Non filing of income tax return within due date u/s 139(1) and disallowance of deduction U/s 80P

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Non filing of income tax return within due date u/s 139(1) and disallowance of deduction U/s 80P

 

There is often a few-month delay in filing the ITR by the assessee society. The income tax law now provides that the deduction U/s 80P shall not be available if the return is not filed within the due date U/s 139(1).

The disallowance of deduction u/s 80P often results in heavy tax liability in various cases.

The question arises what if ITR was filed within the due date permissible u/s 139(4) of the Act, in which the claim for deduction u/s 80P was made.

Recently, ITAT Rajkot has held that the 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 a return of income within due date u/s 139(1).

The case detail is as under

ITAT RAJKOT

 

SHRI NAVA UJALA SEVA SAHAKARI MANDALI LTD.

VERSUS

THE DCIT/ACIT (CPC) , BENGALURU

ITA No. 20/Rjt/2022

 

Let us have a short overview of the case:

– The case was with regard to Deduction u/s 80P.

 – Assessee received intimation u/s 143(1)(a) making adjustment in the returned income and not granting deduction claimed in the return of income u/s 80P

– As per CPC claim of assessee was incorrect u/s 143(1)(a)(ii) since the return of income was not filed within the due date prescribed u/s 139(1)

 – Assessee submitted that the adjustment made by the CPC was beyond the scope of section 143(1)(a)(v)

ITAT Rajkot has held as under:

– 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

 – Amendment has been introduced in section 143(1)(a)(v) of the Act to provide that the claim of deduction under section 80P can be denied to the assessee, in case the assessee does not file its return of income within the time prescribed u/s 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.

– 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.

– 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)?

– 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 delayed filing of return of income and also the said adjustment is not permissible under section 143(1)(a)(v) of the Act.

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 was made.

Conclusion:

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, 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. Appeal of the assessee is allowed.

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