SHREE ORNA GROUP VIVIDH KARYAKARI SAHAKARI MANDALI LTD.,SURAT vs. DCIT, CIRCLE 2(1)(1), SURAT

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ITA 621/SRT/2026Status: DisposedITAT Surat13 October 2026AY 2020-218 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal noted that the assessee had claimed deduction under Section 80P in its original return and that the reassessment was initiated specifically concerning the eligibility of interest income for this deduction. The Tribunal found that the omission of the deduction in the return filed in response to the Section 148 notice was explained as inadvertent, supported by the original return's claim, the tax liability declared in the revised return, and the detailed written submission filed during reassessment. The Tribunal distinguished the reliance on Commissioner of Income-tax Vs. Sun Engg. Works Pvt. Ltd. (supra) by stating that the claim was not raised for the first time during reassessment but was already made in the original return and reiterated. Consequently, the Tribunal set aside the CIT(A)'s order and restored the matter to the AO for fresh adjudication, directing that the claim should not be rejected merely for being omitted from the revised return. The AO is to verify the eligibility and quantum of deduction in accordance with law, affording the assessee a reasonable opportunity of being heard. Ground No. 1 was dismissed as non-pressed.

What were the facts?

The assessee, Shree Orna Group Vividh Karyakari Sahakari Mandali Ltd., a co-operative society, filed its original return for AY 2020-21 claiming a deduction of Rs. 42,82,919/- under Section 80P, restricted to its gross total income of Rs. 29,70,722/-, resulting in a total income of Nil. The return was accepted. Subsequently, the Assessing Officer (AO) reopened the assessment under Section 147, believing that interest income of Rs. 1,31,859/- earned from co-operative banks was not eligible for deduction under Section 80P. In response to the notice, the assessee filed a revised return declaring a total income of Rs. 29,70,720/- without claiming any Section 80P deduction. The AO completed the assessment accepting this income. The CIT(A) upheld the AO's order, rejecting the assessee's claim for deduction on the grounds that it was not made in the revised return.

What were the issues?

1. Whether the Assessing Officer erred in re-opening the assessment under Section 147 of the Income-tax Act, 1961. The assessee requested not to press this ground. The revenue supported the orders of the lower authorities. 2. Whether the Commissioner of Income-Tax (Appeals) erred in not allowing the deduction under Section 80P of the Act on the ground that it was not claimed in the return filed in response to notice under Section 148, despite it being specifically raised before him. The assessee argued that the omission of the deduction in the revised return was an inadvertent mistake by the staff, and the claim was fully detailed in a written submission to the AO. The assessee relied on the fact that the claim was made in the original return and reiterated during assessment proceedings. The revenue contended that the CIT(A) rightly rejected the claim, relying on Commissioner of Income-tax Vs. Sun Engg. Works Pvt. Ltd. (1992) 198 ITR 297 (SC).

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 144B,Section 139,Section 80P

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, SURAT BENCH, SURAT

Before: MS. SUCHITRA KAMBLE & SHRI B.M. BIYANI

For Appellant: Shri Rasesh Shah, CA
For Respondent: Shri Ashish Kumar, Sr. DR
Hearing: 27.07.2026Pronounced: 13.10.2026

आदेश / O R D E R Per B.M. Biyani, A.M.: Feeling aggrieved by the order of first appeal dated 09.02.2026 passed by learned Commissioner of Income-Tax (Appeals)-NFAC, Delhi [“Ld. CIT(A)”], which in turn arises out of the assessment-order dated 18.03.2025 passed by learned Assessment Unit of Income-tax Department [“Ld. AO”] u/s 147 r.w.s. 144B of Income-tax Act, 1961 [“the Act”] for Assessment-Year [“AY”] 2020-21, the assessee has filed this appeal.

The background facts leading to present appeal are as under: 2. Page 1 of 8

Shree Orna Group Vividh Karyakari Sahakari Mandali Ltd. ITA No. 621/SRT/2026 – AY 2020-21 (i) The assessee is a co-operative society engaged in the activity of purchasing and selling agricultural and related products for the benefit of farmers.

(ii) For AY 2020-21, the assessee filed original return u/s 139 declaring a gross total income of Rs. 29,70,722/-. The assessee claimed deduction u/s 80P of Rs. 42,82,919/-, restricted to the gross total income of Rs. 29,70,722/- and declared total income of Rs. Nil. The assessee computed tax liability of Rs. 2,242/-. The copy of return is available in Paper-Book at Pages 62-63. The return so filed was accepted.

