In a recent judgement, the Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) deleted the adjustment on the Section 80P deduction as the taxpayer filed their Income Tax Return ( ITR ) within the due date under Section 139(1).
The assessee, Vishva Villa Co-op Housing Society Ltd challenged the separate impugned orders dated December 29, 2023, issued by the Additional/JCIT(A)-1, Ahmedabad, concerning the assessment years 2012-13, 2013-14, and 2014-15. These appeals pertain to adjustments made under Section 143(1)(a) by disallowing the claim of deduction under Section 80P(2)(d).
Mr. Rajesh Shah, representing the assessee, submitted that the appeal for the assessment year 2013-14 (682/Mum/2024) is being withdrawn because the disallowance under Section 80P (2)(d) was removed following an application filed under Section 154 before the CPC. As a result, the assessee has no grievance for this assessment year.
Regarding the other assessment years, Mr. Shah noted that the CIT (A) dismissed the appeals due to delays of nearly 10 years for AY 2012-13 and nearly 8 years for AY 2014-15. The appeals were dismissed because of the delay in filing the appeals against the intimation under Section 143(1).
Mr. Shah explained that the delay occurred because the assessee had filed a petition for rectification under Section 154 before the AO/CPC, which was not resolved. The assessee’s counsel had advised that since the application under Section 154 was pending, an appeal did not need to be filed. An affidavit from the secretary of the society was submitted, outlining the facts and circumstances of the delay. Consequently, the assessee believed in good faith that there was no need to file an appeal before the CIT (A).
Further submitted that the order under Section 154 for the assessment year 2013-14 had already provided relief to the assessee, leading to the expectation that similar relief would be granted for the assessment years 2012-13 and 2014-15 by the CPC.
He argued that the prima facie adjustment under Section 143(1) disallowing the claim under Section 80P for interest received from a cooperative bank was incorrect. This issue had been resolved in favor of the assessee in several decisions by the Tribunal and the High Court, and such an adjustment under Section 80P was beyond the scope of Section 143(1).
On the other hand, Mr. R.R. Makwana, representing the revenue, contended that there was an enormous delay in filing the appeal before the CIT (A). He argued that if the order under Section 154 was not passed within a reasonable time, the assessee should have filed an appeal before the CIT (A). Therefore, the CIT (A) rightly rejected the appeal due to the delay.
The ITAT bench, after reviewing the relevant material on record, observed that the assessee had explained the reason for the delay in filing the first appeal before the CIT (A). The initial chartered accountant had filed a rectification application under Section 154 before the AO/CPC, and the assessee believed in good faith that the adjustment would be rectified. The CA did not advise the society to file an appeal during this period.
It was only when a demand notice was issued that the assessee was advised to file an appeal. Given that the assessee is a cooperative housing society and believed in good faith that the rectification was pending, the delay in filing the first appeal cannot be attributed to negligence on the assessee’s part. Thus, the delay in filing the appeal before the first appellate authority is condoned.
The bench noted that the assessee, a Cooperative Housing Society registered under the Maharashtra Society Act 1960, had filed its returns of income within the due dates under Section 139(1) for the assessment years 2012-13 and 2014-15. Under the amended provisions, no prima facie adjustment on account of deduction under Section 80P could have been made.
Consequently, the two-member bench of the tribunal, comprising Ratheesh Nandan Sahay (Accountant Member) and Amit Shukla (Judicial Member), held that the disallowance made by the CPC under Section 143(1)(a) on the claim of deduction under Section 80P was beyond the scope of adjustment under Section 143(1). Accordingly, the adjustment was deleted.
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