PER : SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER:-

1. This assessee’s appeal for A.Y. 2019-20, arises from order of National Faceless Appeal Centre (NFAC), Delhi dated 05-04-2022, in proceedings under section 250 of the Income Tax Act, 1961; in short “the Act”.

2. The assessee has taken the following grounds of appeal:-

3. The brief facts of the case are that the assessee is a co-operative society, who filed return of income on 28-11-2020 declaring total income of
5,58,494/- and claimed deduction of 5,58,494/- under section 80P of the Act. The extended due date of filing original return of income for assessment year 2019-20 was 31-08-2019. Thereafter, the assessee received intimation under section 143(1)(a) of the Act making adjustment in the returned income and not granting deduction of 5,58,494/- claimed in the return of income under section 80P of the Act, since the return of income was not filed within the due date prescribed under section 139(1) of the Act.

4. The assessee filed appeal against the order of Ld. CIT(A), who dismissed assessee’s appeal with the following observations:

“6.2 The appellant filed the return of income on 28/11/2020 claiming deduction of Rs. 5,58,494/- u/s 80P of the Act and the extended due date for filing of the original return was 31/08/2018. Thus there is a delay of more than one year in filing the return. The CPC disallowed the deduction stating that the appellant is not entitled to deduction on the ground that the appellant filed the return of income beyond the due date mentioned in Sec. 139(1) of the Act. In this regard, Section 80AC of the Act is reproduced below:

Section 80AC Where in computing the total income of an assessee of any previous year relevant to the assessment year commencing on or after

(i) the 1st day of April, 2006 but before the 1st day of April, 2018, any deduction is admissible under section 80-1A or section 80-IAB or section 80-1D or section 80-IC or section 30- ID or section 80-IE;

(ii) the 1st day of April, 2018, any deduction is admissible under any provision of this Chapter under the heading "C- Deductions in respect of certain incomes no such deduction shall be allowed to him unless he furnishes a return of his income for such assessment year on or before the due date specified under sub-section (1) of section 139" Thus, it is clearly evident that deductions u/s 80P is not allowable if the return is not filed within the stipulated time mentioned in section 139(1) of the Act. Reliance is placed in the case of Bal Kishan Dhawan (HUF) VS. ITO reported in (2012) 18 Taxmann.com 234 (in which the claim was made u/s 139(4) of the Act). Honble Amritsar Bench of the Tribunal had categorically held that Sec 80AC not only contains the time limit for claiming deduction u/s 8018 but also indicates the consequences that would follow if return of income containing the claim of deduction is not furnished before the due date specified in sec 139(1) of the LT Act Every provision in the statute has a purpose and the parliament in its wisdom has introduced the Sec 80AC and proviso to sec 13901) to specify that the appellant's claiming certain deduction have to file their returns within the due date specified us 139(1) of the Act. Any decision to say that it is only directory and the appellant are entitled to make claims of deduction even if returns are filed u/s 139(4) would only make the provision redundant if any assessee fails to tie the return u/s 139(1) by the due date, he is bound to pay interest u/s 234A for the delay in filing of the return. Various High Courts have held that the provisions of 234 AB&C to be valid and not ultra virus of the constitution. The assessees have been paying the interest for any such delay. On comparison, it is not farfetched to argue that the assessees have to forgo certain benefits for not complying with the provisions.

6.3 The appellant further relied on various judicial decisions in regards to the liberal interpretation should be given in case of deductions in this issue. The observation of the Supreme Court in the following cases are relevant and are to be taken on note

(i) In the case of Orissa State Warehousing Corporation Vs. CIT reported in 237 ITR 589 [LQ/SC/1999/355] (SC), Hon'ble Supreme Court held that Fiscal statue shall have to be interpreted on the basis of the language used there in and not de hors the same. No words ought to be added and only the language used ought to be considered so as to ascertain the proper meaning and intent of the legislature The Court is to ascribe natural and ordinary meaning to the words used by the legislature and the Court ought not under any circumstances to substitute its own impression and ideas in place of the legislative intent as his available from a plan reading of the statutory provisions.”