(iii) Subsequently, the Ld. AO re-opened the case u/s 147 through a notice dated 28.03.2024 u/s 148 on the footing that the interest income of Rs. 1,31,859/- earned by assessee from co-operative banks was not eligible for deduction u/s 80P and hence income to that extent had escaped assessment.

(iv) In response to notice, the assessee re-filed return on 29.05.2024 declaring gross total income as well as total income of Rs. 29,70,722/- (rounded off to Rs. 29,70,720/-) without claiming any deduction u/s 80P. The assessee computed tax liability of Rs. 14,47,236/-, claimed credit of Rs. 2,242/- already paid and declared tax payable of Rs. 14,44,990/-. The copy of return is available in Paper-Book at Page 78.

Page 2 of 8

Shree Orna Group Vividh Karyakari Sahakari Mandali Ltd. ITA No. 621/SRT/2026 – AY 2020-21 (v) During assessment proceedings, the assessee filed a Written- Submission to the Ld. AO giving the details of its income from different sources and entitlement to deduction u/s 80P. The Ld. AO has re-produced assessee submission in Para 3 of assessment-order. Nevertheless, the Ld. AO completed the re-opened assessment vide impugned order u/s 147 accepting the total income of Rs. 29,70,720/- as declared in the return, without allowing any deduction u/s 80P.

(vi) Aggrieved, the assessee carried matter in first-appeal and claimed deduction u/s 80P. The submissions of assessee are recorded by Ld. CIT(A) in Para 8 of impugned order. The Ld. CIT(A), however, rejected assessee’s claim with the reasoning that it was not made in the return filed in response to notice u/s 148. Accordingly, the Ld. CIT(A) upheld AO’s order with the result that no relief is given to assessee.

Now, the assessee has come in present appeal before us. (vii)

The assessee has raised following effective grounds: 3.

“(1) On the facts and circumstances of the case as well as law on the subject, the Ld. Assessing Officer has erred in re-opening assessment u/s 147 by issuing notice u/s 148 of the I.T. Act, 1961. (2) The Ld. CIT(A) has erred in not allowing the deduction u/s 80P of the Act on the ground that it was not claimed in the return of income filed in response to notice u/s 148 although it was specifically raised before him. The Ld. CIT(A) has therefore erred in not admitting the additional ground which is purely legal in nature.” Ground No. 1:

Page 3 of 8

Shree Orna Group Vividh Karyakari Sahakari Mandali Ltd. ITA No. 621/SRT/2026 – AY 2020-21 4. In this ground, the assessee challenges the action of Ld. AO in re- opening assessment u/s 147. During hearing, Ld. AR requested not to press this ground. Accordingly, this ground is dismissed as non-pressed.

Ground No. 2:

5.

In this ground, the assessee claims that the Ld. CIT(A) has erred in not allowing deduction u/s 80P.

6.

Before us, the Ld. AR for assessee submitted that, in the original return filed u/s 139, the assessee claimed deduction u/s 80P of Rs. 42,82,919/-, restricted to its gross total income of Rs. 29,70,722/- which the authorities accepted. Subsequently, when the notice u/s 148 was given to assessee on the reasoning that the interest income of Rs. 1,31,859/- was not eligible for deduction u/s 80P, the assessee’s consultant made an understanding that even if the deduction u/s 80P qua the interest income of Rs. 1,31,859/- from co-operative banks is denied (although such denial would also be not correct as per law), there would be no harm to assessee since the overall deduction of Rs. 42,82,919 (-) Rs. 1,31,859/- would still be lesser than the gross total income of Rs. 29,70,922/-. Therefore, the idea was to waive the deduction partly to the extent of Rs. 1,31,859/- qua the interest income but unfortunately, while filing return in response to notice u/s 148, the consultant’s staff made an inadvertent mistake and did not claim the deduction fully and the return got filed declaring total income of Rs. 29,70,720/- without claiming any deduction. However, during

Page 4 of 8

Shree Orna Group Vividh Karyakari Sahakari Mandali Ltd. ITA No. 621/SRT/2026 – AY 2020-21 assessment-proceeding, the assessee filed a Written-Submission to Ld. AO giving complete details of the deduction, as re-produced by Ld. AO in Para 3 of assessment-order. Therefore, Ld. AR submitted, it is a case of mistaken filing of return in response to notice u/s 148 and that the claim of deduction u/s 80P ought to have been considered by authorities on merits and allowed to assessee.

