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Facts
The assessee, Amrapar Seva Sahkari Mandali Ltd., filed a return of income declaring NIL income for AY 2018-19, claiming deduction under Section 80P. The Assessing Officer (AO) accepted the return. However, the Principal Commissioner of Income Tax (PCIT) invoked Section 263, holding the AO's order erroneous and prejudicial to the revenue because the return was not filed within the due date, making the Section 80P deduction inadmissible as per Section 80AC.
Held
The Tribunal noted that the AO had accepted the return after verifying submissions and explaining cash transactions. While acknowledging the issue of delayed filing of return, the Tribunal accepted the assessee's proposal to file a condonation of delay application before the CIT under Section 119(2)(b). The Revenue representative agreed to this proposal.
Key Issues
Whether the PCIT was justified in invoking Section 263 to revise an assessment order when the assessee agreed to regularize the delayed return filing.
Sections Cited
147, 144B, 263, 148, 80P, 80AC, 139(1), 119(2)(b)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, Rajkot Bench, Rajkot
Before: Dr. Arjun Lal Saini & Dr. Dinesh Mohan Sinha
आदेश / ORDER Per, Dr. Dinesh Mohan Sinha, JM: Captioned appeal filed by the assessee, pertaining to Assessment Year (AY) 2018-19, is directed against the order u/s. 263 of the Act, passed by the Learned Principal Commissioner of Income Tax(Appeal), in short “the Ld. PCIT”], dated 20.03.2025, which in turn arises out of an assessment order passed by Assessing Officer (in short ‘the AO”) u/s 147 r.w.s. 144B of the Income Tax Act, 1961 (hereinafter referred to as “the Act”), vide order dated 14.03.2023.
Grounds of appeal raised by the assessee, are as follows: “1. The order u/s. 263 of the Act is bad in law. 2. The Ld. PCIT has erred in law as well as on facts in not considering the submission of the appellant on the strength of which the reassessment order was
ITA No. 324/RJT/2025 Sh. Amrapar Seva Sahkari Mandali Ltd.
neither erroneous nor prejudicial to the interest of revenue and therefore the provisions of section 263 of the Act were not applicable to the case of the appellant. 3. the Ld. PCIT has erred in law as well as on facts in setting aside the reassessment order, passed by the AO u/s. 147 r.w.s. 144B and directing a de-novo assessment on an issue that was never part of the reasons recorded for reopening. 4. The Ld. PCIT has exceeded jurisdiction by setting aside the reassessment order on an issue unrelated to the reason recorded for reopening the assessment when no income was assessed in respect of the issue of reopening. ”
Brief facts of the case that the assessee has not filed his return of income for AY 2018-19, as per the information received by the AO that the assessee has c cash deposited or cash withdraw in current account amounting to Rs.3,46,65,932/- and Rs.3,12,420/- in the bank account that Shri Rajkot District Co. Op. Bank, on that basis, notice u/s. 148 of the Act issued to the assessee, in response to the notice, the assessee filed return of income declaring total income of Rs. NIL, claiming deduction u/s. 80P of the Act. That the assesse filed detail, the submission made by the assesse was verified/scrutinized by AO, and after verification the return filed by the assessee was duly accepted. No variation was made in this case.
On perusal on record by the Ld.PCIT it was noted that the assessee has not filed his return of income within the time limit allowed u/s. 139(1) of the Act. As per amended provisions of section 80AC, commencing from AY 2018-19 no deduction is admissible under any provision of Chapter VI-A of the Income Tax Act under the heading “C- Deduction in respect of certain incomes” unless the assessee furnishes a return of his income for such assessment year on or before the due date specified u/s. 139(1), deduction u/s. 80P was not admissible as per the explicit provision of the Act. It was also noticed that out of total deduction claimed u/s. 80P, the assessee had claimed deduction of Rs.3,33,765/- u/s. 80P(2)(d) of the Act on interest/dividend from investment in other cooperative society. Out of this Rs.1,14,000/- was received as dividend from Rajkot District Co. Op. Bank Ltd. however, the
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ITA No. 324/RJT/2025 Sh. Amrapar Seva Sahkari Mandali Ltd.
AO has failed to make any inquiry whether such interest/dividend in Form investment in other cooperative societies or in cooperative banks. A notice u/s. 263 of the Act was issued to the assesse. In response, the assessee submitted that the case was reopened due to heavy cash deposit and cash withdrawal in the current account of the assessee, and the assesse has not file the due return of income in result it was consider as escapement of income.
