RAJARAMPUR SAMABAY KRISHI UNNAYAN SAMITI LTD.,HALDIA vs. I.T.O., WARD - 27(1), HALDIA

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ITA 261/KOL/2026Status: DisposedITAT Kolkata14 May 2026AY 2020-20217 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the disallowance of deduction under Section 80P could only be made during a scrutiny assessment (Section 143(3)) and not during the processing of the return under Section 143(1). This was because the amended provisions allowing such disallowance under Section 143(1)(a)(v) were effective from April 1, 2021, and not applicable to the assessment year in question.

What were the facts?

The assessee claimed deduction under Section 80P, but it was disallowed during the processing of the return under Section 143(1). The CIT(A) upheld this disallowance, citing Section 80AC which requires filing returns within the due date for such deductions. The assessee appealed to the ITAT.

What were the issues?

Whether the disallowance of Section 80P deduction was permissible under Section 143(1) processing, and whether Section 80AC's mandate on timely filing applied to such processing.

Which sections of the Income-tax Act were involved?

Section 143(1),Section 80P,Section 80AC,Section 139(1),Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, KOLKATA ‘SMC’ BENCH AT KOLKATA

Before: SHRI SONJOY SARMA & SHRI RAKESH MISHRA

PER RAKESH MISHRA, ACCOUNTANT MEMBER:

This appeal filed by the assessee is against the order of the Addl/JCIT(A)-1, Coimbatore [hereinafter referred to as Ld. ‘Addl/JCIT(A)'] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for AY 2020-21 dated 24.11.2025. 2. The assessee is in appeal before the Tribunal raising the following grounds of appeal: “1) For that the intimation passed under section 143(1) was issued in violation of provisions section 143(1)(a)(v) of Income Tax Act, 1961 for the time being in force and as applicable for the Asst. Year 2020-21 and hence the said intimation as issued is illegal and bad in law. 2) For that the learned CIT (Appeals) erred in confirming the disallowance of deduction of Rs. 13,66,310/-claimed under section 80P of the Act which is not justified and thus the same be reversed. 3) For that the learned CIT (Appeals) erred in dismissing the appeal on merits without following the provisos of law under section 143(1)(a) (v) of the ITA No(s). 261/KOL/2026 Assessment Year(s) 2020-21 Act as applicable for Asst. Year 2020-21. Thus order of the CIT (Appeals) be reversed. 4) For that the learned CIT (Appeals) erred in confirming the interest u/s 234 A/B/C/F the same was unjustified and hence the same be deleted. 5) The appellant craves leave to produce additional evidences in terms of Rule 29 of the Income Tax (Appellate Tribunal) Rules 1963. 6) The appellant craves leave to press new, additional grounds of appeal or modify, withdraw any of the above grounds at the time of hearing of the appeal.”

3.

Brief facts of the case as culled out from the order of the Ld. Addl/JCIT(A) are that the assessee had filed the return of income on 20.03.2021 for AY 2020-21 depositing the late fee of ₹1,000/-. The return was processed u/s 143(1) of the Act and the CPC disallowed the claim of deduction u/s 80P of the Act. The assessee filed a rectification application online u/s 154 of the Act against the intimation u/s 143(1) of the Act but the CPC disallowed the claim of deduction u/s 80P of the Act which and the order was received by the assessee on 24.08.2022. Aggrieved with the assessment order, the assessee filed an appeal before the Ld. Addl/JCIT(A), who vide order dated 24.11.2025 dismissed the appeal of the assessee as per his findings as under:

“5. 1. The appellant's principal contention is that deduction under Section 80P should be allowed despite the return being filed belatedly due to COVID- 19 disruptions and delay in obtaining the auditor's report. However, Section 80AC(1)(a), substituted by the Finance Act, 2018 and applicable from A.Y. 2018-19 onwards, clearly mandates that no deduction under Chapter VI-A, including Section 80P, shall be allowed unless the return is furnished within the due date prescribed under Section 139(1). The appellant has admittedly filed the return for A.Y. 2020-21 beyond the extended statutory due dates. Therefore, the basic statutory requirement for claiming the deduction itself remains unfulfilled, and the reason for delay-whether COVID-related or otherwise-cannot override the explicit mandate of Section 80AC.

5.2.

The appellant's reliance on CBDT Circular No. 14 (XL-35) of 1955 is misplaced. This circular is a general administrative instruction and cannot override a specific statutory restriction enacted later by Parliament. The ITA No(s). 261/KOL/2026 Assessment Year(s) 2020-21 binding force of Section 80AC is superior to any circular, particularly one issued long before the Income-tax Act, 1961 and the subsequent amendment of 2018. Hence, the circular does not assist the appellant.

5.3.

The appellant has also relied upon certain judicial decisions, including Chirakkal Service Co-operative Bank Ltd. (Kerala High Court) and some ITAT decisions, to contend that belated returns may be considered for granting deduction under Section 80P. These decisions pertain to assessment years prior to the amendment of Section 80AC in 2018 and therefore reflect the law as it existed earlier. Post-amendment, filing the return within due date is a mandatory statutory condition. Consequently, the earlier judgments cannot be applied to A.Î¥. 2020-21, and the appellant's reliance on them is misplaced.

5.4.

The appellant's further argument that the assessment is invalid due to absence of notice under Section 143(2) is also not acceptable. The return was processed under Section 143(1), in which case issuance of notice under Section 143(2) is not required. The argument is therefore factually incorrect and does not affect the validity of the processing order.

5.5.

In view of the above, the appellant has failed to satisfy the mandatory statutory condition under Section 80AC(1)(a) for claiming deduction under Section 80P. None of the submissions made override the express bar created by the statute. The deduction has been rightly denied by CPC and the appeal is accordingly dismissed.

6.

In the result, the appeal is dismissed.”

4.

Aggrieved with the order of the Ld. Addl/JCIT(A), the assessee has filed the appeal before the Tribunal.

5.

Rival submissions were heard and the record and the submissions made have been examined. It was submitted by the the Ld. AR that the deduction claimed under section 80P of the Act could not have been disallowed as it was not part of the prima facie adjustment and the amendment in this regard in section 143(1)(a) was introduced with effect from 01.04.2021 which is applicable for assessment year 2021– 22 and not for the AY 2020-21. The Ld. AR relied upon the order of the coordinate Bench of the Tribunal in the case of Chunakhali Samabay Krishi Unnayan Samity Ltd. vs. ITO in ITA No. 943/KOL/2025 for ITA No(s). 261/KOL/2026 Assessment Year(s) 2020-21 AY 2020-21 order dated 08.12.2025. The Ld. DR relied upon the order of the appellate authority and requested that the same may be confirmed.

6.

We have considered the submissions made. Similar issue arose in the case of Panisheola Samabay Krishi Unnayan Samity Limited vs. Deputy Commissioner of Income Tax, Circle 4(2), Kolkata [ ITA No. 1181/Kol/2024 for the Assessment Year 2019-20] order dated 14.10.2024 wherein it has been held that the provisions relating to Chapter VI-A adjustments are applicable from 01.04.2021 and prior to that there was no power available to the Ld. AO to disallow the claim under the head “C.- Deductions in respect of certain incomes” under section 80P of Chapter VI-A of the Act. The relevant extract from the order is as under:

“4. During the course of the hearing, it was submitted by the Ld. AR that the amendment in sub-clause (v) of Section 143(1)(a) of the Act which has substituted “sections 10AA, 80-IA, 80-IAB, 80-IB, 80-IC, 80-ID or section 80- IE, if” with “sections 10AA or under any of the provisions of Chapter VI-A under the headings “C.- Deductions in respect of certain incomes”, if” was inserted by the Finance Act, 2021 w.e.f. 01.04.2021. The Ld. AR also relied upon the decision of the coordinate Benches of the Tribunal in the cases of Bisharpara Kodalia Coop. Credit Society Ltd. Vs. Income Tax Officer, Ward 49(2), Kolkata, ITA No. 1248/Kol/2023, AY 2018-19, dated 06.02.2024 and The Commercial Taxes Directorate Employees Co Op. Credit Society Limited Vs. ADIT, CPC, Bangalore, ITA No. 204/Kol/2024, AY 2020-21, dated 19.04.2024. The Ld. Sr. DR relied upon the order of the Addl./JCIT(A).

5.

We have heard the rival contentions and perused the material available on record. A perusal of the relevant provision shows that the power to make disallowance of deduction under the head “C.- Deductions in respect of certain incomes” under section 80P of Chapter VIA while processing the return u/s 143(1) has been given to the assessing officer only by the Finance Act, 2021 with effect from 01.04.2021. Prior to that there was no power available with the Ld. AO to disallow the claim made under head “C.- Deductions in respect of certain incomes” under Chapter VI-A of the Act. Similar issue also came up in the case of Bisharpara Kodalia Coop. Credit Assessment Year(s) 2020-21 Society Ltd. Vs. Income Tax Officer, Ward 49(2), Kolkata (supra) in which the coordinate Bench has held as under:

4.

We have heard rival submissions and have gone through the record placed before us. We notice that the assessee is a Co-operative Society engaged in the business of providing credit to its members. The assessee is required under law to get its account audited under the rules and regulations of West Bengal Cooperative Societies Act, 2006 by the auditor appointed by Directorate of Cooperative Societies. For the AY 2018-19 due date for filing the return was 30.09.2018. However, the return was submitted on 25.11.2018. 5. We note that the Central Processing Centre denied the deduction u/s. 80P of the Act solely for the reason that return was not filed within the due date. Provisions of section 143(1)(a)(v) provides that - “(v) disallowance of deduction claimed under section 10AA or under any of the provisions of Chapter VIA under the heading “C - Deductions in respect of certain incomes”, if the return is furnished beyond the due date specified under subsection (1) of section 139;”

5.1.

In the above provision, an amendment brought is in by Finance Act from 01.04.2021 w.e.f. 1.4.21 and before such amendment in place of the phrase section 10A or in any of the provisions of Chapter VIA under the head e - the words “deductions in respect of certain income, previously which was provided as section 10AA, 80IA, 80IB, 80IC, 80ID or section 80IE of the Act were appearing.”

6.

From perusal of the said amendment, we note that before 01.04.2021 there was no mechanism for the CPC to prima facie disallow the claim u/s. 80P of the Act. It was only from 01.04.2021 that such powers have been conferred with the CPC to make prima facie disallowance in case of the claim made u/s 10AA or deduction claimed under any of the provisions in Chapter VIA which, inter alia, includes 80P of the Act.

7.

We note that section 80AC of the Act puts a bar against claiming of deduction in respect of certain income provided under the head (C) of Chapter VIA which includes section 80P of the Act also if the return of income are not filed before the due date prescribed u/s. 139(1) of the Act. Had it been a case of scrutiny proceeding u/s. 143(3) of the Act, the situation certainly would have been against the assessee subject to the approval by the authorities for condonation of delay in filing the return. However, before us, the issue is regarding prima facie adjustment made u/s. 143(1)(a)(v) of the Act and as discussed above, such power of making the prima facie adjustment towards deduction u/s. 80P of the Act came to CPC only from 1.4.2021 and thus, the alleged disallowance by CPC is beyond its ITA No(s). 261/KOL/2026 Assessment Year(s) 2020-21 juri iction. Therefore, the assessee deserves relief. We are thus inclined to hold that the Ld. CIT(A) erred in denying the deduction u/s 80P of the Act for Rs.19,42,264/-. We, therefore, set aside the order of the Ld. CIT(A) and allow the grounds of appeal raised by the assessee for the claim of deduction u/s. 80P of the Act at Rs.19,42,264/-.

6.

Therefore, respectfully following the decision of the co-ordinate Bench, on facts of the case which are identical to the cases relied upon by the Ld. AR, the Ld. AO was not justified in disallowing the claim for deduction u/s 80P while making prima facie adjustments u/s 143(1)(a)(v) of the Act as the amended provisions were not available for the impugned assessment year and no such adjustment was legally permissible. Section 80AC could have been invoked in the assessment u/s 143(3) of the Act only. Hence, the Ld. AO is directed to delete the disallowance made in the intimation u/s 143(1) of the Act and allow the deduction u/s 80P of the Act as per law. Thus, Ground Nos. 1 to 6 are allowed.

7.

In the result, the appeal of the assessee is allowed.”

7.

Thus, respectfully following the decision in the case of Panisheola Samabay Krishi Unnayan Samity Limited (supra) and the order relied upon by the Ld. AR , we hereby hold that for the impugned AY 2020-21 as per provisions of section 80-AC of the Act the disallowance u/s 80P of the Act could have been made only in the course of the scrutiny assessment but not in the course of the processing of the return u/s 143(1) of the Act. Therefore, the Ground nos. 1,2,3 & 4 are allowed and the Ld. AO is directed to delete the addition made and allow the claim of deduction u/s 80P of the Act made by the assessee.

8.

In the result, the appeal filed by the assessee is allowed. Order pronounced in the open Court on 14th May, 2026. [Sonjoy Sarma] [Rakesh Mishra] Judicial Member Accountant Member Dated: 14.05.2026 Bidhan (Sr. P.S.)

Assessment Year(s) 2020-21 Copy of the order forwarded to:

1.

Rajarampur Samabay Krishi Unnayan Samiti Ltd., Rajarampur, Haldia, Purba Medinipur, West Bengal, 721628. 2. I.T.O., Ward-27(1), Haldia.

3.

Addl/JCIT(A)-1, Coimbatore.

4.

CIT-

5.

CIT(DR), Kolkata Benches, Kolkata.

6.

Guard File. //// By order

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