(ii) In the case of Keshavji Ravji & Co. Vs CIT reported in 183 ITR 1 [LQ/SC/1990/60 ;] (SC) was held that "as long as there is no ambiguity in the statutory language resort to any interpretative process to unfold the legislative intent becomes impermissible The supposed intention of the legislation cannot then appealed to whittle down the statutory language which is otherwise unambiguous if the intendiment is not in the words used is nowhere else The need for interpretation arises when the words used in the statute are on their terms, ambivalent and do not manifest the intent of the legislature.Artificial and unduly latitudinarian rules of construction which, with their general tendency to give the tax payer the breaks are out of place where the legislation has a fiscal mission"

(ii) In the case of NOVOPAN India Ltd Vs. Collector or central Excise reported in 79 ELT 769 (SC), it was held that "The principle that in case of ambiguity a taxing statute should be construed in favour of assessee- assuming that the said principle is good and sound does not apply to the construction of an exception or exempting provisions They have to be construed strictly. A person invoking an exception or exemption provision to relieve him of the tax liability must establish that he is covered by the said provision in case of doubt or ambiguity, benefit of it must go to the state".

6.4 In view of the above Supreme Court observations it is held that there is no ambiguity in Sec 80AC of the Act Therefore, in view of the clear cut provisions of section 80AC of the Act deduction u/s 80P of the Act cannot be allowed to the appellant as the return of income was filed beyond the due date as specified us 139(1) of the Act. In view of this, the disallowance made by the CPC is upheld Therefore, ground no 3 of the appeal is dismissed.”

5. The assessee is in appeal before us against the aforesaid order passed by Ld. CIT(A) denying assessee’s claim of exemption under section 80P of the Act.

6. Before us, the counsel for the assessee submitted that CPC made adjustment to income of the assessee by denying assessee’s claim of deduction of 5,58,494/- under section 80P of the Act on the ground that the claim of assessee was incorrect under section 143(1)(a)(ii) of the Act since the return of income was not filed within the due date prescribed under section 139(1) of the Act. The counsel for the assessee submitted that the adjustment made by the CPC was beyond the scope of section 143(1)(a)(v) of the Act. The counsel for the assessee submitted that 143(1)(a)(v) of the Act was amended w.e.f. 01-04-2021 and hence any prima facie adjustment relating to denial of deduction when the return of income was not filed within due date, was not possible for the year under consideration. Further, “incorrect claim” u/s 143(1)(a)(ii) of the Act is defined by way of an Explanation to section 143(1) of the Act which does not state that the claim would be “incorrect” if return of income is not filed within the due date. Hence, the action of CPC is bad in law and therefore Ld. CIT(A) erred in facts and in law in holding that the assessee is not eligible for claiming deduction under section 80P of the Act for not filing return within the due date prescribed under section 139(1) of the Act. In response, Ld.Departmental Representative relied upon the observations made by Ld. CIT(A) in the appellate order.

7. We have heard the rival contentions and perused the material on record. In the instant facts, admittedly the assessee did not file return of income within the time permissible under section 139(1) of the Act. However, the assessee filed its return of income belatedly on 28-11-2020 and claimed deduction of 5,58,494/- under section 80P of the Act. The issue for consideration before us is that whether once the return of income is filed beyond the prescribed date under section 139(1) of the Act, can the deduction under section 80P of the Act be denied to the assessee, by way of adjustment under section 143(1) of the Act. On going through the statutory provisions, we observe that 80AC of the Act provides that no such deduction under section 80P of the Act shall be allowed to an assessee unless he furnishes a return of his income on or before the due date specified under section 139(1) w.e.f. assessment year 2018-19 onwards. However, section 143(1)(a)(v) of the Act provides that disallowance of deduction claimed under any of the provisions of Chapter VI-A under the heading "C.— Deductions in respect of certain incomes" (which includes deduction under section 80P of the Act), can be made if the return is furnished beyond the due date specified under sub-section (1) of section 139. This amendment has been introduced w.e.f. 1-4-2021. Accordingly, the above amendment would not apply to the impugned assessment year. Further, section 143(1)(ii) of the Act permits adjustment in case of an incorrect claim, if such incorrect claim is apparent from any information in the return. However, Explanation to the aforesaid section specifies the following cases where the claim made in the return of income can be said to be “incorrect” for the purposes of this sub- section:

(a) "an incorrect claim apparent from any information in the return" shall mean a claim, on the basis of an entry, in the return,—

(i) of an item, which is inconsistent with another entry of the same or some other item in such return;

(ii) in respect of which the information required to be furnished under this Act to substantiate such entry has not been so furnished; or

(iii) in respect of a deduction, where such deduction exceeds specified statutory limit which may have been expressed as monetary amount or percentage or ratio or fraction

7.1 A joint reading of the above provisions makes it evident that 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. However, we also note that amendment has been introduced in section 143(1)(a)(v) of the Act to provide that the claim of deduction under section 80P of the Act can be denied to the assessee, in case the assessee does not file its return of income within the time prescribed under section 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. Accordingly, in our considered view, 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.

