Massive Cash Deposits and GSTR-3B Turnover Disclosure Lead to Reassessment: ITAT Restores ₹41.98 Lakh Deduction Claim [Read Order]

The Income Tax Appellate Tribunal (ITAT) Chennai Bench has restored the dispute relating to deduction claimed under Section 80P of the Income Tax Act, 1961, after observing that the assessee pending condonation petition under Section 119(2)(b) had a direct bearing on the claim.

The appeal was filed by The Tuticorin Agricultural Producers Co-Operative Marketing Society Limited against the order passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC) for the Assessment Year 2020-21.

The assessee had initially failed to file its return of income for AY 2020-21. Based on information received through the Insight Portal. The Department noticed that the assessee had reported sales of over ₹11.04 crore in GSTR-3B returns and had also made substantial cash deposits amounting to ₹10.70 crore in a co-operative bank and ₹59.98 lakh in an SBI account. The Department further noted cash withdrawals exceeding ₹2.73 crore during the relevant period.

Consequently, proceedings under Section 148A(d) were initiated and the assessment was reopened by issuance of notice under Section 148. In response, the assessee filed its return declaring total income of ₹13,534 after claiming deduction of ₹41.98 lakh under Section 80P(2)(a)(i) of the Act. However, the Assessing Officer denied the deduction on the ground that the return had not been filed within the prescribed time under Section 139 of the Act. The CIT(A) subsequently upheld the disallowance.

The assessee stated that a condonation petition dated 17.01.2025 had already been filed before the Chief Commissioner of Income Tax under Section 119(2)(b) seeking condonation of delay in filing the return. It was argued that the outcome of the petition would directly affect the allowability of the deduction claim.

The Bench comprising Shri George George K, (Vice President) and Shri Balakrishnan S (Accountant Member) observed that if the competent authority condones the delay the deduction claim would necessarily require examination on merits.

Accordingly, the Bench restored the matter to the file of the Assessing Officer with a direction to pass a fresh order after disposal of the condonation application by the competent authority. The appeal was allowed for statistical purposes.

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