Prima-facie adjustment jurisdiction absent pre 01.04.2021; clerical e return errors do not defeat substantive deduction entitlement.

Centralised processing centre lacked jurisdiction before 01.04.2021 to make prima-facie adjustments denying Chapter VI-A deductions, and returns filed within the due date cannot be treated as belated for that purpose; outcome: CPC adjustment unsustainable. Separately, a substantive entitlement to a cooperative-society deduction under the statutory Chapter VI-A provisions cannot be defeated by a clerical/typographical mis-entry of the sub clause in the e return; such mistakes apparent on record are rectifiable and the deduction claim is to be allowed on the substantive facts. Outcome: deductions directed to be granted.

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Issues: (i) Whether the Centralized Processing Center (CPC) had jurisdiction to make prima-facie adjustment under section 143(1)(a)(v) of the Income-tax Act, 1961 prior to 01.04.2021 to deny Chapter VI-A deductions; (ii) Whether the assessee's claim for deduction under section 80P(2)(a)(i) of the Income-tax Act, 1961 can be allowed despite the claim being entered under an incorrect sub-clause in the return (typographical/clerical error).

Issue (i): Whether the CPC had power to deny Chapter VI-A deductions by prima-facie adjustment under section 143(1)(a)(v) of the Income-tax Act, 1961 prior to 01.04.2021.

Analysis: The Tribunal examined whether returns for the assessment years were filed within the due date under section 139(1) of the Income-tax Act, 1961 and reviewed coordinate decisions on CPC's powers. It found that the assessee's returns for both years were filed within the prescribed due dates and noted precedents holding that prior to 01.04.2021 CPC did not have jurisdiction to make disallowances of Chapter VI-A deductions by prima-facie adjustment under section 143(1)(a)(v).

Conclusion: The CPC's prima-facie adjustment under section 143(1)(a)(v) to deny Chapter VI-A deductions prior to 01.04.2021 is not sustainable and, on the facts, the returns were not belated; conclusion is in favour of the assessee.

Issue (ii): Whether the assessee's deduction properly claimable under section 80P(2)(a)(i) of the Income-tax Act, 1961 must be denied because the amount was entered under the wrong sub-clause in the e-return.

Analysis: The Tribunal considered that the assessee is a credit cooperative society fulfilling the substantive conditions for section 80P(2)(a)(i) and that the only defect was a clerical/typographical error in selecting the incorrect sub-clause (80P(2)(c)(ii)) in the e-return. Relying on authorities recognising rectification of mistakes apparent on record and the principle that substantive entitlement should not be defeated by form errors, the Tribunal treated the error as rectifiable and noted analogous precedents allowing claims where the substantive conditions are met despite incorrect entry in the return.

Conclusion: The deduction under section 80P(2)(a)(i) of the Income-tax Act, 1961 is allowed for the amounts claimed (Rs. 4,75,747 for AY 2018-19 and Rs. 8,74,180 for AY 2019-20); conclusion is in favour of the assessee.

Final Conclusion: On the combined effect of findings on CPC jurisdiction and rectification of the clerical error, the appeals are allowed and the assessee's claimed deductions under section 80P(2)(a)(i) of the Income-tax Act, 1961 are directed to be granted for the stated amounts.

Ratio Decidendi: A substantive entitlement to a Chapter VI-A deduction, when supported by material facts and filed within the due date, cannot be defeated by a clerical or typographical error in the e-return; such mistakes apparent on record are rectifiable and CPC lacked jurisdiction prior to 01.04.2021 to make prima-facie adjustments under section 143(1)(a)(v) to deny such deductions.

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