, a cooperative society, which appealed against the denial of a deduction under section 80P of the Income Tax Act for the assessment year 2020-21. The deduction was initially denied by the CPC due to the late filing of the income tax return, which was filed on 27/02/2021, after the due date of 15/02/2021. The society's subsequent appeals for rectification were also denied, leading to this appeal before the ITAT. The main legal contention was whether the CPC had the jurisdiction to deny the deduction at the time of processing the return under section 143(1) of the Act.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 633086 (ITAT-PANAJI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-06-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: WT(D)
• Assessment Year: 2020-2021
• Other Referred Cases: Allamaprabhu VUSS Niyamit Kalloli Vs ITO, Shri Bhagyalaxmi Co-operative Credit Society Ltd Vs DCIT, CPC, Priyadarshani Mahila Co-op. Society Ltd. Vs DCIT, CPC, Veerappampalayam Primary Agricultural Co-Op. Credit Society Vs DCIT, CIT Vs Travancore Titanium Products Ltd
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DESHMUKH PRAKASH LD.
• Assessee Lawyers: RAVIKUMAR THANED LD.
• Keywords: Business income; Co-operative Credit Society
• Section: 154; 10AA

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL, PANAJI BENCH, PANAJI ITAT-Panaji Page 1 of 10 BEFORE HON’BLE SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER AND SHRI G. D. PADMAHSHALI, ACCOUNTANT MEMBER ITA Nos. 009/PAN/2025 Assessment Year : 2020-21 Vyavasaya Seva Sahakari Sangh Niyamit At Post: Karwa, Honavar, Dist.: Uttara Kannada, 581361. PAN : AABAV0408P . . . . . . . Appellant V/s The Income Tax Officer, Karwar. . . . . . . . Respondent Appearances Assessee by : Mr Ravikumar Thaned [‘Ld. AR’] Revenue by : Mr Deshmukh Prakash [‘Ld. DR’] Date of conclusive Hearing : 04/06/2025 Date of Pronouncement : 10/06/2025 ORDER PER G. D. PADMAHSHALI; This appeal is filed by the assessee u/s 253(1) of the Income-tax Act, 1961 [‘the Act’] challenges the DIN & Order No 1067066587(1) dt. 26/07/2024 passed by the National Faceless Appeal Centre, Delhi [‘Ld. NFAC’] u/s 250 of which arises out of order of rectification dt. 09/01/2024 passed u/s 154 of the Act by the Central Processing Centre, Bengaluru [‘Ld. CPC’] for the assessment year 2020-21 [‘AY’]. Vuavasaya Seva Sahakari Sangh Niyamit Vs ITO, CPC ITA Nos.009/PAN/2025 AY: 2020-21 ITAT-Panaji Page 2 of 10 2. Tersely stated facts of the case are that; 2.1 The assessee is a co-operative society and for the year under consideration filed its return of income u/s 139(4) of the Act on 27/02/2021 declaring total income at NIL after claiming deduction u/s 80P deduction u/c VI-A of the Act for sum of ₹9,25,920/-. On 25/11/2021 the aforestated ITR of the assessee was summarily processed u/s 143(1) of the Act whereby deduction claimed u/s 80P of Chapter VI-A was denied to the assessee for defaulting in filing the return by prescribed due date 15/02/2021 u/s 139(1) of the Act. Being aggrieved by denial of deduction, Vide online requests dt. 12/12/2022, 09/03/2023 & 08/12/2023, the assessee applied for rectification u/s 154 of the Act to reverse the denial, which by separate order dt. 10/01/2023, 16/08/2023 & 09/01/2024 denied by the Ld. CPC. The assessee unsuccessfully contested the denial to rectify in first appeal before the Ld. NFAC. Further aggrieved the assessee came in appeal with a solitary ground for reversal of denial of 80P(2) deduction u/s 154 of the Act. Vuavasaya Seva Sahakari Sangh Niyamit Vs ITO, CPC ITA Nos.009/PAN/2025 AY: 2020-21 ITAT-Panaji Page 3 of 10 3. We have heard the rival party’s submission and subject to rule 18 of ITAT Rules, 1963 perused the material placed on records and considered the facts in the light of settled position of law and judicial precedents relied upon which are forewarned to the parties present. 4. We note that, the appellant society was entitled to claim deduction in relation to its business income u/s 80P of Chapter VI-A of the Act and for the purpose the appellant in terms of section 139(1) of the Act was to file its return within due date of filing which for the year under consideration was 15/02/2021. The appellant however filed its return of income belated on 27/02/2021 wherein the claim for deduction u/s 80P of the Act was made. The respondent revenue invoked the provisions of section 80AC(ii) of the Act, and denied the 80P deduction for assessee’s default in filing the return within the time limit prescribed u/s 139(1) of the Act. The application for rectification and the appeal thereagainst could not bring any relief to the appellant. Vuavasaya Seva Sahakari Sangh Niyamit Vs ITO, CPC ITA Nos.009/PAN/2025 AY: 2020-21 ITAT-Panaji Page 4 of 10 5. As we note, the rival parties has no dispute over the application of provisions of section 80AC(ii) of the Act which for the purpose of allowance of claim u/c VI-A of the Act mandates the filing of return with a such claim therein within the time limit prescribed u/s 139(1) of the Act. Further there is also disagreement that w.e.f. 01/04/2021 the Ld. CPC is empowered to deny the disallowance in view of provisions of section 80AC(ii) of the Act. That is to say, without disputing the application of section 80AC(ii) of the Act, the appellant by the present appeal only challenges the jurisdiction of Ld. CPC in denying the claim for deduction for AY 2020-21 through ‘primary adjustment’ u/s 143(1) of the Act. The appellant contended that, jurisdiction to deny deduction by virtue of section 80AC(ii) while processing return u/s 143(1)(a)(vi) of the Act has effectively come into effect from 01/04/2021. This jurisdiction operates from assessment year 2021-22 relevant to previous year 2020-21 and not for the year under dispute in the present appeal. Vuavasaya Seva Sahakari Sangh Niyamit Vs ITO, CPC ITA Nos.009/PAN/2025 AY: 2020-21 ITAT-Panaji Page 5 of 10 6. On the contrary the Ld. DR Mr Deshmukh countered that, the impugned action of disallowance by the Ld. CPC was well within its authority and in sanction of law. To drive home this contention the Ld. DR relied on co- ordinate bench’s decision in [ITA No 063/PAN/2025] ‘Allamaprabhu VUSS Niyamit Kalloli Allamaprabhu VUSS Niyamit Kalloli Vs ITO’, ‘Shri Bhagyalaxmi Co-operative Credit Society Ltd Vs DCIT, CPC’ [2023, TS-512-ITAT- 2023(PAN)] and ‘Priyadarshani Mahila Co-op. Society Ltd. Vs DCIT, CPC’ [ITA No 32/PAN/2025 dt. 30/04/2025] and the decision of Hon’ble Madras High Court in the case of ‘Veerappampalayam Primary Agricultural Co-Op. Credit Society Vs DCIT’ [2022, 138 taxmann.com 571] 7. Without loose stock & barrel of section 80AC of the Act, it shall suffice to state that, the provisions of section 80AC(ii) of the Act which sanctions denial of claim for deduction made under the head ‘C-Deduction in respect of Certain Income’ u/c VI-A of the Act has into effect from 01/04/2018 [thus applicable from AY 2019- Vuavasaya Seva Sahakari Sangh Niyamit Vs ITO, CPC ITA Nos.009/PAN/2025 AY: 2020-21 ITAT-Panaji Page 6 of 10 20]. However the empowerment or authorisation to carry-out such denial in summary assessment u/s 143(1)(v) of the Act was granted by Finance Act, 2021 and made it operative w.e.f. 01/04/2021. Therefore, the Ld. CPC’s power to deny claim for deduction by virtue of application of 80AC(ii) became effectively operational from 01/04/2021 irrespective of assessment year to which such belated return relates. 8. We note that, the subject matter of dispute regarding effective date from which power of Ld. CPC to make disallowance u/s 80AC(ii) was came for consideration before the Ld. Co-ordinate bench in ‘Allamaprabhu VUSS Niyamit Kalloli Allamaprabhu VUSS Niyamit Kalloli Vs ITO’, (supra) wherein while allowing appeal filed by assessee the Ld. Co-ordinate bench held that the date of processing of return is determinant to decide the empowerment/authorisation of the Ld. CPC to carry-out disallowance. Thus if at the relevant time of processing of return, the Ld. CPC if lacks the jurisdiction to carry Vuavasaya Seva Sahakari Sangh Niyamit Vs ITO, CPC ITA Nos.009/PAN/2025 AY: 2020-21 ITAT-Panaji Page 7 of 10 out disallowance, then processing of return denying 80P deduction to the assessee would be contra-legem’. It is therefore apt to reproduce relevant adjudication as; 7. The only question for our adjudication is that; ‘as to whether the Ld. CPC had a jurisdiction to disallow or deny the claim for deduction made u/s 80P of Chapter VI-A of the Act at the relevant time of passing the order of intimation u/s 143(1) of the Act’? To settle this question, it is apt deal with relevant clause (v) of section 143(1)(a) of the Act which deal with the power of Ld. CPC at the relevant period passing intimation order was as; (v) disallowance of deduction claimed under sections 10AA, 80- IA, 80-IAB, 80-IB, 80-IC, 80-ID or section 80-IE, if the return is furnished beyond the due date specified under sub-section (1) of section 139; or 8. It is also necessary to note that, subsequently, this sub- clause (v) of clause (a) of s/s (1) of section 143 of the Act was substituted by the Finance Act, 2021 with the following which came into effect from 01/04/2021; (v) disallowance of deduction claimed under [section 10AA or under any of the provisions of Chapter VI-A under the heading \"C.