Foundational requirement for processing a return under Section 143(1) is that such return must be valid as per the Act

 

Bangalore Tribunal: Mysore District Judicial Employee Credit Co-operative Society Limited (ITA No 1271/Bang/2024) has held that the the intimation issued by CPC was without jurisdiction and void ab initio.

Let us have a Short Overview of the case:

Key Issue
Disallowance of Deduction under Section 80P:
The primary issue is the disallowance of the claim of deduction under Section 80P of the Income Tax Act, amounting to ₹35,86,483/-.

Facts of the Case

The assessee is a cooperative society engaged in providing credit facilities to its members.

For AY 2020-21, the assessee did not file its return of income within the due date prescribed under Section 139(1) of the Act.

The time limit for filing a belated return under Section 139(4) had also lapsed.

Consequently, the assessee filed an updated return under Section 139(8A) on 26th September 2022, declaring a total income of NIL after claiming the deduction under Section 80P(2)(a)(i) of the Act for ₹35,86,483/-.

The CPC held the updated return invalid through an intimation dated 28th March 2023, citing non-compliance with Section 140B of the Act and omission to file Part B-ATI in the return of income.

Subsequently, the CPC issued another intimation on 25th December 2023, questioning the correctness of the deduction claimed under Section 80P, reasoning that such a claim is not admissible when a return is not filed under Section 139(1).

The CPC passed an intimation under Section 143(1) on 29th December 2023, disallowing the entire deduction claimed by the assessee.

Tribunal’s decision:
The Tribunal noted that the intimation issued under Section 143(1) was without jurisdiction, as it was based on a return that was already held invalid by CPC itself.

A foundational requirement for processing a return under Section 143(1) is that such return must be valid as per the Act.

Once the updated return filed under Section 139(8A) was declared invalid by CPC, it ceased to exist for legal purposes and could not form the basis for any further intimation or adjustment under Section 143(1).

The Tribunal observed that where no valid return exists, any disallowance of claims must be undertaken through regular assessment proceedings under Section 144, not through summary processing under Section 143(1).

Consequently, the Tribunal held that the impugned intimation dated 29th December 2023 issued by CPC was bad in law and void ab initio.

The copy of the order is as under:

1745498743648