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Facts
The assessee, a cooperative society, initially did not file a regular return of income. After a notice u/s.142(1), they filed a return claiming deduction u/s.80P. The Assessing Officer denied this deduction on the grounds that the return was not e-verified within the stipulated time, deeming it invalid. The CIT(A) upheld this decision.
Held
The Tribunal held that the assessee had fulfilled the conditions for deduction u/s.80P. The failure to e-verify the return within the initial period was a technical glitch, and subsequent e-verification with relaxation provided by CBDT circular was accepted. The provisions of section 80A(5) were considered, and it was found that the assessee had made a valid claim in the return filed in response to the notice.
Key Issues
Whether the deduction u/s.80P can be denied solely on the technical ground of delayed e-verification of the return filed in response to a notice u/s.142(1)?
Sections Cited
144, 250, 80P, 142(1), 80A(5), 139(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PUNE BENCHES “SMC”, PUNE
Before: DR.MANISH BORAD
आदेश / ORDER
This appeal at the instance of assessee pertaining to the Assessment Year 2017-18 is directed against the order dated 20.06.2024 of Addl/JCIT(A)-3, Bengaluru passed u/s.250 of the Income-tax Act, 1961 (hereinafter also called ‘the Act’) arising out of the Assessment Order dated 30.12.2019 passed u/s.144 of the Act.
Assessee has raised eight grounds of appeal but the only grievance is that ld.CIT(A) erred in not allowing the deduction u/s.80P of the Act at Rs.11,23,838/-.
Brief facts of the case are that the assessee is a Cooperative Society and did not file regular return of income. Based on the information about cash deposit of Rs.5,31,740/- during the demonetization period, ld. Assessing Officer issued notice u/s.142(1) of the Act on 15.12.2017 requiring the assessee society to file the return for A.Y. 2017-18. In response, assessee furnished the return on 28.02.2018 Kasma Prathmik Shishak Sahakari Patsanstha Maryadit declaring income of Rs.24,000/- and again revised the return on 07.03.2018. Ld. AO observed that assessee has not e- verified the return and therefore the return is invalid. Ld. AO after examining the records has accepted the source of cash deposit of Rs.5,31,740/- but for not filing the income-tax return and not making claim u/s.80P of the Act denied the deduction u/s.80P at Rs.11,23,838/- claimed in the income- tax return and assessed the income at Rs.11,47,240/-.
Aggrieved assessee preferred appeal before ld.CIT(A) but failed to succeed. Ld. CIT(A) has referred to CBDT Circular No.13/2020 dated 13.07.2020 where one time relaxation for verification of tax returns for A.Y. 2015-16 to A.Y. 2019-20 was given but did not apply the CBDT Circular observing that relaxation was not applied in the case of assessee as income- tax department has already taken recourse to any other measure as specified in the Act for ensuring filing of tax return, i.e. issuing notice u/s.142(1) of the Act.
Now the assessee is in appeal before this Tribunal assailing the order passed by ld.CIT(A).
Ld. Counsel for the assessee vehemently argued referring to various details mentioned in the paper book running into 180 pages along with case laws paper book running into 121 pages and the contentions given by him can be summarised in two parts. Firstly, that the return of income filed has been accepted by ld. AO in the assessment order and that in the return filed claim of deduction u/s.80P of the Act has been made. Even on the income-tax portal, the return having been filed is appearing. Second fold of contention is that even if it is held that the assessee has not filed a valid return then also for Kasma Prathmik Shishak Sahakari Patsanstha Maryadit A.Y. 2017-18 firstly section 80AC cannot be applied as it was brought into the Act from 01.04.2018 and secondly 80A(5) of the Act cannot be applied because it comes into operation if a return is filed and claim is not made. In support of this, reliance was placed on the decision of this Tribunal in the case of Rajya Rakhiv Police Karmachari Sahakari Patsanstha Maryadit Vs. ITO - order dated 16.06.2025.
On the other hand, ld. Departmental Representative vehemently argued supporting the orders of the lower authorities.
I have heard the rival contentions and perused the record placed before me. I observe that the assessee is a Cooperative Society and did not file regular return u/s.139(1) of the Act. There was a information about cash deposit of Rs.5,31,740/- in the bank account of assessee held with The NDCC Bank Ltd. Bramhangaon during the demonetization period. Notice u/s.142(1) of the Act issued. The assessee in compliance filed the income-tax return on 28.02.2018 and further revised on 07.03.2018 but for unavoidable reasons e-acknowledgement could not be sent so as to e-verify the return. In subsequent assessment years, returns can be e-verified with the Digital signature as well as the e-verification through Aadhar/bank details but at that point of time assessee was required to sign the acknowledgement and send it to CPC, Bangalore for verification. Now in the instant case assessee failed to e-verify the return. At a subsequent date, assessee has submitted the signed copy to the CPC, Bangalore and the same is also verified on the income-tax portal under the assessee’s login id.
