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2025 (5) TMI 504 - AT - Income TaxDisallowance of 80P deduction - defaulting in filing the return within the time limit prescribed u/s 139(1) - HELD THAT - As the appellant society furnished its ITR beyond the prescribed due date (filed belated) but making therein claim for 80P(2) deduction. The claim for deduction was no doubt subjected to disallowance by application of provisions of clause (ii) of section 80AC of the Act however there was complete absence of authority vested with the Ld. CPC to carry out the disallowance u/s 143(1)(a)(v) . Therefore the impugned action of denial of 80P deduction to the appellant by the Ld. CPC was barred by jurisdiction hence unlawful. And in the absence of any explicit power contained in and vested with any authority under the Act to ratify the impugned action of the Ld. CPC we are duty bond to reverse prejudice caused to the appellant by vacating the impugned disallowance. Without multiplying the judicial precedents on the subject matter maintaining the parity with the decision of learned co-ordinate benches we concur with the claim of the appellant society that the Ld. CPC clearly traversed and in fact exceeded its jurisdiction in disallowing the appellant s claim for deduction u/s 80P. In the absence of anything contrary brought to our notice by the respondent revenue placing reliance on the decision of CIT Vs Travancore Titanium Products Ltd. 2003 (4) TMI 33 - KERALA HIGH COURT we allow the appeal of the assessee following the decision of the co-ordinate bench laid in aforestated case of Allamaprabhu VUSS Niyamit Kalloli Allamaprabhu VUSS Niyamit Kalloli 2025 (5) TMI 432 - ITAT PANAJI wherein while allowing the appeal filed by the assessee held that the Ld. CPC at the relevant time of processing return lacked the jurisdiction to carry out disallowance of 80P deduction. Assessee appeal allowed.
1. ISSUES PRESENTED and CONSIDERED
The core legal questions considered by the Tribunal are:
2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Jurisdiction of the CPC under section 143(1) of the Act to disallow deduction under section 80P for belated return filing Relevant legal framework and precedents: Section 143(1) of the Income-tax Act empowers the CPC to process returns summarily and issue intimation orders. Clause (v) of section 143(1)(a) specifically enumerates the CPC's power to disallow certain deductions if the return is filed beyond the due date under section 139(1). Prior to amendment, this clause listed specific sections (10AA, 80-IA, 80-IAB, 80-IB, 80-IC, 80-ID, 80-IE) under which deductions could be disallowed on late filing. Section 80AC(ii), introduced by the Finance Act, 2018, mandates that to claim deductions under Chapter VI-A, including section 80P, the return must be filed within the prescribed due date under section 139(1). Failure to do so results in disqualification of the deduction claim. However, the clause (v) of section 143(1)(a) was substituted by the Finance Act, 2021 with effect from 01/04/2021 to include deductions under "any of the provisions of Chapter VI-A" under the heading "C.-Deductions in respect of certain incomes," thereby expanding the CPC's power to disallow such deductions during summary processing. Court's interpretation and reasoning: The Tribunal noted that at the time when the CPC passed the order of intimation (16/04/2020), the clause (v) of section 143(1)(a) did not empower the CPC to disallow deductions under section 80P or Chapter VI-A generally for belated returns. The amendment expanding this power only came into effect from 01/04/2021. Therefore, the CPC lacked jurisdiction to deny the deduction claimed under section 80P during summary assessment for AY 2019-20. Key evidence and findings: The return was filed on 23/09/2019, after the due date of 31/08/2019, making it a belated return under section 139(4). The CPC denied the deduction claimed under section 80P invoking section 80AC(ii) due to late filing. The appellant challenged the jurisdiction of the CPC to disallow the deduction at the summary stage. Application of law to facts: Since the CPC's jurisdiction to disallow deductions under Chapter VI-A on account of late filing was not conferred until the Finance Act, 2021 amendment, the denial of deduction in 2020 was beyond the CPC's authority. Treatment of competing arguments: The Revenue contended that since section 80AC(ii) disqualifies deductions for late filing, the CPC could deny the claim either at summary assessment under section 143(1) or regular assessment under section 143(3). The Tribunal rejected this, emphasizing the absence of explicit jurisdictional power in section 143(1)(a)(v) at the relevant time. Conclusions: The CPC's disallowance of the deduction under section 80P during summary processing was without jurisdiction and therefore invalid. Issue 2: Applicability of section 80AC(ii) and the timing of jurisdictional amendments Relevant legal framework and precedents: Section 80AC(ii) disqualifies deductions under Chapter VI-A if the return is not filed within the due date under section 139(1). However, the mechanism for enforcing this disqualification at the summary assessment stage depends on the jurisdiction granted under section 143(1)(a)(v). The Tribunal relied on several coordinate bench decisions, including 'Dayalbhag Co-op. Chrome Leather Tanneries Ltd. Vs DCIT, CPC', 'Allamaprabhu VUSS Niyamit Kalloli Allamaprabhu VUSS Niyamit Kalloli Vs ITO', and 'Bhagyalaxmi Co-Op. Cr. Soc. Ltd. Vs DCIT' which held that prior to the Finance Act, 2021 amendment, the CPC lacked jurisdiction to disallow section 80P deductions during summary assessment. Court's interpretation and reasoning: The Tribunal highlighted that while section 80AC(ii) applied from AY 2019-20 onwards, the enabling provision allowing CPC to disallow deductions under Chapter VI-A at summary assessment was introduced only from AY 2021-22. Therefore, the denial of deduction by the CPC before this amendment was ultra vires. Key evidence and findings: The Tribunal examined the text of clause (v) of section 143(1)(a) before and after substitution and found that the earlier provision did not include section 80P or Chapter VI-A generally. Application of law to facts: Since the appellant's return was processed in 2020, before the amendment, the CPC had no power to deny the deduction at that stage. Treatment of competing arguments: The Revenue's argument that disallowance could be made either at summary or regular assessment was countered by the Tribunal's finding that the CPC's summary power was limited by the statutory text at the relevant time. Conclusions: The Tribunal concluded that the disallowance of the deduction under section 80P on the ground of late filing could not be validly made by the CPC at summary assessment for AY 2019-20. Issue 3: Validity of the CIT(A)'s order upholding the CPC's disallowance Relevant legal framework and precedents: The CIT(A) had upheld the CPC's disallowance of the deduction. However, coordinate benches have set aside similar orders upholding CPC disallowance in the absence of jurisdiction. Court's interpretation and reasoning: The Tribunal found that the CIT(A) erred in confirming the CPC's disallowance since the CPC lacked jurisdiction at the relevant time. The Tribunal relied on the consistent view of coordinate benches and authoritative precedents to reverse the CIT(A) order. Key evidence and findings: The Tribunal noted no contrary submissions or evidence from the Revenue to justify the CIT(A)'s decision. Application of law to facts: The CIT(A)'s order was set aside, and the disallowance was directed to be reversed. Treatment of competing arguments: The Tribunal rejected the Revenue's contention that the CIT(A) was correct in upholding the disallowance. Conclusions: The CIT(A) order was quashed, and the appellant's claim for deduction under section 80P was restored. 3. SIGNIFICANT HOLDINGS The Tribunal held:
Core principles established include:
Final determinations on each issue are:
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