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Facts
The assessee, a co-operative society, failed to file a return of income for AY 2017-18. The Assessing Officer (AO) denied a deduction of Rs. 25,67,615/- under Section 80P of the Income Tax Act, 1961, on the grounds that no return was filed. The CIT(A) upheld the AO's decision.
Held
The Tribunal held that Section 80A(5) of the Act, which requires a return of income to be filed for claiming deductions, is not applicable when no return of income has been filed at all. Furthermore, Section 80AC of the Act, as it stood prior to its amendment, did not preclude deduction under Section 80P if no return was filed. Therefore, the AO erred in invoking Section 80A(5) to deny the deduction.
Key Issues
Whether denial of deduction under Section 80P is justified solely on the ground of non-filing of return of income, when the assessee is a co-operative society and has provided necessary documentation.
Sections Cited
80P, 144, 250, 80A(5), 80AC, 139, 271F, 270A, 274
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Income Tax Appellate Tribunal, SMC BENCH,
Before: Dr. MANISH BORAD
Assessee by : Shri Aakash Parakh Revenue by : Shri Sanjay Dhivare, Addl. CIT Date of hearing : 11.08.2025 Date of pronouncement : 29.08.2025 आदेश/ORDER PER DR. MANISH BORAD, ACCOUNTANT MEMBER :- This appeal at the instance of the assessee is directed against the order passed by Ld. CIT(A) NFAC, Delhi dated 16.08.2024 u/s 250 of the Income Tax Act, 1961 and is arising out of assessment order passed u/s 144 dated 04.12.2019.
Assessee has raised following grounds of appeal:-
1. On the facts and in the circumstances of the case and in law, the order passed, by Ld. CIT(A)/NFAC under section 250 of the Income Tax Act, 1961 (the Act) upholding the assessment order u/s 144 of the Act as well as the denial of deduction u/s 80P therein, is bad in law and invalid and hence, may please be quashed and set aside.
2. On the facts and in the circumstances of the case and without prejudice to any other grounds, the learned CIT(A) has erred in law and on facts in passing an order under section 250 of the Act without adjudicating the matter on merits and without dealing with the specific grounds raised by the appellant, in violation of the mandate of section 250(6) of the Act and therefore, the impugned order, being non-speaking and devoid of proper reasoning, is bad in law and deserves to be quashed.
On the facts and in the circumstances of the case and in law, the assessment order by Ld. AO passed under section 144 of the Act is bad in law, without jurisdiction and invalid and hence, the same may please be quashed.
On the facts and in the circumstances of the case and in law and without prejudice to other grounds, the Ld. AO as well as Ld. CIT(A)/ NFAC have erred in denying the deduction us/80P of the Act solely on the ground that Appellant did not file the return of income without appreciating the fact that the appellant is a duly registered co-operative society under the Maharashtra Co-operative Societies Act, 1960, which has maintained proper books of account including an Income and Expenditure Account and had camed out the eligible activities during the relevant previous year and hence it was eligible for the claim of deduction u/s 80P and therefore, the additions of Rs 25.87.615 made in the impugned assessment order passed by Ld. AO may please by deleted
On the facts and in the circumstances of the case and in law and without prejudice to other grounds, the Ld. Assessing Officer and the Ld. CIT(A) have failed to appreciate that the provisions of section 80A(5) are not applicable in the appellant's case since the section contemplates restriction on claim of deduction only when the returm is filed and the same does not envisage a situation where the return itself has not been filed and hence, deduction u/s 80P should be allowed to the Appellant. Kindly Refer - Rajya Rakhiv Police Karmachari Sahakari Patsanstha Maryadit vs. ITO-ITA 171/PUN/2025-dated 16.06.2025
On the facts and in the circumstances of the case and in law and without prejudice to other grounds, the Ld. AO as well as Ld. CIT(A)/ NFAC have erred in denying the deduction us/80P of the Act overlooking the fact that the requirement to make claim of deduction u/s 80P is directory and not mandatory and even if the claim is made during the course of assessment proceedings, such claim has to be allowed. Kindly refer - Krushi Vibhag Karmchari Vrund Sahakari Pat Sanstha Maryadit vs. ITO-Pune ITAT-147 taxmann.com 449.
7. On the facts and in the circumstances of the case and in law and without prejudice to other grounds, the authorities below have grossly erred in not considering the fact that the appellant had substantiated its claim for deduction under section 80P during the assessment proceedings by furnishing requisite documents and explanations, and thus, denial of deduction is bad in law and contrary to the spirit of beneficial legislation intended for co- operative societies.
8. On the facts and in the circumstances of the case and in law and without prejudice to other grounds, Ld. CIT(A) has erred in upholding the addition of Rs 25,67,615/-made by Ld. AO without appreciating the valid submission filed by the Appellant is eligible to claim deduction u/s 80P of the Act and hence, the same is bad in law and thus, the impugned addition may please be deleted.
9. On the facts and in the circumstances of the case and in law and without prejudice to any other ground, Ld. AO has erred in initiating penalty u/s 271F and 270A r.ws. 274 of the Act and hence, the same may please be quashed.