7.2 The second issue for consideration is that 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). In our view, the scope of the adjustments that can be made under the said provision has been elaborated in the Explanation to the aforesaid section, which does not include denial of deduction claimed by the assessee in case the assessee does not furnish its return of income within the date stipulated under section 139(1) of the Act. The Explanation to the said section specifically provides for cases/instances when the claim made by the assessee could be said to be “incorrect”. Therefore, in our considered view, 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).

7.3 We note that in the case of Chirakkal Service Co-Operative Bank Ltd. Kannur v. CIT 2016] 68 taxmann.com 298 (Kerala), the Kerala High Court held that a return filed by assessee beyond period stipulated under section 139(1) or 139(4) or under section 142(1) or section 148 can also be accepted and acted upon for entertaining claim raised under section 80P provided further proceedings in relation to such assessments are pending in statutory hierarchy of adjudication in terms of provisions of Act. In the case of ASR Engg. & Projects Ltd. [2019] 111 taxmann.com 49 (Hyderabad - Trib.), the ITAT held that to be eligible to make claim under section 80-IA or any other section of Chapter VI A, assessee should have filed return of income under section 139(1) and even if it did not make claim for deduction in original return and subsequently file revised return making such claim, its claim for deduction under section 80-IA is maintainable. Therefore, where assessee had filed return under section 139(1), it was entitled to claim deduction under section 80-IA even if such claim was not made in original return but subsequently in revised return filed in response to notice issued under section 153A. In the case of Lanjani Co-Operative Agri Service Society Ltd. (CPC) v. DCIT [2023] 146 taxmann.com 468 (Chandigarh - Trib.), the ITAT held that the enabling provisions of sub- clause (v) of section 143(1) providing for disallowance of deduction under section 80P due to late filing of return having been introduced by Finance Act, 2021 effective from 1-4-2021, disallowance of deduction claimed under section 80P during relevant years 2018-19 and 2019-20 on grounds of late filing of return was unjustified. In the case of Lunidhar Seva SahkariMandali Ltd.149 taxmann.com 28 (Rajkot - Trib.) the ITAT held that denial of claim under section 80P would not come within purview of prima facie adjustment under section 143(1)(a)(v) for reason that said section was not in force during period under consideration i.e. assessment year 2019-20. Further, the case of assessee would also not fall within purview of prima facie adjustment under section 143(1)(a)(ii), which specifies the list for disallowance under the said provision and prima facie adjustment for late filing of return of income is not specifically included therein.It was held that that since return of income was filed within due date permissible under section 139(4), in which claim for deduction under section 80P was made, therefore, deduction under section 80P could not be denied to assessee only on basis that assessee did not file its return of income within due date prescribed under section 139(1) by way of adjustment u/s 143(1) of the Act. 7.4 Therefore, though section 80AC of the Act does provide for denial of deduction u/s 80-P in case return of income is filed beyond stipulated date u/s 139(1) of the Act, but various judicial precedents have also held that “deduction” provisions need to be construed “liberally”. Therefore, denial of deduction u/s 80-P of the Act cannot come within the purview of a prima-facie adjustment u/s 143(1) of the Act, especially in light of absence of an enabling provision during the impugned assessment year, which came to be introduced only during the succeeding assessment year. We, however, wish to point out that we are only concerned or adjudicating on the limited aspect of whether denial of deduction u/s 80-P of the Act can be sustained by way of prima- facie adjustment u/s 143(1) of the Act, and we are not adjudicating or commenting on whether such deduction u/s 80-P of the Act can be disallowed during the course of regular assessment.

7.4 We note that the instant case, there was a delay in filing the return of income by the assessee for the assessment year 2019-20. However, we are of the view that 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, by way of prima facie adjustment u/s 143(1) of the Act, in light of above discussion and judicial precedents highlighted above.

8. In the result, appeal of the assessee is allowed.

Order pronounced in the open court on 19-07-2023