7.

Per contra, Ld. DR for revenue supported the orders of lower authorities. He submitted that the Ld. CIT(A) has rightly rejected assessee’s claim relying upon Commissioner of Income-tax Vs. Sun Engg. Works Pvt. Ltd. (1992) 198 ITR 297 (SC).

8.

We have considered the rival submissions, perused the orders of the lower authorities and examined the material placed on record. The short issue for our consideration is whether the assessee’s claim for deduction u/s 80P, which was made in the original return but omitted from the return filed in response to notice u/s 148, could be rejected without examining the claim on merits.

9.

It is undisputed that the assessee had claimed deduction u/s 80P in its original return, wherein the total income was declared at Nil. The reassessment was initiated on the specific ground that interest income of Rs. 1,31,859/- earned from co-operative banks was not eligible for deduction u/s 80P. However, while filing the return in response to notice u/s 148, the assessee omitted the claim of deduction in its entirety,

Page 5 of 8

Shree Orna Group Vividh Karyakari Sahakari Mandali Ltd. ITA No. 621/SRT/2026 – AY 2020-21 resulting in the declaration of total income of Rs. 29,70,720/-. Thus, the dispute in reassessment arose from the eligibility of the aforesaid interest income for deduction and not from any fresh claim initially made by the assessee.

10.

The assessee has explained that the omission of the deduction in the return filed in response to notice u/s 148 was inadvertent. This explanation finds support from the fact that the original return contained the claim of deduction u/s 80P; the return filed in response to notice u/s 148 reflected a tax liability of Rs. 14,44,990/- after credit of tax already paid; and, significantly, the assessee furnished a written submission during the reassessment proceedings setting out the details of its claim for deduction u/s 80P, as reproduced by the Ld. AO in Para 3 of the assessment order. These circumstances support the assessee’s explanation that the omission was inadvertent, though the admissibility of the deduction is a separate matter requiring examination in accordance with law.

11.

The Ld. CIT(A) rejected the claim by relying upon the decision of the Hon’ble Supreme Court in Sun Engineering Works (supra), which has also been relied upon by the Ld. DR. However, in the facts of the present case, the assessee had already made the claim in its original return and had reiterated its entitlement during the reassessment proceedings by filing a written submission before the Ld. AO. The claim was thus not raised for the first time during reassessment. In these circumstances, the aforesaid

Page 6 of 8

Shree Orna Group Vividh Karyakari Sahakari Mandali Ltd. ITA No. 621/SRT/2026 – AY 2020-21 decision does not, by itself, justify rejection of the claim without examining its admissibility on merits.

12.

In view of the foregoing discussion, we set aside the order of the Ld. CIT(A) on this issue and restore the matter to the file of the Ld. AO for fresh adjudication. The Ld. AO shall examine the assessee’s claim for deduction u/s 80P in the light of the original return, the written submission furnished during reassessment proceedings and the applicable provisions of law. The claim shall not be rejected merely on the ground that the deduction was omitted from the return filed in response to notice u/s 148. The Ld. AO shall, however, verify the eligibility and quantum of deduction in accordance with law and allow only such deduction as is found admissible. Needless to state, the assessee shall be afforded a reasonable opportunity of being heard. This ground is accordingly allowed for statistical purposes.

Resultantly, this appeal is partly allowed for statistical purposes. 13.

Order pronounced in open court on 13/10/2026

Sd/- Sd/- (SUCHITRA KAMBLE) (B.M. BIYANI) JUDICIAL MEMBER ACCOUNTANT MEMBER Surat दिन ांक /Dated : 13/10/2026 * Kishore, Sr. P.S.

Page 7 of 8

Shree Orna Group Vividh Karyakari Sahakari Mandali Ltd. ITA No. 621/SRT/2026 – AY 2020-21 Copy of the Order forwarded to: 1. The Appellant 2. The Respondent 3. CIT- concerned 4. DR, ITAT, Surat 5. Guard File By Order,

Sr. Private Secretary, I.T.A.T., Surat

Page 8 of 8

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