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Facts
The assessee, a cooperative society, did not file its return of income for AY 2018-2019 within the due date. The Assessing Officer reopened the assessment and disallowed the deduction under Section 80P claimed in a belated return filed in response to a notice under Section 148, citing Section 80AC.
Held
The Tribunal held that Section 80AC, as amended effective from April 1, 2018, mandates that deduction under Chapter VI-A, including Section 80P, is allowable only if the return of income is filed by the due date specified under Section 139(1). Reliance was placed on the Madras High Court judgment in Veerappampalayam Primary Agricultural Cooperative Credit Society Ltd.
Key Issues
Whether deduction under Section 80P is allowable when the return of income is filed after the due date, in light of the amended Section 80AC.
Sections Cited
80P, 139, 147, 148, 80AC, 143(1), 119(2)(b), 148A
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Income Tax Appellate Tribunal, Hyderabad ‘SMC’ Bench, Hyderabad
Before: SHRI VIJAY PAL RAO & SHRI MADHUSUDAN SAWDIA
आयकर अपील�य अ�धकरण, हैदराबाद पीठ IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘SMC’ Bench, Hyderabad BEFORE SHRI VIJAY PAL RAO, VICE PRESIDENT AND SHRI MADHUSUDAN SAWDIA, ACCOUNTANT MEMBER आ.अपी.सं /ITA.No.1522/Hyd/2025 Assessment Year 2018-2019 Chillakuru Primary The Income Tax Officer, Agricultural Ward-1, GUDUR. Cooperative Society vs. PIN – 524 101. Limited No.529, State of Andhra PELLAKUR. Pradesh. PIN – 524 129. TIRUPATI. PAN AABAC1880A (Appellant) (Respondent) -None- िनधा�रती �ारा/Assessee by : राज� व �ारा/Revenue by : Sri Karthik Manickam, Sr. AR सुनवाई की तारीख/Date of hearing: 07.04.2026 घोषणा की तारीख/Pronouncement: 10.04.2026 आदेश/ORDER PER VIJAY PAL RAO, VICE PRESIDENT :
This appeal by the Assessee is directed against the Order dated 28.07.2025 of the learned CIT(A)-National Faceless Appeal Centre [in short “NFAC], Delhi, for the assessment year 2018-2019.
2 ITA.No.1522/Hyd./2025 2. None has appeared on behalf of the assessee when this appeal called for hearing. It transpires from the record that since beginning nobody appeared on behalfof the assessee when this appeal was listed for hearing on 13.11.2025, 09.12.2025, 07.01.2026, 11.02.2026 and 17.03.2026. Thus, it is clear that after filing the appeal, the assessee never appeared before the Tribunal nor filed any request for adjournment of the hearing. On the last date of hearing i.e., on 17.03.2026 when nobody appeared on behalf of the assessee, the Bench directed to issue notice to the assessee. Accordingly, notice was issued to the assessee at the email ID given in Form No.36 as well as through speed post. Despite the repeated notices issued to the assessee, the assessee did not bother to appear and prosecute the present appeal. Accordingly, the Bench proposed to hear and dispose of this appeal ex-parte.
3. The assessee has raised the following grounds of appeal:
3 ITA.No.1522/Hyd./2025 “1. General 1. That the order of the Learned Commissioner of Income-tax (Appeals), National Faceless Appeal Centre, dated 28.07.2025, is against the facts of the case and the provisions of law, hence liable to be quashed.
Deduction under Section 80P-Wrongful Denial 2. That the Learned CIT(A) erred in confirming the denial of deduction u/s 80P of the Income-tax Act, 1961, amounting to 22,39,393/-, solely on the ground of belated filing of return. That the Learned CIT(A) failed to appreciate that Section 80P itself imposes no requirement of filing return within the time limit under Section 139(1). The benefit of Section 80P is a substantive right granted to co-operative societies and cannot be denied on procedural grounds. That the reliance placed by the CIT(A) on Section 80AC is misplaced; the amendment to Section 80AC introduced by the Finance Act, 2018, cannot be applied so as to defeat the vested right of deduction in respect of A.Y. 2018-19, as the amendment is substantive and not merely procedural.
3. Validity of Return Filed in Response to Section 148 3. That the Learned CIT(A) erred in holding that a return filed u/s 148 cannot be considered for the purpose of allowing deduction u/s 80P. That the return filed in response to notice u/s 148 is deemed to be a return u/s 139(4), and therefore all lawful claims including deduction u/s 80P are maintainable therein. Reliance is placed on Chirakkal Service Co-operative Bank Ltd, v CIT (384 ITR 490, Kerala HC), Muvattupuzha Agricultural Co-op Bank Ltd. v. ITO (Ker HC, WP 17739/2024), and similar judicial precedents.
