Late filing doesn't bar co-op society from section 80P deduction

The Tribunal allowed the appeal of the co-operative society, holding that the denial of the deduction under section 80P for late filing of the return was not sustainable for the assessment year 2019-20. It was concluded that deductions under section 80P cannot be denied solely based on late filing if done within the extended period under section 139(4). The claim for deduction under section 80P could not be denied merely on the basis of late filing of the return.

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Issues Involved:
1. Denial of deduction under section 80P for filing return beyond the due date under section 139(1).
2. Scope of adjustments under section 143(1)(a) for incorrect claims.

Summary:

Issue 1: Denial of Deduction Under Section 80P for Late Filing
The assessee, a co-operative society, filed its return of income on 28-11-2020, claiming a deduction of Rs. 5,58,494 under section 80P of the Income Tax Act. The return was filed beyond the due date prescribed under section 139(1). The Centralized Processing Centre (CPC) disallowed the deduction, citing section 80AC, which mandates that deductions under section 80P are not allowable if the return is filed after the due date. The Commissioner of Appeals (CIT(A)) upheld this disallowance, referencing several Supreme Court judgments that emphasize strict adherence to statutory language and deadlines.

Issue 2: Scope of Adjustments Under Section 143(1)(a)
The assessee argued that the adjustment made by the CPC was beyond the scope of section 143(1)(a)(v) of the Act, which was amended effective from 01-04-2021, and thus not applicable for the assessment year 2019-20. The Tribunal noted that section 143(1)(a)(v) allows disallowance of deductions if the return is filed beyond the due date, but this amendment came into effect only from 01-04-2021. Therefore, for the assessment year 2019-20, such a disallowance could not be made as a prima facie adjustment under section 143(1)(a).

The Tribunal also considered whether the case falls under section 143(1)(a)(ii) for incorrect claims. The Explanation to this section defines "incorrect claim" but does not include late filing of returns as a basis for disallowance. The Tribunal referenced several judicial precedents, including the Kerala High Court and various ITAT rulings, which support the view that deductions under section 80P cannot be denied solely based on late filing of returns if the return is filed within the extended period under section 139(4).

Conclusion:
The Tribunal concluded that the denial of the deduction under section 80P of the Act by way of prima facie adjustment under section 143(1)(a) was not sustainable for the assessment year 2019-20. The appeal of the assessee was allowed, and it was held that the claim for deduction under section 80P could not be denied merely on the basis of late filing of the return.

Order Pronounced:
The appeal of the assessee was allowed, and the order was pronounced in the open court on 19-07-2023.

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