ITAT directs to Rectify Assessment Order passed u/s 143(3)of Income Tax Act regarding 80P deduction [Read Order]

The Income Tax Appellate Tribunal ( ITAT ), Bangalore bench directed to rectify the assessment order passed under Section 143(3) of the Income Tax Act, 1961 regarding the 80P deduction .

The Assessee Town Vividodesha Sahakari Bhandara Niyamitha is a credit cooperative society engaged in the business of providing credit facilities to its members. The assessee field return of income along with claiming deduction u/s.80P of the Act amounting to Rs.27,16,210. Thereafter the case was selected for scrutiny. After hearing the assessee, the AO passed an order under Section143(3) of the Income Tax Act  dated 14.12.2016 accepting the returned income.

Subsequently the assessee was issued notice by the AO by informing his intention to rectify the assessment order . Since there was no reply to the notice issued, the AO passed an order under Section 154 of the Income Tax Act on 30.3.2022 denying the claim of deduction under Section 80P of the Income Tax Act.

Aggrieved by the order assesee filed an appeal before the first appellate authority. The CIT(Appeals) dismissed the appeal of the assessee and confirmed the view taken by the AO in his order passed under Section 154 of the Income Tax Act rejecting the claim of deduction u/s. 80P of the Income Tax Act.

During the adjudication Sandeep Chalapathy, the counsel for assessee argued that  there is no mistake apparent on record warranting interference under Section 154 of the Income Tax Act. Also the issue involved is highly debatable and not amenable to rectification under Section. 154 of the Income Tax Act

Ganesh R. Ghalei, standing counsel, supported the order passed under Section 154 of the Income Tax Act and the order of the CIT(Appeals).

The tribunal observed that the AO has merely stated that the assessee has been wrongly granted deduction under Section. 80P of the Income Tax Act and therefore the same has been rectified.The AO has not passed a speaking order stating that deduction under Section 80P of the Income Tax Act allowed is a mistake apparent from the record.

Further the In the instant case, the AO has not brought out single material on record to show that the deduction granted in the assessment order completed is a mistake apparent from the record. The rectification order does not provide for any reason

Therefore the bench  further observed that AO while issuing show cause notice for rectification had not mentioned that the assessee had violated the principles of mutuality by dealing with nonmembers.

After analyzing the submission of both parties the bench comprising  George George K (Vice President) and Chandra Poojari, (Accountant Member) allowed  rectification of the assessment order passed under Section 143(3) of the Income Tax Act, 1961 regarding the 80P deduction.

To Read the full text of the Order CLICK HERE

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