Ambaradi Seva Sahkari Mandali Ltd. Vs DCIT (CPC) (ITAT Rajkot)
ITAT Rajkot held that denying the exemption under Section 80P of the Income Tax Act merely on the ground of belated filing of return by the assessee is not justifiable.
Facts- The assessee is a co-operative society. Post filing of return of income, the assessee was in receipt of communication u/s. 143(1)(a) of the Act from CPC dated 08.12.2020 for proposed adjustment u/s. 143(1)(a) of the Act in returned income for not granting deduction of Rs.18,20,276/- claimed in the return of income u/s. 80P of the Act stating that of the assessee made incorrect claim under Section 143(1)(a)(ii) of the Act by way of deduction u/s. 80P to the returned income is not filed within due date.
The assessee filed response in reply to communication u/s. 143(1)(c) of the Act by stating that the return of income was filed u/s. 139(4) of the Act and provisions of Section 143(1)(a)(b) of the Act do not provide for denial of deduction u/s. 80P of the Act. Even when the return of income is not filed within the time limit as per Section 139(1) of the Act and, therefore, denial of deduction under Section 80P vide intimation u/s. 143(1) of the Act was not valid in law. The assessee also submitted that the said adjustment could not be called prima facie adjustment. Thereafter, intimation u/s. 143(1) of the Act dated 22.12.2020 was received by the assessee thereby no deduction u/s. 80P of the Act was made determining total income at Rs.18,20,276/-.
CIT(A) dismissed the appeal. Being aggrieved, present appeal is filed.
Conclusion- It is pertinent to note that the assessee though filed return of income not as per Section 139(1) of the Act due date, but prior to due date of Section 139(4) of the Act. This fact was not disputed by the Revenue at any juncture. In the light of the decision of Hon’ble Kerala High Court in case of Chirakkal Service Co-operative Bank Limited (supra), the Hon’ble High Court has observed that denying the exemption under Section 80P of the Act merely on the ground of belated filing of return by the assessee is not justifiable.
FULL TEXT OF THE ORDER OF ITAT RAJKOT
These four appeals are filed by the assessees against four separate orders dated 20.04.2022, 18.05.2022, 10.06.2022 & 15.06.2022 passed by the CIT(A), National Faceless Appeal Centre (NFAC), Delhi for the Assessment Years 2019-20 for all the appeals.
2. The assessees have raised identical grounds in all the appeals and hence grounds raised in ITA No.186/RJT/2022 are being reproduced hereunder:
“1. The Learned Commissioner (Appeals), National Faceless Appeal Centre, Delhi erred in confirming action of CPC Bengaluru by holding that claim made by the Appellant was “Incorrect claim” as per Sec.143(1) of the Act.
2. The Learned Commissioner (Appeals), National Faceless Appeal Centre, Delhi erred in confirming action of CPC Bengaluru by disallowing claim of deduction of Rs.18,20,276.!– by failing to appreciate that provisions of Sec.143(1)(a)(v) do not provide for denial of deduction u/s 80P of the Act when the return of income is not filed within time allowed u!139(1) of the Act but u/.s.139(4).
3. The Learned Commissioner (Appeals), National Faceless Appeal Centre, Delhi erred in upholding action of the CPC Bengaluru in making adjustment to the returned income of the Appellant by way of an intimation u!143(1) and in denying the benefit of Sec.80P of the Act of Rs.18,20,280/– to the Appellant by failing to appreciate that this was not a prima facie adjustment permissible u/s.143(1)(a) of the Act.
4. The Learned Commissioner (Appeals), National Faceless Appeal Centre, Delhi erred in not adjudicating ground of disallowance of claim of deduction of Rs.18,20,280/– u/80P of the Act on merits.”