The Ld. PCIT passed the revision order u/s. 263 by setting aside the re- assessment order passed u/s. 147 r.w.s. 144B dated 14.03.2023 on the contention that the AO has completed the assessment without due verification and application of the correct provision of law as the AO and has incorrectly allowed the deduction u/s. 80P of the Act, since the return of income was not filed within the time permitted u/s. 139(1) of the Act, and as per section 80AC of the Act, such deduction is not admissible unless the return of income is filed within the due date specified u/s. 139(1) of the Act.
The assessee has relied on the following judgement in the case of Shri Nagichana Mahila Dodh Sahakari Mandali in ITA No. 847/Rjt/2024, vide order dated 02/06/2025, wherein the Hon’ble ITAT, Rajkot Bench, held that; “Therefore, we find that when the assessing officer had not made any addition, as regards the very basis on which the proceedings under section 147 of the Act were initiated in the case of the assessee, i.e. cash withdrawal to the tune of Rs.2,87,70,000/- and the assessing officer has expanded his jurisdiction, without taking permission from the higher authorities and has made a different addition, on account of disallowance of deduction under section 80P(2) (d) of the Act. We note that the assessing officer could not make addition on other grounds which did not form part of the reasons recorded by the assessing officer, for that, reliance is placed on the judgement of Hon’ble Gujarat High Court in the case of CIT Vs. Mohmed Juned Dadani, (2013) 30 taxmann.com 1 (Guj), where in it was
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held thatwhen on ground on which reopening of assessment was based, no addition wasmade by Assessing Officer, he could not make additions on some other grounds, which did not form part of reasons recorded by him. Based on these facts and circumstances, we delete the addition made by the assessing officer under section 80P(2)(d) of the Act, and allow the appeal of the assessee.” 7. The Ld.PCIT passed an order that it is a fit case for invoking section 263 of the Act as the twin conditions namely, (i) the order of the assessing officer sought to be revised is erroneous, and (ii) it is prejudicial to the interests of the revenue, are satisfied. Accordingly, the impugned assessment order passed by the AO u/s. 147 r.w.s. 144B of the Act, 1961 on 14.03.2023 is set aside for fresh assessment only to the extent of the issues discussed supra and the assessing officer is directed to pass a fresh assessment order after applying the correct provision of law.
That the assessee filed an appeal against the impugned order of the Ld.PCIT before this Tribunal.
During the course of hearing, the Ld. AR of the assessee submitted that return was filed in response to the notice u/s. 148 of the Act, within the limitation and the return was duly acknowledge by the department for making an assessment and assessment completed on the basis of the return, that section 80AC of the Act has not applicable in this case.
On the other hand, the Ld. DR for the revenue relied on the order of the Ld.PCIT.
We have heard, both the parties and perused the material available on record. We note that in the instant case ld. AO has issued only one show
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cause notice u/s.148 of the Act along with the reasons to believe of the escapement of income with regard to unexplained cash deposit. That the assesse submitted detail reply, during the assessment proceedings, the assessee submitted registration certificate of society, ITR computation, trading, P&L account, Balance-sheet, Statement of Account, dividend income and interest income. The submission was perused by the AO and verified the genuineness of the transaction. The main activity of society was to give financial loans to its members or agricultural aids and sale of fertilizers. The amount of repayment of loan and sale of fertilizer is received in cash and same cash was deposited in bank. The assessee had explained property along with register of certificate, loan register to its members along with names and shares of them. The assessee being a Primary Agricultural Co. Op. Society was eligible for deduction u/s. 80P and has accordingly claimed the deduction in return of income. That the AO was satisfied with the source of cash transaction.
During the course of hearing, the Ld. AR was agreed that assessee will file an application for condonation of delay in filing the return in due time u/s. 139(a) of the Act before the CIT u/s. 119(2)(b) of the Income Tax Act, in accordance with law circular No. F. No. 225/49/2021/ITA-II dtd. 09th September, 2021, in respect of ‘Extension of time lines for filing of Income-tax returns and various reports of audit for the Assessment Year 2021-22 reg.’ The Ld. DR was agreed to the proposal of the Ld. AR.
Considering the above facts and circumstances of the case, we are of the opinion that the above course of action will be sufficient to meet the end of justice with this remark, the appeal of the assessee is disposed off.
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In the result, the appeal of the assessee is dismissed.
Order is pronounced in the open Court on 17/04/2026.
Sd/- Sd/- [ Dr. Arjun Lal Saini ] [ Dr. Dinesh Mohan Sinha ] Accountant Member Judicial Member
//True Copy// Rajkot �दनांक/ Date: 17/04/2026 Copy of the Order forwarded to 1. The Assessee 2. The Respondent 3. The CIT(A) 4. Pr. CIT 5. DR/AR, ITAT, Rajkot By Order 6. Guard File
Assistant Registrar/Sr. PS/P.S. ITAT, Rajkot
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