BAGLAN PRATHMIK SHIKSHAK SAHKARI PATSANSTHA MARYADIT,NAMPUR vs. INCOME TAX OFFICER, MALEGAON

Facts of the case, in brief, are that the assessee is a Credit Cooperative Society registered under Maharashtra Cooperative Societies Act, 1960 with the main object of providing credit or loan to its Members and collect deposits from its Members by way of Fixed Deposits, Saving deposits and daily recurring deposits. Return of income for A.Y. 2017-18 was not filed. Learned Assessing Officer (AO) based on the information about the cash deposit of Rs.10,86,500/- in the bank accounts held with NDCC Bank Ltd. And Central Bank of India issued notice u/s 142(1) of the IT Act requiring the assessee to file the return for assessment year 2017-18. The secretary of the assessee society appeared in person and filed reply from time to time before the Assessing Officer. The Assessing Officer found that the objectives and activities of the assessee attracts the provisions of section 80P(2)(a)(i) of the IT Act, however the assessee has not furnished return of income, therefore, in the light of section 80A(5) of the IT Act, the assessee is not entitled for any deduction u/s 80P of the IT Act. Ld. AO was satisfied with the details filed about the source of cash deposit but denied the deduction u/s.80P of the Act as the assessee did not file the return of income and accordingly assessed the income at Rs.1,50,96,230/-.

Assessee challenged this addition before ld.CIT(A) but partly succeed since Ld. CIT(A) allowed the benefit of Rs.2,46,375/- and sustained the disallowance of deduction u/s 80P of the IT Act at Rs.1,48,50,249/-. Aggrieved assessee is now in appeal before this Tribunal.

Ld. Counsel for the assessee did not press ground no.1, therefore the same is dismissed as not pressed.

So far as the ground no.2 is concerned the assessee submitted that even though the assessee did not file the return of income but the activity of the assessee society has been accepted by the ld. AO and that the eligibility of the assessee for deduction u/s.80P of the Act has been denied solely for not filing the return of income invoking section 80A(5) of the Act. He however submitted that section 80AC of the Act is applicable where the assessee files the return but fails to make the claim of deduction/exemption. Section 80AC of the Act which provides that for claiming deduction u/s.80P of the Act return is to be filed within the statutory time limit has been inserted from 01.04.2018 and is not applicable in the instant case as it pertains to A.Y. 2017-18. In support of the contention, reliance was placed on the decision of this Tribunal in the case of Sanchar Gramin Bigarsheti Sahakari Patsanstha Maryadit Vs. ITO in & 2433/PUN/2024 order dated 06.01.2025 as well as the decision of Coordinate Bench, Bangalore in the case of Prathamika Krishi Pattina Sahakara Sangha Ltd. Vs. ITO reported in (2022) 142 taxmann.com 405.

On the other hand, ld. Departmental Representative vehemently argued supporting the orders of the lower authorities.

We have heard the rival contentions and perused the record placed before us. In this regard, we find that even if the assessee has not filed the return of income but since it has carried out the activity as a cooperative society which is duly registered under Maharashtra Cooperative Societies Act, 1960 and has maintained the details of Income and Expenditure Account during the year, the assessee is eligible for deduction u/s.80P(2)(a)(i) of the Act and that section 80A(5) of the Act is not applicable as it is applicable only in case return of income is filed. We observe that the assessee has referred and relied on the decision of Coordinate Bench, Bangalore in the case of Prathamika Krishi Pattina Sahakara Sangha Ltd. (supra) wherein similar issue was there and the assessee did not file the return of income for A.Y. 2017-18 and the deduction u/s.80P of the Act claimed subsequently during the course of assessment proceedings was denied by the AO referring to section 80A(5) of the Act. Coordinate Bench after considering the judicial precedents held as under : “7. I have heard the rival submissions. The learned Counsel for the assessee submitted that the provisions of section 80A(5) of the Act will come into play only when a return of income is filed by an assessee and the claim for deduction under Chapter VIA of the Act is not claimed in the said return. It was contended that since the assessee did not file return of income for Assessment Year 2017-18, there was no question of invoking the provision of section 80A(5) of the Act. His further submission was that section 80AC of the Act as it existed prior to its substitution by the Finance Act, 2018 w.e.f. 1-4-2018 reads as follows: "80AC. Deduction not to bs allowed unless return furnished- Where in computing the total income of an assessee of the previous year relevant to the assessment year commencing on the 1st day of April, 2006 or any subsequent assessment year, any deduction is admissible under section 80-1A or section 80- 1AB or section 80-IC or section 80-ID or section 80-IE, no such deduction shall be allowed to him unless he furnishes a return of (1) of section 139." He pointed out that the aforesaid provisions contemplate filing of return of income to claim deductions under certain provisions of Chapter VI "A" of the Act and 80P is not one of the section which is mentioned in section 80AC of the Act. He therefore submitted that the deduction under section 80P of the Act cannot be denied to the assessee for non filing of return of income. Learned DR, on the other hand, reiterated the stand of the Revenue as reflected in the order of the CIT(A).

In the result, appeal of the assessee is treated as allowed for statistical purposes.”