4 ITA.No.1522/Hyd./2025 4. CBDT Circular and Delay due to Audit under State Law 4. That the Learned CIT(A) failed to appreciate that the delay in filing return was solely due to delay in statutory audit under the Andhra Pradesh Co-operative Societies Act, which is a factor recognized by the CBDT itself. That CBDT Circular No.13/2023 dated 26.07.2023 clarifies that such delay warrants condonation u/s 119(2)(b) and directs authorities to grant relief to co-operative societies. The CIT(A) erred in dismissing the claim without granting the benefit of this binding circular.
5. Principle of Mutuality 5. That the Learned CIT(A) failed to appreciate that the surplus of the Society arises purely from transactions with its members, and under the doctrine of mutuality, such surplus is not taxable income at all. That reliance placed by the appellant on CIT. West Godavari District Rice Millers Association (150 ITR 394, AP HC) and other precedents was ignored, though the law is settled that no person can make a profit out of himself and surplus under mutuality is not income chargeable to tax.
Jurisdictional and Procedural Errors 6. That the Learned CIT(A) erred in disregarding the appellant's plea for admitting additional grounds relating to mutuality and condonation, which ought to have been entertained in the interest of justice. That the Learned CIT(A) failed to apply the principle of liberal construction of beneficial provisions, as consistently laid down by the Hon'ble Supreme Court (eg Ashton Coop. Marketing Society Ltd. v. CIT, 208 ITR 768).
5 ITA.No.1522/Hyd./2025 7. Prayer 7. The appellant therefore prays that the Hon'ble ITAT may kindly allow the deduction u/s 80P as claimed, delete the demand of Rs.21,67,499/-, and grant such other relief as deemed fit in the facts and circumstances of the case.”
The assessee is a Cooperative Society and has not filed any return of income u/sec.139 of the Income Tax Act [in short "the Act"], 1961. Based on the information of cash deposit of Rs.4,87,37,123/- in the bank account of the assessee, the Assessing Officer reopened the assessment by issuing notice u/sec.148 of the Act dated 07.04.2022. In response to the notice u/sec.148 of the Act, the assessee filed return of income on 15.06.2023 declaring Rs. NIL income after claiming deduction u/sec.80P of the Act. The Assessing Officer while passing the assessment order u/sec.147 r.w.s.144B of the Act has denied the deduction of Rs.2,34,393/- u/sec.80P(2) of the Act on the ground that the assessee has not claimed the deduction in the return of income filed u/sec.139 of the Act and therefore, in view of the provisions of sec.80AC of the Act, the claim of the assessee is not allowable. The assessee challenged the action of the 6 ITA.No.1522/Hyd./2025 Assessing Officer before the learned CIT(A) but could not succeed.
The assessee has reiterated its claim as stated in the grounds of appeal and stated that the amendment brought in sec.80AC by Finance Act, 2018 cannot be applied to deny the claim of deduction u/sec.80P(2) of the Act. In support of its contention, the assessee has relied upon the decision of Hon’ble Kerala High Court in the case of Chirakkal Service Cooperative Bank Ltd. vs. CIT 384 ITR 490 (Kerala-HC) as well as Hon’ble A.P. High Court in the case of CIT vs. West Godavari District Rice Millers Association 150 ITR 394 (AP-HC).
6. On the other hand, the learned DR has submitted that the learned CIT(A) has dealt with this issue in Para nos.5 to 5.9 of the impugned order. He has further submitted that the CBDT vide Circular No.8/2018 has clarified this aspect that this amendment in sec.80AC is applicable w.e.f. 01.04.2018 and in respect of the assessment year 2018-2019 and subsequent assessment years. He has further submitted that there was a remedy to the assessee for seeking 7 ITA.No.1522/Hyd./2025 condonation of delay in filing the return of income. However, he assessee has not filed any return of income u/sec.139 and therefore, the decisions relied upon by the assessee are not applicable in the facts of the present case.
