Case Law Details
Neyyoor P A C C S Ltd Vs ITO (ITAT Chennai)
Introduction: In a significant decision that accentuates the significance of due process in tax disputes, the Income Tax Appellate Tribunal (ITAT) Chennai, in the case of Neyyoor P A C C S Ltd Vs ITO, has ruled that an order can’t be passed while a delay condonation application is pending before the Central Board of Direct Taxes (CBDT). The ITAT set aside the order of the Commissioner of Income Tax (Appeals), asserting that the department ought to have waited for the CBDT’s decision on the condonation petition.
Analysis: The ITAT’s verdict underscores the importance of following procedural requirements in income tax matters. The assessee had filed a return of income for the assessment year 2018-19, which was processed by ADIT CPC, Bengaluru. The claim for a deduction under section 80P was denied due to the late filing of the return. Despite having a condonation petition pending before the CBDT, the processing and dismissal of the case were hurried, leading to the ITAT intervention.
In their decision, ITAT emphasized that the department should have awaited the CBDT’s decision on the condonation petition before proceeding. This ruling may set a precedent for other cases, where due process has to be maintained and all relevant factors considered before passing orders in tax matters.
Conclusion: The ruling of ITAT in Neyyoor P A C C S Ltd Vs ITO serves as a reminder of the necessity of observing procedural regulations in income tax matters. This ensures fairness and transparency in tax administration and dispute resolution. The decision underscores that it is inappropriate to pass an order when a condonation application is pending before the CBDT. This ruling could potentially influence the future course of how such cases are treated, bolstering due process in tax disputes.
FULL TEXT OF THE ORDER OF ITAT CHENNAI
This appeal filed by the assessee is directed against the order of the ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre [NFAC], Delhi both dated 21.03.2022 relevant to the assessment year 2018-19.
2. Brief facts of the case are that the assessee has filed the return of income for the assessment year 2018-19 on 22.01.2019 admitting Nil income after claiming deduction under section 80P of the Income Tax Act, 1961 [“Act” in short] of ₹.22,36,570/-. The ADIT CPC, Bengaluru, while processing the return of income disallowed the claim of the assessee under section 80P of the Act and passed intimation under section 143(1) of the Act dated 31.05.2019.
3. The assessee carried the matter in appeal before the ld. CIT(A). Since the assessee has not filed the return of income within the due date of filing as specified under section 139(1) of the Act and accordingly, the ld. CIT(A) confirmed the assessment and dismissed the ground raised by the assessee.
4. On being aggrieved, the assessee is in appeal before the Tribunal. By filing copy of the application under section 119(2) of the Act, the ld. Counsel for the assessee has submitted that the assessee has filed a condonation petition before the CBDT under section 119(2) of the Act to condone the delay in filing the return of income. It was further submission that despite having time to process the return of income under section 143(1) of the Act, the CPC, Bengaluru hurriedly processed the same by denying the claim of deduction under section 80P of the Act.
5. We have heard both the sides, perused the materials available on record and gone through the orders of authorities below. In this case, since the return of income for both the assessment years were not filed within the due date of filing as specified under section 139(1) of the Act, the DCIT-CPC, Bengaluru disallowed the claim of deduction under section 80P of the Act and the ld. CIT(A) confirmed the disallowance made under section 80P of the Act by the Assessing Officer.
6. Before the Tribunal, the ld. Counsel for the assessee has argued that despite having time to process the return of income under section 143(1) of the Act, the DCIT-CPC, Bengaluru hurriedly processed the return of income under section 143(1) of the Act without waiting for the outcome of the condonation petition filed before the CBDT. In view of the fact that the assessee has filed an application for condonation of delay before the CBDT under section 119(2)(b) of the Act, it is opined that once the delay condonation is pending before the CBDT, the Department ought to have waited for the decision of the CBDT, for the reason that, if the CBDT condone the delay, the claim of the assessee has to be considered in accordance with law. Therefore, we set aside the order passed by the ld. CIT(A) and remit the matter back to the file of the ld. CIT(A) to wait for the decision on the condonation petition filed by the assessee before the CBDT and thereafter pass order in accordance with law.
7. In the result, both the appeals filed by the assessee are allowed for statistical purposes.
Order pronounced on 14th June, 2023 at Chennai.