—Deductions in respect of certain incomes\", if] the return is furnished beyond the due date specified under sub- section (1) of section 139; or Vuavasaya Seva Sahakari Sangh Niyamit Vs ITO, CPC ITA Nos.009/PAN/2025 AY: 2020-21 ITAT-Panaji Page 8 of 10 9. The bare reading of substituted provisions clearly suggest that, the jurisdiction of Ld. CPC s/c (v) of clause (a) of s/s (1) of section 143 of the Act to deny or disallow the deduction claimed under the head ‘C-Deduction in respect of certain income’ u/c VI-A of the Act was not available as on the date when the order of intimation was passed, As the matter of fact that s/c (v) (supra) was amended by substitution by the Finance Act, 2021 wherein instead of reference to Sections 10AA, 80-IA, 80-IAB, 80- IB, 80-IC, 80-ID or Section 80-IE, the substituted provision of s/c (v) extended its umbrella to Section 10AA or under any of the provisions of Chapter VI-A under the head ‘C-Deductions in respect of certain incomes’. No doubt Section 80AC(ii) as amended by the Finance Act, 2018 mandated that even for claiming deduction claimed u/c VI-A of the Act, the return of income was to be filed before the expiry of due date prescribed u/s 139(1) of the Act, however, the enabling jurisdiction clause (v) of s/c (a) of section143(1) of the Act came into play only w.e.f. 01/04/2021. Vuavasaya Seva Sahakari Sangh Niyamit Vs ITO, CPC ITA Nos.009/PAN/2025 AY: 2020-21 ITAT-Panaji Page 9 of 10 10. As on the date of processing the return summarily u/s 143(1)(a)(v) of the Act there was no enabling power vested with the Ld. CPC to apply provisions of section 80AC(ii) of the Act. Therefore, the impugned action of disallowance in our considered view was beyond Ld. CPC’s jurisdiction or authority.’ (Emphasis supplied) 9. In the present case in hand, the original return was filed first time on 27/02/2021 and was admittedly processed on 25/11/2021 that is much after 01/04/2021. The Ld. CPC by pressing into service the provisions of section 80AC(ii) denied the 80P deduction. The said action of denial as was authorised by Finance Act, 2021 was in our considered view is well within the provisions of law and in jurisdiction. In absence of anything contrary brought to our notice by the appellant, placing reliance on the decision of ‘CIT Vs Travancore Titanium Products Ltd. [2003, 131 Taxman 705 (Ker.)] we respectfully follow the co-ordinate bench’s ratio decision(supra), and hold that, as on the date of processing the return summarily u/s 143(1)(v) of the Act Vuavasaya Seva Sahakari Sangh Niyamit Vs ITO, CPC ITA Nos.009/PAN/2025 AY: 2020-21 ITAT-Panaji Page 10 of 10 and in carrying out the impugned denial of deduction by application of provisions of section 80AC(ii) of the Act, the Ld. CPC had valid, operative & effective jurisdiction in law. Therefore the Ld. tax authorities have rightly denied to rectify the denial of deduction by reversal u/s 154 of the Act. Therefore, without multiapplication, maintaining the parity with Ld. co-ordinate bench’s decision(supra), we concur with Revenue’s claim that the Ld. CPC did neither traverse and nor exceeded its jurisdiction in disallowing the appellant’s claim for deduction u/s 80P of the Act. Therefore, much less reasons for reversal. In result, we uphold the impugned order of Ld. CIT(A) and dismiss the effective & solitary ground of appeal. 8. The appeal in result stands DISMISSED. In terms of rule 34 of ITAT Rules, 1963 the order pronounced in the open court on date mentioned herein before. -S/d- -S/d- PAVAN KUMAR GADALE G. D. PADMAHSHALI JUDICIAL MEMBER ACCOUNTANT MEMBER Panaji/Dt: 10th June 2025 Copy of the Order forwarded to: 1. The Appellant. 2. The Respondent. 3. The CIT(A) Concerned 4. PCIT Concerned 5. DR, ITAT, Panaji Bench, Panaji 6. Guard File By Order, Sr. Private Secretary / AR ITAT, Panaji. "