We have considered the submissions of the assessee before the authorities below as well as grounds of appeal and the submissions of the learned DR. The learned CIT(A) has considered and decided this issue in Para nos.5 to 5.9 of the impugned order as under:
“5. Analysis and Decision: 5.1. I have duly considered the grounds of appeal
, statement of facts, assessment order, written submission of the appellant and the material placed on record. The facts of the case are that the appellant did not file the return of income for year under consideration. The AO has received the information regarding large amount of cash deposits in the bank account. After following the due procedure, the AO has initiated proceedings u/s 147 of the I.T. Act, by issue of notice u/s 148 of the I.T. Act after passing the order u/s 148A(d) with prior sanction from Authorities. The Appellant for the first time filed the return of income in pursuant to this notice u/s 148 and claimed deduction u/s 80P of Rs. 2,39,393/-. As the return of income was not filed as per section 139(1) of the I.T. Act in view of specific provisions of section 80AC of the I.T. Act (which are available in the Act w.e.f. 01.04.2018, which requires that claim u/s 80P can be allowed only if return of income is filed as 8 ITA.No.1522/Hyd./2025 per section 139(1) of the I.T. Act), the AO disallowed the deduction claimed u/s 80P of the I.T. Act. 5.2. The appellant in its grounds of appeal as well as in its submission has mainly taken two pleas; first, the appellant is of view that return in pursuant to notice u/s 148 is a valid return, thus, the appellant is eligible for deduction u/s 80P of the I.T. Act. The appellant in its support has relied on the decision of the Hon'ble ITAT, Rajkot in case of Ambaradi Seva Sahkari Mandali Ltd.,... vs The Dcit(Cpc), Bangaluru, Bengaluru, decision of the Hon'ble Kerala High Court in Chirakkal Service Co-operative Bank Ltd. v. CIT [(2016) 384 ITR 490 (Ker)). The appellant is also of the view that section 80AC was introduced by the Finance Act, 2018, therefore, should be applicable from AY 2019-20 onwards. The appellant has also given reference through the CBDT Circular No. 13/2023 dated 26.07.2023 and prayed for the condonation of delay. In an alternative plea, the appellant has also stated that the appellant society works on mutuality, therefore surplus under mutual agreement is not real profit and thus, income should have been exempted. 5.3. In this regard, it is important to mention that section 80AC of Income-tax Act has been amended w.e.f. 01.04.2018 applicable from AY 2018-19 onwards which clearly says that from AY 2018-19 onwards, deduction u/s 80P of the I.T. Act is allowed only if assessee files return of income u/s 139(1) of the I.T. Act. Section 80AC of the Act was substituted by the Finance Act, 2018 with effect from 01/04/2018 applicable to the Assessment Order 2018-2019 which provides as under: "80AC. [duction not to be allowed unless return furnished. [Substituted by Finance Act, 2018 (Act No. 13 of 2018), dated 29.3.2018.] - Where in computing the total income of an assessee
9. ITA.No.1522/Hyd./2025 of any previous year relevant to the assessment year commencing on or after- (i) the 1st day of April, 2006 but before the 1st day of April, 2018, any deduction is admissible under section 80-IA or section 80-IAB or section 80-IB or section 80-IC or section 80-ID or section 80- IE; (ii) the 1st day of April, 2018, any deduction is admissible under any provision of this Chapter under the heading "C.-Deductions in respect of certain incomes", 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" In view of these specific provisions, no benefit of 80P can be provided from A.Y. 2018-19 onward. Further, CBDT'S CIRCULAR NO. 8/2018 [F.NO.370142/07/ 2018-TPL] by which the effect of the amendment was clarified is as under:
22. Deductions in respect of certain incomes not to be allowed unless return is filed by the due date. 22.1. Before amendment by the Act, section 80AC of the Income-tax Act provided that no deduction would be admissible under section 80-IA or section 80-IAB or section 80-IB or section 80-IC or section 80-ID or section 80-IE, unless the retum of income by the assessee is furnished on or before the due date specified under sub-section (1) of section 139 of the Income-tax Act. However, this burden was not cast upon the assessee claiming deduction under other similar provisions contained in Chapter 10 ITA.No.1522/Hyd./2025 VIA of the Income-tax Act under the heading "C.-Deductions in respect of certain incomes". 22.2. In order to ensure timely filing of return by the assessee for claiming deductions under the provisions contained in Chapter VIA of the Income-tax Act under the heading "C.- Deductions in respect of certain incomes", section 80AC has been amended to provide that the benefit of deduction under the entire class of deductions under the heading "C.-Deductions in respect of certain incomes" in Chapter VIA of the Income-tax Act shall not be allowed unless the return of income is filed on or before the due date. 22.3. Applicability: This amendment take effect from 1st April, 2018 and will, accordingly, apply in relation to the assessment year 2018-19 and subsequent assessment years. This Circular also makes it clear that from AY 2018-19 onwards, the deduction u/s 80P can be allowed only if return has been filed u/s 139(1) of the I.T. Act. 5.4. This specific change in the act also make the decisions of various tribunal and courts as ineffective which have been made for pre A.Y. 2018-19. This change has been observed by HIGH COURT OF MADRAS in case of Veerappampalayam Primary Agricultural Cooperative Credit Society Ltd. v. Deputy Commissioner of Income-tax [2022] 138 taxmann.com 571 (Madras) and held that after A.Y.2018-19 NO BENEFIT CAN BE PROVIDED TO ASSESSEE, if return is not filed with in 139(1) of IT Act. The relevant part of such decision is as under:-
