Late ITR Filing bars Deduction u/s 80P: ITAT Disallows Rs. 83.89 Lakhs Claim by Co-operative Society [Read Order]

The Bangalore Bench of the Income Tax Appellate Tribunal (ITAT) disallowed a claim of Rupees 83.89 lakhs by a Co-operative Society and ruled that the late filing of income tax returns (ITR) bars deduction under Section 80P of the Income TaxAct, 1961.

In response to a notice issued under Section 148 of the Income Tax Act, 1961, the co-operative society filed its return of income on 29.04.2022 declaring a total income of ₹5,14,250 after claiming a deduction of ₹83,89,567 under Section 80P of the Income Tax Act. The Assessing Officer issued notices under Sections 142(1) and 143(2) on various dates, to which the co-operative society furnished only partial compliance.

Subsequently, a final show cause notice was issued, in response to which the co-operative society submitted its reply. After considering the submissions, the Assessing Officer observed that since the co-operative society had not filed its return of income under Section 139(1) of the Income Tax Act, the deduction claimed under Section 80P amounting to ₹83,89,567 was disallowed.

Aggrieved by the assessment order, the co-operative society preferred an appeal before the Commissioner of Income Tax (Appeals), contending that the provisions of Section 80AC of the Income Tax Act, 1961 were not applicable and, therefore, the deduction under Section 80P could not be denied on that basis. However, the Commissioner of Income Tax (Appeals) was not convinced with the submissions of the co-operative society and upheld the order of the Assessing Officer, thereby dismissing the appeal.

Before the Income Tax Appellate Tribunal, the Authorised Representative reiterated that the provisions of Section 80AC, as amended with effect from 01.04.2018, were not applicable to the co-operative society, and that since the return of income was filed in response to notice under Section 148, the claim for deduction under Section 80P was validly made in such return. It was further submitted that Section 80P being a beneficial provision, the disallowance of the claim was not justified.

The Departmental Representative, on the other hand, strongly relied upon the orders of the lower authorities.

The Tribunal of Balakrishnan S, Accountant Member and Soundararajan K, Judicial Member observed that “According to section 80AC(ii) of the Act, the assessee has to file his return of income under section 139(1) of the Act to claim the benefit under Chapter “C.—Deductions in respect of certain incomes”. In the instant case, the assessee has not filed the return of income on or before the due date prescribed under section 139(1) of the Act, however, has filed belatedly in response to notice under section 148 of the Act.

In view of the above, the Tribunal held that the co-operative society was not entitled to claim deduction under Section 80P in the return filed under Section 148 and accordingly dismissed the grounds raised by the co-operative society.

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates