ADARSH GRAM SEWA SAHKARI SAMITI LIMITED,JAIPUR vs. INCOME TAX WARD 7(1), JAIPUR, JAIPUR

Brief facts of the case are as follows: Assessee is a co-operative society registered under the Karnataka Co-operative Societies Act, 1959. For the Assessment Year 2018-19, assessee did not file any return of income: Information waS available with the Department that assessee had made cash deposits of Rs.1,09,68,097/- in Chikmagalur District Central Co-operative Bank Ltd Therefore, notice under section 148 of the Act, was issue on 24.03.2022. In response to the notice issued under section 148 of the Act, assessee filed its return of income on 25.04.2022 declare ring Nil income. Assessment waS completed under section 147 r.w.S: 144B of the Act, vide Order dated 16.03.2023. In the said Assessment Order; the source of cash deposit was accepted and no additions were made on that account. However; while computing the income, the AO disallowed deduction claimed by the assessee under section 80P of the Act. 3_ Aggrieved by the disallowance of deduction claimed under section 8OP of the Act, amounting t0 Rs.15,00,698/-, assessee filed appeal before the First Appellate Authority: The CIT(A) dismissed the appeal of the assessee The CIT(A) held that assessee has not filed its return of income within the due date prescribed under section 139(1) of the Act and therefore aS per section 80AC of the _ Act, the claim of deduction under section 8OP of the Act cannot be allowed 4 Aggrieved by the CIT(A)s Order, assessee has filed the present appeal before the Tribunal. The grounds raised by the assessee read as follows: 1. The important question of law aS t0 the belated filing of ITR afier receipt of notice us 148 of the Act and consequent disallowance of deduction claimed wls: 8OP of the Act by virtue of provision contained in Sec. 8OAC of the Act was left out to be pleaded in the grounds of appeal before the First Appellate Authority due to oversight The belated filing of ITR will not disentitle the appellant from claiming the benefit wls: 80P of the _ Act as held in a good number of decisions of the Hon'ble High Courts and ITATs 2 Whether CIT (A) was right in sustaining the addition even when the Respondent could not have invoked the power to make adjustments as provided P a g e | 3 ITA No. 1253/JPR/2025 Adarsh Gram Sewa Sahkari Samiti Limited wls. 143(a) (i)(v) of the Act (which was inserted by Finance Act, 2021 w.e f 01 - 04-2021) after reopening the assessment for subject assessment year and adopting travel hack in time theory to tax the appellant. 3_ Both the authorities below passed the impugned Orders contrary to established principles laid down by the Hon'ble Supreme Court and jurisdictional High Court.

Assessee relied on the grounds raised 6_ The learned DR, on the other hand, submitted that the issue in question is covered in favour of the Department by the judgment of the Hon'ble Kerala High Court in the case of Nileshwar Range Kallu Chethu Vyavasaya Thozhilali Sahakarana Sangham CIT reported in (2023) 459 ITR 730. 7 We have heard the rival submissions and perused the material on record The solitary issue that is arising for our consideration is whether claim of deduction under section 8OP of the Act can be allowed in the facts of this case. The claim of deduction under section 80P of the Act has been denied for the reason that assessee has not filed the return of income within the due date prescribed under section 139(1) of the Act The issue is no longer res integra. The Hon'ble Kerala High Court in the case of Nileshwar Range Kallu Chethu Vyavasaya Thozhilali Sahakarana Sangham v. CIT (supra) has decided the issue in favour of the Revenue. The relevant finding of the Hon'ble Kerala High Court reads as follows: "I. On a consideration of the rival submissions and on a perusal of the statutory provisions; we find that a reading of section 804(5) and Section 80AC of the IT Act as they stood prior to 1-4-2018, when the latter provision was amended by Finance Act 2018, would reveal that the statutory scheme under the IT Act was to admit only such claims for deduction under section 80P of the IT Act as were made by the assessee in a return of income filed by him. That return can be under sections 139(1), 139(4), 142(1) or section 148, and to be valid, had t0 be filed within the due date contemplated under those provisions Under section 804(5) , the claim for deduction under section 8OP could be made by an assessee in a return filed within the time prescribed for filing such returns under any 0f the above provisions: The amendment to Section 8OAC with effect from 1-4-2018, however, mandated that for an assessee to get a deduction under section 80P of the IT Act, he had t0 furnish a return of his income for such assessment vear on or before the due date specified in section 139(1) of the IT Act. In Other words, after 1-4-2018, even if the assessee makes his claim for deduction under section 80P in a return filed within time under sections 139(4), 142(1) or section 148, he will not be allowed the deduction, unless the return in question was filed within the due date prescribed under section 139(1). Thus, it is clear that the statutory scheme permits the allowance of a deduction under section 80P of the IT Act only if it is made in a return recognised aS such under the IT Act, and after 1-4-2018, only if that return is one filed within the time prescribed under section 139(1) of the Act. As the return in these cases, for the assessment years 2009-10 and 2010- 11, were admittedly filed after the dates prescribed under sections 139(1) and 139(4) or in the notices issued under section 142(1) and section 148, the returns P a g e 14 ITA No. 1253/JPR/2025 Adarsh Gram Sewa Sahkari Samiti Limited were indeed non-est and could not have been acted upon by the Assessing Officer even though they - were filed before the completion of the assessment.

There is vet another aspect of the matter: The requirement of making the claim for deduction in a return of income filed by the assessee. can be seen aS a statutory pre-condition for claiming the benefit of deduction under the IT Act. It is trite that a provision for deduction or exemption under a taxing Statute has to be strictly construed against the assessee and in favour of the Revenue. Thus viewed, failure on the part of an assessee t0 comply with the pre-condition for obtaining the deduction cannot be condoned either by the statutory authorities or by the courts 13. It is in the backdrop of the aforesaid discussion that we must consider the findings of a Division Bench of this Court in Chirakkal Service Co-operative Bank Ltd. [supra]. The findings therein, that appear to suggest that a claim for deduction under section 8OP can be entertained even if it is made in return filed beyond the time permitted under the IT Act, ignores the perspective that sees the requirement of the claim for deduction being made in a valid return aS a pre- condition for obtaining the benefit of the statutory deduction. The said findings also fly in the face of the express statutory provisions that requires the claim to be made in a return filed by the assessee, by which term is meant a valid return under the Act, and therefore have necessarily t0 be seen aS per incuriam: We also find that the subsequent amendments to section 80AC by the Finance Act 2018 fortifies the view that we have taken for; it makes the claim for deduction under section 8OP conditional on filing a return within the due date prescribed under section 139(1) of the IT Act. In other words, the precondition for claiming the deduction under section 80P of the IT Act has now been made more stringent by reducing the time available to an assessee for making the claim.

Before parting with these cases, we must also address the arguments of the learned counsel for the appellantlassessee relying on the provisions of section 139(8)/(9) and section 234A of the IT Act. A reading of the provisions of section 139(8) and (9) of the IT Act clearly reveals that even under those provisions, the restrictions placed with regard to the accrual of interest on amounts assessed on an assessee is with regard t0 the date of filing of a return within the time prescribed under the IT Act. Under section 234A of the IT Act, however; although the provision suggests that even a return filed beyond the time prescribed under any of the provisions of the IT Act can have the effect of limiting the accrual of interest on the amounts assessed against an assessee, we have to see the said provision aS permitting a filing of a belated return for the limited purpose of conferring specific benefit of limiting the accrual of interest, on an assessee, and for no other purpose. We cannot accept the contention of the appellantlassessee that the said provisions which are intended for a specific purpose and are not general in nature, have to be seen aS manifesting statutory scheme that enables the Department to act upon a belated return for allowing the claim of an assessee for deduction under section 8OP of the IT Act: P a g e | 5 ITA No. 1253/JPR/2025 Adarsh Gram Sewa Sahkari Samiti Limited In the light of the aforesaid discussion, we find that the above questions of law have to be answered in favour of the Revenue and against the assessee, and we do SO. Thus; these IT Appeals are disposed by answering the substantial questions of law raised therein, in favour of the Revenue and against the assessee: 8 On identical facts; the Bangalore Bench of the Tribunal in the case of Madhu Souharda Pathina Sahakari Niyamitha Vs: ITO in ITA No.969/Bang/2023 (Order dated 02.01.2024), by following the judgment of Hon'ble Kerala High Court in the case of Nileshwar Range Kallu Chethu Vyavasaya Thozhilali Sahakarana Sangham Vs: CIT (supra) has decided the issue in favour of the Revenue. The relevant finding of the Bangalore Bench of the Tribunal reads as follows:

Considering the rival submissions; we note that the during the impugned assessment year; the assessee has received interest of Rs.3,57,185 on deposits with DCC and earned profit at Rs.26,00,809 inclusive of interest income, but did not file return of income uls: 139(1) or 139(4). Notice uls: 142(1) was issued by the AO to the assessee for filing return of income on 09.03.2018 within 08.04.2018. Further notice WS 142(1) and show cause notice waS issued t0 the assessee, but the assessee did not file the return of income except written submissions Accoridngly the AO denied deduction wls. 8OP aS per section 80A(5) and completed the assessment wls: 144 of the Act.

Section 80A(5) of the Act reads aS under: - "(5) Where the assessee fails t0 make a claim in his return of income for any deduction under section 10A or section I0AA or section I0B or section 1OBA or under any provision of this Chapter under the heading "C Deductions in respect of certain incomes' no deduction shall be allowed to him thereunder: 9. It is clear from the above section that for claiming deduction under Chapter VIA under the head, "Deductions to be made in computing total income which covers section 80P also, the assessee has to file return of income. However, the assessee did not file return of income at all and therefore the assessee is not eligible for deduction uls: 8OP of the Act. The Hon'ble Kerala High Court in the case of Nileshwar Rangekallu Chethu Vyavasaya Thozhilali Sahakarana Sangham v CIT [2023] 152. taxmann.com 347 (Kerala) has held as under: - "

In light of the aforesaid judicial pronouncements; we reject the grounds, raised by the assessee. It is ordered accordingly: 10. In the result, appeal filed by the assessee is dismissed 4_ The Assessment Year involved in this case is AY 2015-16. As discussed above, the Hon'ble Kerala High Court in the case of Nileshwar Range Kallu Chethu Vyavasaya Thozhilali Sahakarana Sangham V CIT (supra) has discussed the relevant statutory provisions and arrived at the conclusion as per the section 804(5) and Section 8OAC of the IT Act; as they stood prior to 1-4-2018, the statutory scheme under the IT Act was to admit only P a g e | 7 ITA No. 1253/JPR/2025 Adarsh Gram Sewa Sahkari Samiti Limited such claims for deduction under section 8OP of the IT Act as were made by the assessee in a return of income filed by him: That return can be under sections 139(1), 1394), 142(1) or section 148, and to be valid, had to be filed within the due date contemplated under those provisions. The amendment to Section 8OAC with effect from 1-4-2018, however; mandated that for an assessee to get a deduction under section 8OP of the IT Act; he had to furnish a return of his income for such assessment year on or before the due date specified in section 139(1) of the IT Act: Since, the Assessment year under consideration AY 2015 -16 is prior to the amendment brought in section 8OAC w.e.f. 1.4.2018, therefore, the assessee is entitled to deduction claimed u/s 8OP in a return filed in response to notice u/s 148 of the Act: We hold accordingly: 5. In the result; appeal of the assessee stands Allowed: Order is pronounced under provision of Rule 34 0f ITAT Rules, 1963 on 16/06/2026. - - (Ratnesh Nandan Sahay) Accountant Member Dated 16.06.2026Mittali, Sr. PS (Sanjay Garg) Judicial Member