3. Firstly we are taking up ITA No.186/RJT/2022 as the issue contested in all these appeals are identical. The assessee is a Co-operative Society registered under the Mumbai Co-operative Societies Act, 1925 with object and activities of providing credit facilities to its members as well as it provides facilities to members for purchase of agricultural implements, seeds, livestock or other articles intended for agricultural activities. The original return of income for the year under consideration was filed on 30.11.2020 declaring total income of Rs.nil claiming therein deduction of Rs.18,20,276/- under Section 80P of the Income Tax Act, 1961, under Section 80P(2)(a)(i) – Rs.10,22,148/-, under Section 80P(2)(a)(iv) – Rs.3,76,152/-, under Section 80P(2)(d) – Rs.3,51,076/- and under Section 80P(2)(e) – Rs.70,900/-.
Thereafter, the assessee was in receipt of communication under Section 143(1)(a) of the Act from CPC dated 08.12.2020 for proposed adjustment under Section 143(1)(a) of the Act in returned income for not granting deduction of Rs.18,20,276/- claimed in the return of income under Section 80P of the Act stating that of the assessee made incorrect claim under Section 143(1)(a)(ii) of the Act by way of deduction under Section 80P to the returned income is not filed within due date. The assessee filed response in reply to communication under Section 143(1)(c) of the Act by stating that the return of income was filed under Section 139(4) of the Act and provisions of Section 143(1)(a)(b) of the Act do not provide for denial of deduction under Section 80P of the Act. Even when the return of income is not filed within the time limit as per Section 139(1) of the Act and, therefore, denial of deduction under Section 80P vide intimation under Section 143(1) of the Act was not valid in law. The assessee also submitted that the said adjustment could not be called prima facie adjustment. Thereafter, intimation under Section 143(1) of the Act dated 22.12.2020 was received by the assessee thereby no deduction under Section 80P of the Act was made determining total income at Rs.18,20,276/-.
4. Being aggrieved by the intimation under section 143(1) of the Act, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal/not allowed the appeal of the assessee.
5. The Ld. AR submitted that the return was not filed as per Section 139(1) of the Act but within the time limit of due date under Section 139(4) of the Act. Therefore, the rejection of return cannot be the criteria. The Ld. AR further submitted that the debatable issue in respect of pima facie adjustment cannot be taken into account by disallowing the claim under Section 80P of the Act which is available to the assessee. The Ld. AR relied upon the decision of Hon’ble Madras High Court in the case of Veerappampalayam Primary Agricultural Co-operative Credit society Limited vs. DCIT and Others (2021) 110 CCH 0219, which was referred by the CIT(A) will not be applicable in the present case as the Hon’ble Kerala High Court in the case of Chirakkal Service Co-operative Bank Limited vs. CIT (2016) 95 CCH 0197 specifically stated that in cases where returns have been filed, the question of exemptions or deductions referable to Section 80P would definitely have to be considered and granted if eligible. The Hon’ble Kerala High Court most specifically observed that the Tribunal was not justified in denying exemption under Section 80P of the Act on the mere ground of belated filing of return by the assessee concerned. The Ld. AR also relied upon the decision of Tribunal in case of Lanjani Co-operative Agri Service Society Limited & Another vs. DCIT (2022) 65 CCH 0560 (Chandigarh Tribunal) as well as decision of the Tribunal of Rajkot Bench in the case of Medi Seva Sahakari Mandali Limited vs. ADIT (CPC), ITA no.38/RJT/2022, order dated 31.10.2022.
6. The Ld. DR submitted that the Hon’ble Madras High Court has given a categorical finding that it is Administrative order and the same was properly done by the Assessing Officer as the return was filed beyond the due date of Section 139(1) of the Act. The Ld. DR relied upon the decision of Hon’ble Supreme Court in the case of Prakash Khanna, 135 taxman 327 (SC). The Ld. DR relied upon the order of the CIT(A). The Ld. DR has filed the following submissions:-
“2. All the above assesses are co-operative societies. The details of due dates of filing of return of income and the date on which they were actually filed are tabulated below:
