DCIT (CPC) Vs Dhar Seva Sahakari Mandali Ltd. (ITAT Rajkot)
Summary: The Rajkot Bench of the Income Tax Appellate Tribunal dismissed the Revenue’s miscellaneous application seeking recall of its earlier order dated 31 October 2022 in the case of Dhar Seva Sahakari Mandali Ltd. for Assessment Year 2019-20. The dispute concerned a deduction of ₹5,13,568 claimed under Section 80P in a belated return filed on 28 November 2020. The earlier Tribunal order had held that the deduction could not be denied through a prima facie adjustment under Section 143(1)(a) solely because the return was filed after the due date under Section 139(1), and had restored the matter to the Commissioner (Appeals) for fresh adjudication on merits.
The Department sought recall on the ground that the Tribunal had not discussed Veerapampalayam Primary Agricultural Co-operative Credit Society Ltd. vs. DCIT (2022) 138 taxman.com 571 (Madras High Court), concerning deductions under Part C of Chapter VI-A in cases of belated returns. It argued that Section 143(1)(a) permitted adjustment of apparent errors. The assessee submitted that the Tribunal had already examined the issue and that the application did not disclose a mistake apparent from the record under Section 254(2).
The Tribunal reviewed its earlier distinction between the substantive due-date requirement under Section 80AC and the scope of processing adjustments under Section 143(1). Its earlier decision had held that the amendment to Section 143(1)(a)(v), effective from 1 April 2021, did not apply to AY 2019-20. It also held that Section 143(1)(a)(ii) and its Explanation did not authorise the disputed adjustment on the facts. The earlier order referred to Chirakkal Service Co-Operative Bank Ltd. Kannur v. CIT and ASR Engg. & Projects Ltd. before remanding the claim for consideration on merits.
The Tribunal found that its earlier order contained detailed factual and legal findings and that the Madras High Court ruling relied upon by the Revenue did not address the particular adjustment issue under Section 143(1)(a)(v) arising in the present case. It found no apparent mistake warranting interference and dismissed the Department’s miscellaneous application. The decision concerns the scope of processing adjustments for AY 2019-20 and does not generally dispense with the substantive condition under Section 80AC.
Cases Discussed
- Veerapampalayam Primary Agricultural Co-operative Credit Society Ltd. vs. DCIT (2022) 138 taxman.com 571
- (Madras High Court); Chirakkal Service Co-Operative Bank Ltd. Kannur v. CIT [2016] 68 taxmann.com 298 (Kerala);
- ASR Engg. & Projects Ltd. [2019] 111 taxmann.com 49 (ITAT Hyderabad).
FULL TEXT OF THE ORDER OF ITAT RAJKOT
This Miscellaneous Application filed by the Department is against the order passed by ITAT, Rajkot Bench in ITA No. 33/Rjt/2022 vide order dated 31-10- 2022.
2. In the present Miscellaneous Application, the Department has contended that the order passed by the ITAT holding that deduction u/s. 80P of the Act cannot be denied to the assessee only on the basis that assessee did not file return of income within due date u/s. 139(1) of the Act. The contention of the Department is that while allowing the appeal of the assessee, the ITAT has not discussed the binding decision of Madras High Court in the case of Veerapampalayam Primary Agricultural Co-operative Credit Society Ltd. vs. DCIT (2022) 138 taxman.com 571, which has held that no claim under any provision of para C of Chapter VIA would be admissible in case of belated return. It was submitted that the scope of intimation u/s. 143(1)(a) of the Act extends to making of adjustments based upon error apparent from the return of income and patent from the record. Accordingly, the Explanation to section 143(1)(a) of the Act cannot curtail or restrict the main thrust of the main provision and due weightage has to be attributed to the purposes of section 143(1)(a) of the Act. Accordingly, it was submitted that the order may kindly be recalled. In response, the ld. counsel for the assessee submitted that the ITAT has considered all the aforesaid aspects in detail while taking the decision on this issue, and all the aspects have been discussed in detail in para 7 of the order. It was submitted that ITAT has given due consideration of the amendment made in section 143(1)(a)(v) of the Act to provide that such claim of deduction u/s. 80P can be denied prima facie adjustment u/s. 143(1) of the Act only w.e.f. 01-04- 2021 since the Act was amended from such date and would not apply to assessment years prior to the date of amendment in the statute. Accordingly, it was submitted that the aforesaid Miscellaneous Application is beyond the scope of section 254(2) of the Act since there is no mistake apparent from the record in the order passed by ITAT.
3. Before deciding on the issue, it would be important to reproduce the relevant extracts of the order for ready reference.
