Prima facie adjustment for belated filing under Chapter VIA was impermissible before section 143(1)(a)(v) took effect.

Before 01.04.2021, CPC lacked authority under section 143(1)(a) to make a prima facie adjustment disallowing a Chapter VIA deduction merely because the return was filed after the due date under section 139(1). The power to deny such claims was introduced only by the Finance Act, 2021 through section 143(1)(a)(v), and could not be applied to earlier processing. Accordingly, the adjustment disallowing deduction under section 80P was without jurisdiction and unsustainable, and the deduction was to be allowed.

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Issues: Whether the CPC could, before 01.04.2021, make a prima facie adjustment under section 143(1)(a) to deny deduction under Chapter VIA on the ground that the return was filed beyond the due date prescribed under section 139(1), and consequently disallow deduction under section 80P.

Analysis: The return for the relevant assessment year had been filed after the due date and the CPC had disallowed the deduction while processing the return. The controlling legal position applied was that the power to make such an adjustment by disallowing a Chapter VIA claim for belated filing was conferred on the CPC only by the Finance Act, 2021, with effect from 01.04.2021, through section 143(1)(a)(v). Since the impugned adjustment had been made prior to that date, the CPC lacked the authority to deny the deduction on that ground. The prior appellate order was therefore unsustainable.

Conclusion: The disallowance was without jurisdiction and the deduction under section 80P was to be allowed. The assessee succeeded on the main ground, and the alternate ground became infructuous.

Ratio Decidendi: A prima facie adjustment under section 143(1)(a)(v) disallowing a Chapter VIA deduction for belated filing cannot be made for a return processed before the provision became effective on 01.04.2021.

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