ITA No 267/Coch/2012 (Asst Year 2009-10 ) IN INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH KOCHI BEFORE S/SHRI B P JAIN, AM & GEORGE GEORGE K, JM ITA No 267/Coch/2012 (Asst Year 2009-10 ) M/s. Perassery Service Co-operative Vs Income Tax Officer Bank Ltd., Ward -1, Peralassery, P.O.Mudalur, Kannur. Kannur District -670 622 ( Appellant) (Respondent) PAN No. AAAAT7441H Assessee By Smt. Divya Ravindran Revenue By Shri Dhanaraj, Sr DR Date of Hearing 29th Sept 2016 Date of pronouncement 29th Sept 2016 ORDER PER GEORGE GEORGE K,JM: This appeal is restored to Tribunal by Hon ble Kerala High Court vide judgment dated 7/04/2016 in ITA no.56 of 2016. 2 Brief facts of case are as follows: assessee is cooperative society registered under Kerala Cooperative Societies Act, 1969. assessee had failed to file return of income for AY 2010-11, AO issued notice u/s 142(1) requiring assessee to file return of income. assessee neither complied with this notice nor filed return of income in terms of section 139 or 142(1) of Act and 1 ITA No 267/Coch/2012 (Asst Year 2009-10 ) hence, best judgment assessment u/s 144 of Act was completed by denying benefit of deduction u/s 80P of I T Act. AO held that by virtue of section 80A(5) of Act, assessee was not entitled to benefit of deduction claimed u/s 80P of Act, since return of income was not furnished within time limit prescribed u/s 139 of Act. 3 Aggrieved by assessment, assessee preferred appeal to first appellate authority. CIT(A) confirmed assessment order. 4 Aggrieved by above order of CIT(A), assessee preferred appeal to Tribunal. Tribunal vide order dated 31/01/2011 disposed off appeal of assessee. Tribunal held that since return was not filed within time prescribed u/s 139(1)or u/s 139(4), assessee was not entitled to benefit of deduction u/s 80P of Act in view of section 80A(5) of Act. 5 Aggrieved by order of Tribunal, assessee preferred further appeal u/s 260A of Act. Hon ble Kerala High Court, vide judgment dated 07/04/2016 in ITA No. 56 of 2016, restored matter to Tribunal. It is in this context, case was heard on 29th Sept 2016. 6. We have heard rival parties and perused material on record. As regards belated filing of return, Hon ble High Court has decided issue in favour of assessee. Hon ble High Court had held that Tribunal was not justified in denying benefit of exemption u/s 80P of Act 2 ITA No 267/Coch/2012 (Asst Year 2009-10 ) on mere ground of belated filing of return of income. Hon ble High Court was considering following substantial question of law: B Whether Tribunal is justified in denying exemption u/s 80P of I T Act 1961 on mere ground of belayed filing of return by assessee? C. Whether return filed by assessee beyond period stipulated u/s 139(1)/(4) or section 142(1)/148 can be held as non-est in law and invalid for purpose of deciding exemption u/s 80P of I T act, 1961? 6.1 In considering above substantial question of law, Hon ble High Court rendered following findings: 18. Questions B & C relate to denial of exemption on ground referable to belated filing of return, that is to say, returns filed beyond period stipulated under section 139)1) or section 139(4) as case may be as well as section 142 (1) or section 148, as case may be. There are no cases among these appeals where returns were not filed. There are cases where claims have been made along with returns and returns were filed within time. Still further, there are cases where returns were filed belatedly, that is to say, beyond period stipulated under sub section 1 or 4 of section 139; and there are also returns filed after period with reference to sections 142(1) and 148 of I T Act. 19. Section 80A(5) provides that where assessee fails to make claim in his return of income for any deduction, inter alia, , under any provision of chapter VIA under heading "C- Deductions in respect of certain incomes", no deduction shall be allowed' to him thereunder. Therefore, in cases where no returns have been filed for particular assessment year, no deductions shall be allowed. This embargo in section 80A(5) would apply, though section 80p 1 S not included in section 80AC. This is so because, inhibition against allowing deduction is worded in quite similar terms in sections 80A(5) and 80AC, of which section 80A(5) is provision inserted through Finance Act 33/2009 with effect from 1.4.2013 after insertion of section 80AC as per Finance Act of 2006 with effect from 1.4.2006. This clearly evidences 3 ITA No 267/Coch/2012 (Asst Year 2009-10 ) legislative intendiment that inhibition contained in sub section 5 of section 80A would operate by itself. In cases where returns have been filed, question of exemptions or deductions referable to section 80P would definitely have to be considered and granted if eligible. 20 Hence, question would arise as to whether belated returns filed beyond period stipulated under section 139(1) or section 139(4) as well as following sections 142(1) and 148 proceedings could be considered for exemption. If those returns are eligible to be accepted in terms of law, going by provisions of statue and governing bind precedents, it goes without saying that claim for exemption will also stand effectuated as claim duly made as part of returns so filed, for due consideration. 21 When notice under section 142(1) is issued, person may furnish return and while doing so, could also make claim for deduction referable to section 80P. Not much different is situation when pre-assessment enquiry is carried forward by issuance of notice under section 142 (1) or when notice 1 s issued on premise of escaped assessment referable to section 148 of IT Act. This position notwithstanding, when assessment is subjected to first appeal or further appeals under IT Act or all questions germane for concluding assessment would be relevant and claims which may result 1n modification of returns already fi1ed could also be entertained, particularly when it relates to claims for exemptions. This is so because fina1iy of assessment would not be achieved in all such cases, until termination of all such appellate remedies. Under such circumstances, Tribunal was not justified in denying exemption under section 80P of I T act on mere ground of belated filing of return by assessee concerned. return fi1ed 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 provided further proceedings in relation to such assessments are pending in statutory hierarchy of adjudication in terms of provisions of IT Act. In all such situations, it cannot be treated that return filed at any stage of such proceedings could be treated as non-est in law and invalid for purpose of deciding exemption under section 80p o IT Act. We thus, answer substantial questions of law Band C formulated and enumerated above. 4 ITA No 267/Coch/2012 (Asst Year 2009-10 ) 6.2 In light of above judgment of Hon ble High Court, belated filing of return of income by assessee does not disentitle it from benefit of deduction u/s 80P(2) of Act. Further, assessee, in instant case, is primary agricultural credit society registered under Kerala Cooperative Societies Act, 1969. certificate has been issued by Registrar of Cooperative Societies to above said effect and same is on record. Hon ble High Court, in assessee s own case and other batch of cases, had held that primary agricultural credit society, registered under Kerala Cooperative Societies Act, 1969, is entitled to benefit of deduction u/s 80P(2). Since there is certificate issued by Registrar of Cooperative Societies, stating that assessee is primary agricultural credit society, we hold that assessee is entitled to benefit of deduction u/s 80P(2) of Act. It is ordered accordingly. 7 In result, appeal filed by assessee is allowed. Order pronounced in open Court on this 29th day of Sept 2016. Sd/- Sd/- (B P JAIN) (GEORGE GEORGE K ) Accountant Member Judicial Member Cochin: Dated 29th Sept 2016 VM, Sr.P.S 5 ITA No 267/Coch/2012 (Asst Year 2009-10 ) Copy to: 1. Appellant 2. Respondent 3. CIT(A) 4. CIT, 5. DR 6. Guard File By order Assistant Registrar ITAT, COCHIN 6 ITA No 267/Coch/2012 (Asst Year 2009-10 ) 7 M/s. Perassery Service Co-operative Bank Ltd. v. Income-tax Officer Ward -1, Kannur