11 ITA.No.1522/Hyd./2025 "8. The provisions of section 80AC(ii) make it clear that any deduction that is claimed under Part C of Chapter VIA would be admissible only if the return of income in that case were filed within the prescribed due date. Thus no claim under any of the provisions of Part C of Chapter VIA would be admissible in the case of a belated return. There is no dispute on this position. The date of filing of a return of income would be apparent on the face of return and upon a perusal thereof, it would be clear as to whether the return is a valid return, having been filed within the statutory time limit, or a belated one." 5.5. In light of the above discussion, the specific amendment in section 80AC of the I.T. Act, the above decision of the Hon'ble Madras High Court, it is clear that from AY 2018-19 onwards, no deduction can be allowed to assessee u/s 80P of the I.T. Act if the return of income is not filed within due date as prescribed u/s 139(1) of the I.T. Act. 5.6. Now coming to the decision of the Hon'ble ITAT, Rajkot in case of Ambaradi Seva Sahkari Mandali Ltd., vs The DCIT (CPC), Bangaluru, Bengaluru. This decisions of the Hon'ble Tribunal has nowhere stated that benefit of section 80P can be allowed to the assessee if return of income has not been filed u/s 139(1) of the I.T. Act. These decisions have only stated that such disallowance does not come under the purview of processing u/s 143(1) of the I.T. Act for period before 01.04.2021, as the specific changes u/s 143(1)(v) have been made only by Finance Act, 2021 and are effective from 01.04.2021 only. As the present case does not involve such adjustments (denial of deduction u/s 80P of the I.T. Act) through processing u/s 143(1), but through order u/s 147 of the I.T. Act, therefore, these decisions cannot help to the assessee.
12 ITA.No.1522/Hyd./2025 Further, the other decision quoted by the appellant of the Hon'ble Kerala High Court in case of Chirakkal Sevices (Supra) is of 2016 thus, no applicable after amendment in section 80AC of the I.T. Act. Further, the claim of the appellant that provisions of section 80AC(2)(ii) are applicable from AY 2019-20 is also unfounded in view of specific mention in the Circular discussed above that the above provisions of section 80AC are applicable from AY 2018-19 only. 5.7. In view of above facts and discussions, it is clear that denial of deduction u/s 80P of the I.T. Act to assessee in view of non-filing of return of income u/s 139(1) of the I.T. Act is fully justified and correct. Therefore, the decision of the AO in this regard is upheld and the appeal of the appellant on this issue is liable to be dismissed. 5.8. Now corning to the grounds where appellant has given reference through the CBDT Circular No. 13/2023 dated 26.07.2023 and prayed for the condonation of delay. In this regard, it is important to mention that the said Circular is about the application filed by assessees u/s 119(2)(b) of the I.T. Act and the Authority for such condonation lies with CCIT/DGIT. Therefore, the said Circular do not empower the CIT(A) to condone the delay in filing the return of income. If assessee want for condonation of delay for filing the return of income, he should have approached the respective authority as mentioned in that Circular. Therefore, this plea of assessee is also unable to give any relief to the appellant. 5.9. Now coming to the other grounds taken by the appellant that its income is exempt under the concept of mutuality, thus, deduction can be allowed to the appellant even when return of income has been filed beyond the due date. This is the ground 13 ITA.No.1522/Hyd./2025 has not been taken by the appellant before the AO in its assessment proceedings and the appellant has not submitted any application for admission of such grounds under Rule 46A of the I.T. Rules, therefore, such grounds cannot be taken during the appellate proceedings.”
7.1. Therefore, so far as the applicability of the amendment for the assessment year under consideration is concerned, the CBDT has clarified this aspect and therefore, we do not find any error or illegality in the impugned order of the learned CIT(A) qua issue. Further, the learned CIT(A) has also relied upon the Judgment of Hon’ble Madras High Court which is the latest Judgment on the applicability of provisions of sec.80AC of the Act whereby the Hon’ble High Court has held that no claim under the provisions of Part-C of Chapter-VIA would be admissible in the case of a belated return. Accordingly, in the facts and circumstances of the case, we do not find any reason to interfere with the impugned order of the learned CIT(A) and the same is upheld.
In the result, appeal of the Assessee is dismissed.
14 ITA.No.1522/Hyd./2025 Order pronounced in the open Court on 10.04.2026.
Sd/- Sd/- [MADHUSUDAN SAWDIA] [VIJAY PAL RAO] ACCOUNTANT MEMBER VICE PRESIDENT Hyderabad, Dated 10th April, 2026 VBP Copy to: Chillakuru Primary Agricultural Cooperative 1. Society Limited No.529, PELLAKUR - 524 129. PELLAKUR MANDAL. TIRUPATI. State of Andhra Pradesh. The Income Tax Officer, Ward-1, Road No.1, 2. Narasinghraopet, GUDUR 524 101. State of Andhra Pradesh.
The Pr. CIT, Tirupati 4. The DR, ITAT, “SMC” Bench, Hyderabad.