Kasma Prathmik Shishak Sahakari Patsanstha Maryadit 9. I observe that the assessment order has been framed on 30.12.2019 but the ITR-V, i.e. acknowledgment was received by CPC on 28.08.2020 and 15.09.2020. At the time when ld. Assessing Officer concluded the proceedings, on one hand he has accepted the source of cash deposit of Rs.5,31,740/- based on the information filed by the assessee including bye- laws of the society and the statutory audit report, profit and loss account and bank statement, however AO based on his observation that return filed by the assessee is invalid, denied the benefit of deduction u/s.80P of the Act. Ld. AO has invoked section 80A(5) of the Act for making the impugned disallowance.
I observe that in the instant case assessee has not filed regular return of income but then return of income has been filed in compliance to notice u/s.142(1) of the Act and though e-verified at a later date, i.e., subsequent to framing of the assessment order, that was well in accordance with the CBDT Circular No.13/2020 dated 13.07.2020. Ld. AO has invoked section 80A(5) for denying the claim of deduction u/s.80P of the Act which provides that “where the assessee fails to make a claim in his return of income for any deduction under section 10A or section 10AA or section 10B or section 10BA 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.”
Now from perusal of the above section, it is manifest that if the assessee furnishes a return of income but fails to make a claim as enunciated in section 80A(5) of the Act then said claim/deduction/exemption shall not be allowed. In the Kasma Prathmik Shishak Sahakari Patsanstha Maryadit instant case though the assessee has not filed the regular return of income but again that is not a pre-condition in section 80A(5) of the Act as to whether a return is to be filed u/s.139(1) of the Act. Assessee has not filed the regular return u/s.139(1) of the Act but has subsequently filed the return in response to notice u/s.142(1) of the Act and has made a claim u/s.80P of the Act. So assessee has filed the return and has made a claim u/s.80P of the Act but the only glitch in this case is that assessee failed to e-verify the return, i.e. signed copy of ITR-V was not sent to the CPC, Bangalore within 120 days of filing of the return. Now the reason for such non-submission are not available on record but the AO has observed that assessee had filed the return on 28.02.2018 and revised on 07.03.2018 but because the return could not be e-verified within 120 days it was found to be invalid and deduction u/s.80P of the Act has been denied.
Admittedly, assessment has been completed on 30.12.2019 but then during the pendency of the proceedings before ld.CIT(A), CBDT vide Circular No.13/2020 dated 13.07.2020 gave one time relaxation for e-verification of tax returns for A.Y. 2015-16 to A.Y. 2019-20 it was pending due to non-submission of acknowledgement on ITR-V. Assessee at a later date on 28.08.2020 had sent the ITR-V and it has been acknowledged by the Department also and is verifiable from the screenshot obtained from the income-tax portal under the assessee’s PAN where it provides that return of income for A.Y. 2017-18 filed on 28.02.2018 and on 07.03.2018 has been accepted and the ITR-V has been received on 28.08.2020 and 15.09.2020.
Kasma Prathmik Shishak Sahakari Patsanstha Maryadit 13. Under these given facts and circumstances where the conditions of section 80A(5) stands fulfilled and a valid claim of deduction u/s.80P of the Act has been made in the return, even ld. AO could have allowed the claim but then ld.CIT(A) who is having co-terminus powers with that of the ld. AO was very much having the necessary details and could have allowed the claim of assessee because section 80A(5) of the Act has no pre-condition that return of income has to be filed u/s.139(1) of the Act. Though the ld. Counsel for the assessee has referred to plethora of decisions, I however considering the facts of the case and also going through the provisions of section 80A(5) of the Act and also observing that ld. AO has examined the details filed by the assessee accepting the source of cash deposit as well as activity of Cooperative Society and having not disputed the quantum of deduction except for the technical ground, I am inclined to hold that assessee is eligible for deduction u/s.80P of the Act. Ld. AO is directed to allow the deduction u/s.80P of the Act claimed by the assessee at Rs.11,23,838/-. Thus, finding of ld.CIT(A) is set-aside and effective grounds of appeal raised by the assessee are allowed.
In the result, appeal of the assessee is allowed.
Order pronounced on this 27th day of June, 2025.