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Facts
The assessee, a cooperative society, claimed deduction under section 80P. However, due to an incorrect sub-clause mentioned in the return of income, the claim was disallowed under section 143(1). The CIT(A) upheld the disallowance, citing procedural lapses and the assessee's failure to file a revised return or seek rectification.
Held
The Tribunal held that the CIT(A)'s approach was not sustainable as the decision in Goetze (India) Ltd. pertains only to the Assessing Officer's powers and does not limit appellate authorities. Procedural lapses should not bar substantive justice, and the claim deserves examination on merits.
Key Issues
Whether a deduction claim, otherwise eligible, can be denied solely due to a technical error in mentioning the wrong sub-clause in the return of income, and if appellate authorities can examine such claims on merits.
Sections Cited
80P, 143(1), 139(5), 154
AI-generated summary — verify with the full judgment below
Order These two appeals filed by the assessee are directed against the separate orders passed by the ld. Commissioner of Income Tax (Appeals), Ranchi, both dated 23.06.2025 and 24.06.2025 respectively, pertaining to Assessment Years 2018–19 and 2019–20, arising out of intimation issued under section 143(1) of the Income Tax Act, 1961 (in short ‘the Act’). Since the issue involved in both the appeals is identical, the 2 1073 & 1075-CHD-2025 same were heard together and are being disposed of by this consolidated order for the sake of convenience.
The brief facts of the case, as emanating from the record, are that the assessee is a co-operative society engaged in the activity of milk procurement and supply. The return of income filed by the assessee was processed under section 143(1) of the Act by CPC, Bengaluru, wherein the claim of deduction under section 80P was disallowed on the ground that the same was claimed under an incorrect sub-clause in the return of income. In Assessment Year 2019–20, the deduction amounting to Rs. 5,14,066/- was disallowed on account of a mismatch in the applicable provision, as the claim was made under section 80P(2)(f) instead of the relevant clause.
Aggrieved by the said adjustment, the assessee preferred appeals before the ld. CIT(A). The ld. CIT(A), after considering the submissions of the assessee, upheld the action of the CPC/Assessing Officer by observing that the incorrect claim was apparent from the return itself and, therefore, the adjustment under section 143(1)(a) was justified. The ld. CIT(A) further held that since the assessee failed to file a 3 1073 & 1075-CHD-2025 revised return within the time prescribed under section 139(5) or to seek timely rectification under section 154, the claim could not be entertained at the appellate stage. Reliance was placed on the judgment of the Hon’ble Supreme Court in the case of Goetze (India) Ltd. vs. CIT and other decisions. Consequently, the assessee's appeals were dismissed.
Before us, the ld. Authorised Representative (AR) submitted that the assessee is otherwise fully eligible for deduction under section 80P(2) of the Act and the denial of deduction is solely on account of a clerical and inadvertent error in selecting the relevant clause in the return of income. It was contended that the mistake is purely technical and does not go to the root of the claim's eligibility. The ld. AR further submitted that it is a settled proposition of law that a legitimate claim cannot be denied merely on account of a procedural lapse or wrong mention of a provision. It was argued that the decision in Goetze (India) Ltd. (supra) is limited to the powers of the Assessing Officer and does not restrict the powers of the appellate authorities, including the Tribunal, to entertain a fresh or corrected claim. It was thus
1. 4 1073 & 1075-CHD-2025 pleaded that the matter may be restored to the file of the Assessing Officer for examining the claim on merits.
Per contra, the ld. Departmental Representative (DR) strongly relied upon the orders of the lower authorities and submitted that the assessee had not complied with the statutory mechanism provided under the Act for correction of errors, i.e., by filing a revised return or by seeking rectification within time. It was argued that the CPC has rightly made the adjustment based on the information available in the return of income and the ld. CIT(A) has correctly upheld the same. The ld. DR thus prayed for confirmation of the impugned orders.
We have heard the rival submissions and perused the material available on record, including the orders of the authorities below. The undisputed fact emerging from the record is that the assessee had claimed a deduction under section 80P; however, due to an inadvertent error, the claim was made under an incorrect sub-clause in the return of income, which resulted in its disallowance at the stage of processing under section 143(1). The ld. CIT(A) has dismissed
1. 5 1073 & 1075-CHD-2025 the claim primarily on technical grounds by holding that the assessee failed to follow the prescribed procedure for rectification and placing reliance on the decision in the case of Goetze (India) Ltd. (supra).
In our considered opinion, the approach adopted by the ld. CIT(A) cannot be sustained in law. It is well settled that the decision of the Hon’ble Supreme Court in the case of Goetze (India) Ltd. (supra) is confined to the powers of the Assessing Officer and does not impinge upon the powers of the appellate authorities. The Tribunal, being the final fact- finding authority, is vested with wide powers to entertain a legitimate claim, even if the same was not properly made in the return of income.
In the present case, the denial of deduction is not on account of the inability of the assessee but on account of a technical defect in the return of income. The claim of the assessee that it is otherwise eligible for deduction under section 80P(2) has not been examined on merits either by the Assessing Officer or by the ld. CIT(A), as the issue was decided at the threshold on technical considerations.
1. 6 1073 & 1075-CHD-2025 9. It is a settled principle that procedural lapses should not come in the way of substantive justice. If the assessee is otherwise entitled to a deduction under the Act, the same cannot be denied merely because of a wrong mention of the relevant provision in the return of income. The claim deserves to be examined on merits in accordance with law.
Having regard to the entirety of facts and circumstances of the case, we deem it appropriate, in the interest of substantial justice, to set aside the impugned orders of the ld. CIT(A) and restore the issue to the file of the Assessing Officer with a direction to examine the assessee’s claim of deduction under section 80P(2) of the Act on merits. However, this restoration is made subject to the condition that the assessee shall deposit a cost of Rs. 5,000/- in each appeal with the Poor Relief Fund, PGI, Chandigarh, within a period of one month from the date of receipt of this order, and furnish proof of such deposit before the Assessing Officer. Upon compliance of the said condition, the Assessing Officer shall afford adequate opportunity of being heard to the assessee and adjudicate the issue afresh in accordance with law, without being influenced by the technical defect in the original claim.
7 1073 & 1075-CHD-2025 11. In the result, both the appeals of the assessee are allowed for statistical purposes.
Order pronounced in the open Court on this 6th day of 2026.