10. The appellant craves leave to add, amend, modify, alter, revise, substitute, or withdraw any or all grounds of the appeal, if deemed necessary at the time of hearing of the appeal, in the interest of justice. 3. The assessee has raised 10 grounds of appeal
but the sole grievance is against the denial of deduction u/s 80P of the Act at Rs. 25,67,615/-
4. At the outset Ld. Counsel for the assessee stated that case of the assessee is squarely covered by plethora of decision of this Tribunal. In support of Ground 5 relied on the decision of Rajya Rakhiv Police Karmachari Sahakari Patsanstha Maryadit vs. ITO – ITA 171/PUN/2025-order dated 16-06-2025 (para 9&10) and stated that as the assessee has not filed the return of income therefore section 80A(5) of the Act is not applicable and on merits Ld. Assessing Officer (AO) has not disputed the eligibility of the assessee of getting benefit of deduction u/s 80P of the Act.
5. On the other hand Ld. Departmental Representative (DR) vehemently argued supporting the order of the Ld. CIT(A).
6. I have heard rival contentions and perused the record placed before me. I observe that the assessee is a Co- operative Society and no return of income filed for A.Y. 2017-18. Based on the information about cash deposit during the demonetization period, assessee was served with notice u/s 142(1) of the Act for filing the return. Assessee again failed to file the return on income. However during the course of assessment proceedings the representative of the assessee submitted the Profit and Loss Account, Balance Sheet, Bank Statement and the source of cash deposits and also the proof that the assessee is registered as a Co-operative Society. Ld. AO was satisfied with the statements regarding source of cash deposits. He however denied the benefit of deduction u/s 80P of the Act as assessee has not filed the return of income. The appeal filed by the assessee against the disallowance made by Ld. AO before Ld. CIT(A) brought no relief.
7. I observe that section 80AC of the Act has been subject to the amendment from A.Y. 2018-19 onwards post which for claiming deduction u/s 80P of the Act it is mandatory for the assessee to file return of income u/s 139(1) of the Act. However the instant appeal pertains to A.Y. 2017-18. Therefore the amendment brought in section 80P of the Act from A.Y. 2018-19 is not applicable. So far as applicability of section 80P(5) of the Act I observe that similar issue came for adjudication before this Tribunal in the case of Sanchar Gramin Bigarsheti Sahakari Patsanstha Maryadit v/s ITO order dated 06.01.2025 this Tribunal has held as under:-
“9. Though we have dealt with the legal issue and have allowed the ground in favour of the assessee we still deem it proper to deal with merits of the case raised in Ground No.2 through which it has been contended 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) where also similar issue was there where 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:
I have heard the rwal 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 be allowed unless return furnished-Where in computing the total income of an Ist 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 his income for such assessment year on or before the due date specified under sub section (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 SOP 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) 8. I have given a careful consideration to the rival submissions. I agree with the submissions of the learned Counsel for the assessee that section 80A(5) of the Act is applicable only when a return of income is filed by an assessee and a deduction under Chapter VI "A" of the Act, is not claimed in such return of income. It will not apply to a case where no return of income is filed. The provisions of section 80AC of the Act, as we have already seen, contemplates denial of deduction in respect of certain provisions of Chapter VI "A" of the Act, if a return of income is not filed by an assessee. Those provisions, as rightly contended by the learned Counsel for the assessee, do not apply to the claim for deduction under section 80P of the Act. Therefore, the Revenue authorities were not justified in not entertaining the claim of the assessee for deduction under section 80P of the Act as made by the assesseer Since neither the AO nor the CIT(A) have examined the other conditions for allowing deduction under section 80P of the Act, I deem it fit and proper to remand the issue of the assessee's eligibility to claim deduction under section 80P of the Act, in the sense with regard to the quantum of deduction and also with regard to the other conditions for allowing deduction under section 80P of the Act, for examining afresh by the AO. I therefore allow the appeal of the assessee for statistical purposes.
In the result, appeal of the assessee is treated as allowed for statistical purposes.
Similar issue was also taken by this Tribunal in the case of Sanchar Gramin Bigarsheti Sahakari Patsanstha Maryadit (supra). We therefore following the judicial precedents and taking consistent view are of the considered view that ld. AO erred to invoke section 80A(5) of the Act in the instant case and therefore assessee's claim of deduction u/s.80P of the Act deserves to be allowed as Id. AO has not disputed the carrying out of the activity of the cooperative society as per its objects coupled
On going through the above finding of this Tribunal and the same being squarely applicable on the facts in the instant case I find that the Ld. AO erred in invoking section 80A(5) of the Act for denying deduction u/s 80P of the Act. Respectfully following the above referred decision, I hereby set aside the finding of the Ld. CIT(A) and direct the AO to grant deduction u/s 80P of the Act to the assessee. Effective grounds raised
by the assessee are allowed.
9. In the result, appeal of the assessee is allowed. Order pronounced on this 29th day of August, 2025.
Sd/- (MANISH BORAD) ACCOUNTANT MEMBER पुणे/ Pune; दििांक / Dated: 29th August, 2025. Neeta आिेश की प्रधिधलधप अग्रेधर्ि / Copy of the Order forwarded to:
1. 1. अपीलार्थी / The Appellant. 2. प्रत्यर्थी / The Respondent.