2025 (9) TMI 288 - AT - Income Tax

Appeal allowed: s.143(1) intimation annulled; denial of s.80P for late s.139(1) filing impermissible for AY 2019-20

Pahalampur Samabay Krishi Unnayan Ltd. C/o S.N. Ghosh & Associates Versus ITO, Ward-23 (1), Hooghly

Pahalampur Samabay Krishi Unnayan Ltd. C/o S.N. Ghosh & Associates Versus ITO, Ward-23 (1), Hooghly - TMI ISSUES PRESENTED AND CONSIDERED 1. Whether the delay in filing the appeal (967 days) should be condoned and the appeal admitted for adjudication. 2. Whether a deduction claimed under Section 80P (Chapter VI-A) can be disallowed by way of processing adjustment under Section 143(1)(a)(v) where the return of income for the relevant assessment year (2019-20) was filed after the due date specified in Section 139(1), having regard to the temporal scope of the Finance Act, 2021 amendment to Section 143(1)(a)(v). 3. Whether denial of a Section 80P deduction can be sustained as a prima facie 'incorrect claim' under Section 143(1)(a)(ii) (an incorrect claim apparent from information in the return) when the only basis is belated filing beyond the Section 139(1) due date for the assessment year 2019-20. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Condonation of Delay in Filing Appeal Legal framework: Principles governing condonation of delay in filing appeals require plausible and valid reasons to be shown for extended delay; tribunal has discretion to condone delay where reasons are acceptable. Precedent treatment: The Bench applied established discretionary principles without reference to conflicting authority. Interpretation and reasoning: The application for condonation contained plausible and valid reasons; the Tribunal exercised discretion to condone 967 days' delay and proceeded to adjudicate the appeal on merits. Ratio vs. Obiter: Ratio (procedural): delay condoned as a matter of discretion on the facts presented. Conclusion: Delay in filing the appeal was condoned; appeal admitted for adjudication on merits. Issue 2 - Permissibility of Disallowing Section 80P Deduction in Section 143(1) Processing for AY 2019-20 (Pre-amendment) Legal framework: Section 80P (deductions under Chapter VI-A); Section 80AC (no deduction under specified sections unless return furnished on or before due date under Section 139(1)); Section 143(1)(a)(v) (processing adjustments permitting disallowance of deductions under Chapter VI-A where return is furnished beyond due date) as amended by Finance Act, 2021 with effect from 01.04.2021. Precedent treatment: The Tribunal followed coordinate-bench decisions addressing identical facts for assessment years prior to the 01.04.2021 amendment, holding that the post-2021 amendment to Section 143(1)(a)(v) cannot be invoked retrospectively for assessment years 2018-19/2019-20. Interpretation and reasoning: The Tribunal examined the temporal effect of the Finance Act, 2021 amendment to Section 143(1)(a)(v). It held that prior to w.e.f. 01.04.2021 the processing provision did not empower the Central Processing Centre (CPC) to disallow Chapter VI-A deductions (including Section 80P) solely because the return was filed after the Section 139(1) due date. For assessment year 2019-20 (relevant year 2018-19), the amendment was not in force; therefore the statutory basis for denying the Section 80P claim at the processing stage did not exist. The Tribunal relied on the enacted text, the effective date of the amendment, and consistent decisions of coordinate benches that reached the same conclusion. Ratio vs. Obiter: Ratio: For assessment years prior to 01.04.2021, Section 143(1)(a)(v) (as subsequently amended) could not be invoked to disallow deductions under Chapter VI-A on the ground of belated filing; therefore processing-stage disallowance of a Section 80P claim for AY 2019-20 is impermissible. Conclusion: The intimation under Section 143(1) that disallowed Section 80P on the sole ground of return filed after Section 139(1) due date (for AY 2019-20) was invalid and was quashed; the deduction was to be restored and the order set aside. Issue 3 - Applicability of Section 143(1)(a)(ii) ('Incorrect Claim Apparent from Return') to Deny Section 80P Deduction Where Only Basis Is Late Filing Legal framework: Section 143(1)(a)(ii) permits adjustments where an incorrect claim is apparent from information in the return; Explanation to Section 143(1)(a)(ii) defines 'incorrect claim apparent from any information in the return' by reference to (i) inconsistency between entries, (ii) non-furnishing of information required to substantiate the entry, or (iii) deduction exceeding specified statutory limits. Precedent treatment: Coordinate-bench authorities considered the Explanation and held that denial of a Chapter VI-A deduction solely because the return was filed after Section 139(1) due date does not fall within the Explanation's categories of an 'incorrect claim apparent from the return.' Interpretation and reasoning: The Tribunal analysed the Explanation to Section 143(1)(a)(ii) and concluded that late filing is not an element enumerated in the Explanation that would make a claim 'incorrect' as a matter of being apparent from the return itself. The Explanation contemplates errors discoverable from the return's contents (inconsistency, missing substantiating information, quantitative breach of limits), not temporal compliance failures such as belated filing. Therefore, invoking Section 143(1)(a)(ii) to deny Section 80P solely on the ground of late filing was not permissible for the assessment year in question. Ratio vs. Obiter: Ratio: Denial of a Section 80P deduction on the sole ground of belated filing does not qualify as an 'incorrect claim apparent from any information in the return' within the meaning of Section 143(1)(a)(ii) (as explained by the Explanation) for assessment years prior to the 2021 amendment. Conclusion: Even if the Revenue sought to characterize the adjustment under Section 143(1)(a)(ii), that provision's Explanation does not support disallowing Section 80P solely because the return was not filed within Section 139(1) due date for AY 2019-20; accordingly such an adjustment was impermissible. Cross-References and Consequential Direction 1. The Tribunal expressly followed coordinate bench decisions addressing identical facts and legal questions, treating those decisions as persuasive and applicable to the assessment year before the Finance Act, 2021 amendment took effect. 2. Consequentially, the Tribunal directed the designated authority/CPC to restore the Section 80P deduction and allow the claim in the returned income for AY 2019-20.