DCIT/ACIT (CPC) Vs Nava Ujala Seva Sahakari Mandali Ltd. (ITAT Rajkot)
Summary: The Rajkot Bench of the Income Tax Appellate Tribunal dismissed the Department’s miscellaneous application seeking recall of its earlier order dated 31 October 2022 concerning Shri Nava Ujala Seva Sahakari Mandali Ltd. for Assessment Year 2019-20. The dispute arose from a deduction of ₹2,12,008 claimed under Section 80P in a belated return filed on 28 November 2020. The Tribunal had earlier held that such deduction could not be denied through a prima facie adjustment under Section 143(1)(a) merely because the return was filed beyond the Section 139(1) due date, and had restored the case to the CIT(A) for adjudication on merits.
The Department argued that the Tribunal overlooked the Madras High Court decision in Veerapampalayam Primary Agricultural Co-operative Credit Society Ltd. vs. DCIT (2022) 138 taxman.com 571, which addressed Chapter VI-A deductions claimed in belated returns. It maintained that the processing adjustment provision was broad enough to address an error apparent from the return. The assessee opposed recall, pointing to the detailed reasoning in the earlier order and submitting that there was no mistake apparent from the record under Section 254(2).
The Tribunal revisited its earlier distinction between the substantive timely-filing requirement under Section 80AC and the authority to disallow a deduction through return-processing adjustments. It reiterated that the amendment to Section 143(1)(a)(v), concerning Chapter VI-A deductions where returns are late, took effect from 1 April 2021 and did not govern AY 2019-20. It had also examined Section 143(1)(a)(ii) and the Explanation defining an incorrect claim apparent from the return. Its reproduced earlier decision referred to Chirakkal Service Co-Operative Bank Ltd. Kannur v. CIT and ASR Engg. & Projects Ltd.
The Tribunal concluded that the earlier order contained detailed factual and legal reasoning and that the Madras High Court decision relied upon by the Department did not decide the specific issue of disallowance through adjustment under Section 143(1)(a)(v) in the circumstances of this case. It found no apparent mistake warranting interference and dismissed the Department’s miscellaneous application. The order concerns rectification and the scope of prima facie adjustment for AY 2019-20; it does not generally remove the substantive due-date requirement 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 High Court)
- ASR Engg. & Projects Ltd. [2019] 111 taxmann.com 49 (ITAT Hyderabad)
FULL TEXT OF THE JUDGMENT/ORDER OF ITAT, RAJKOT BENCH
This Miscellaneous Application filed by the Department is against the order passed by ITAT, Rajkot Bench in ITA No. 20/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 2,12,008/- 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 2019-20 and return of income was filed within due date permissible u/s 139(4) of the Act, in which the claim for deduction u/s 80P 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