“7. We have heard the rival contentions and perused the material on record. In the instant facts, admittedly the assessee did not file return of income within the time permissible under section 139(1) of the Act. However, the assessee filed its return of income belatedly on 28-11-2020 and claimed deduction of 5,13,568/- under section 80P of the Act. The issue for consideration before us is that whether once the return of income is filed beyond the prescribed date under section 139(1) of the Act, can the deduction under section 80P of the Act be denied to the assessee, by way of adjustment under section 143(1) of the Act. On going through the statutory provisions, we observe that 80AC of the Act provides that no such deduction under section 80P of the Act shall be allowed to an assessee unless he furnishes a return of his income on or before the due date specified under section 139(1) w.e.f. assessment year 2018-19 onwards. However, section 143(1)(a)(v) of the Act provides that disallowance of deduction claimed under any of the provisions of Chapter VI-A under the heading “C.—Deductions in respect of certain incomes” (which includes deduction under section 80P of the Act), can be made if the return is furnished beyond the due date specified under sub- section (1) of section 139. This amendment has been introduced w.e.f. 1-4-2021. Accordingly, the above amendment would not apply to the impugned assessment year. Further, section 143(1)(ii) of the Act permits adjustment in case of an incorrect claim, if such incorrect claim is apparent from any information in the return. However, Explanation to the aforesaid section specifies the following cases where the claim made in the return of income can be said to be “incorrect” for the purposes of this sub-section:
(a) “an incorrect claim apparent from any information in the return” shall mean a claim, on the basis of an entry, in the return,—
(i) of an item, which is inconsistent with another entry of the same or some other item in such return;
(ii) in respect of which the information required to be furnished under this Act to substantiate such entry has not been so furnished; or
(iii) in respect of a deduction, where such deduction exceeds specified statutory limit which may have been expressed as monetary amount or percentage or ratio or fraction
7.1 A joint reading of the above provisions makes it evident that the claim of deduction under section 80P of the Act cannot be allowed the assessee, if the assessee does not file its return of income within the due date stipulated under section 139(1) of the Act w.e.f. assessment year 2018-19 onwards. However, we also note that amendment has been introduced in section 143(1)(a)(v) of the Act to provide that the claim of deduction under section 80P of the Act can be denied to the assessee, in case the assessee does not file its return of income within the time prescribed under section 139(1) of the Act with effect from 01- 04-2021 and does not apply to the impugned assessment year i.e. assessment year 2019-20 relevant to financial year 2018-19. Accordingly, in our considered view, denial of claim under section 80P of the Act would not come within the purview of prima facie adjustment under section 143(1)(a)(v) of the Act, for the simple reason that the section was not in force during the period under consideration i.e. assessment year 2019-20.
7.2 The second issue for consideration is that whether the case of the assessee would fall within the purview of prima facie adjustment under section 143(1)(a)(ii) (an incorrect claim, if such incorrect claim is apparent from any information in the return). In our view, the scope of the adjustments that can be made under the said provision has been elaborated in the Explanation to the aforesaid section, which does not include denial of deduction claimed by the assessee in case the assessee does not furnish its return of income within the date stipulated under section 139(1) of the Act. The Explanation to the said section specifically provides for cases/instances when the claim made by the assessee could be said to be “incorrect”. Therefore, in our considered view, the case of the assessee would also not fall within the purview of prima facie adjustment under section 143(1)(a)(ii) (an incorrect claim, if such incorrect claim is apparent from any information in the return). We also observe that the counsel for the assessee has filed copies of orders passed by Commissioner (Appeals), NFAC in many other cases of cooperative societies having similar issues, in which it has been held that section 143(1)(a)(ii) of the Act does not deal with disallowance of deduction for deed filing of return of income and also the said adjustment is not permissible under section 143(1)(a)(v) of the Act.
7.3 We note that in the case of Chirakkal Service Co-Operative Bank Ltd. Kannur v. CIT 2016] 68 taxmann.com 298 (Kerala), the Kerala High Court held that a return filed by assessee beyond period stipulated under section 139(1) or 139(4) or under section 142(1) or section 148 can also be accepted and acted upon for entertaining claim raised under section 80P provided further proceedings in relation to such assessments are pending in statutory hierarchy of adjudication in terms of provisions of Act. In the case of ASR Engg. & Projects Ltd. [2019] 111 taxmann.com 49 (Hyderabad – Trib.), the ITAT held that to be eligible to make claim under section 80-IA or any other section of Chapter VI A, assessee should have filed return of income under section 139(1) and even if it did not make claim for deduction in original return and subsequently file revised return making such claim, its claim for deduction under section 80-IA is maintainable. Therefore, where assessee had filed return under section 139(1), it was entitled to claim deduction under section 80-IA even if such claim was not made in original return but subsequently in revised return filed in response to notice issued under section 153A.
7.4 We note that the instant case, there was a few-month delay in filing the return of income by the assessee for the assessment year 2019-20and return of income was filed within due date permissible u/s 139(4) of the Act, in which the claim for deduction u/s80P of the Act was made. Therefore, looking into the totality of facts, we are of the view that claim of deduction u/s 80P of the Act cannot be denied to the assessee only on the basis that the assessee did not file return of income its return of income within due date u/s 139(1) of the Act , in light of the discussion and judicial precedents highlighted above. Therefore, in the interests of justice, we are restoring the case to the file of the Ld. CIT(Appeals) for fresh adjudication on merits of the case after giving due opportunity of hearing to the assessee.
8. In the result, appeal of the assessee is allowed.”
4. On going through the contents of the order passed by the ITAT, we observe that while passing the order, ITAT has given a detailed legal as well as factual finding has to why the denial of claim of deduction u/s. 80P cannot be made by way of prima facie adjustment u/s. 143(1)(a)(v) of the Act for the impugned assessment order i.e. A.Y. 2019-20. We observe that ITAT has given a detailed factual and legal finding/discussion while deciding this issue. Further, the decision cited by Department is not on the issue of denial of claim by way of adjustment made u/s. 143(1)(a)(v) of the Act and has been rendered on its own set of facts while the assessee’s facts are on a different footing. Accordingly, on going through the order passed by the ITAT, we find no apparent mistake in the order passed by the ITAT in ITA No. 23/Rjt/2022 so as to call for any interference.
5. In the result, the Miscellaneous Application filed by the Department is dismissed.
Order pronounced in the open court on 08-11-2023
