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Facts
The assessee, a cooperative society, failed to file a return of income for AY 2015-16. The AO issued notices for compliance, which were not met. Consequently, a best judgment assessment was made under section 147 r.w.s. 144, and the claim for deduction under section 80P was denied.
Held
The CIT(A) confirmed the AO's action. The Tribunal, following the decision of the Jurisdictional High Court in Nileshwar Range Kallu Chethu Vyavasaya Thozihilali Sahararana Sangham, held that a claim for deduction under Section 80P must be made in a valid return of income filed within the prescribed due date.
Key Issues
Whether the assessee is entitled to deduction u/s. 80P of the Act when no valid return of income was filed by the assessee.
Sections Cited
139(1), 142(1), 148, 147, 144, 80P, 80A(5), 80AC
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Income Tax Appellate Tribunal, COCHIN BENCH
Before: SHRI INTURI RAMA RAO, AM
& 394/Coch/2025 Mannuthy Town Co-op. Society Ltd. No. R 1143 credit facilities to its members. No return of income under the provisions of section 139(1) of the Act was filed by the assessee for the AY 2015-16. Therefore, the AO issued a notice u/s. 148 of the Act on 31/03/2021 requiring the assessee to file return of income. The assessee neither complied with the notice issued u/s. 148 nor 142(1) calling for certain details. Under these circumstances, the AO was constrained to pass the best judgment assessment vide order dated 24/03/2022 passed u/s. 147 r.w.s. 144 of the Act at a total income of Rs. 30,43,110/-. While doing so, the AO denied the claim for deduction u/s. 80P placing reliance on the provisions of section 80A(5) of the Act.
Being aggrieved, an appeal was filed before the CIT(A), who vide the impugned order, confirmed the action of the AO.
Being aggrieved, the assessee is in appeal before the Tribunal in the present appeal.
I have heard the rival contentions of both the parties and perused the material available on record. The solitary issue that arises for my consideration is whether or not the CIT(A) was correct in law in confirming the action of the AO denying deduction u/s. 80P of the Act as no valid return of income was filed by the assessee. Admittedly, in the present case the assessee had not filed valid return of income either under the provisions of section 139 of & 394/Coch/2025 Mannuthy Town Co-op. Society Ltd. No. R 1143 the Act or in response to the notice u/s. 142(1) issued by the AO. The provisions of sub-section 80A(5) mandates that in order to claim a deduction under the section specified under Chapter VI-A, a claim is required to be made in the return of income. The issue in the present case is settled against the assessee by the decision of the Hon'ble Jurisdictional High Court in the case of Nileshwar Range Kallu Chethu Vyavasaya Thozihilali Sahararana Sangham [2023] 459 ITR 730 (Ker) wherein it was held as under: - “11. On a consideration of the rival submissions and on a perusal of the statutory provisions, we find that a reading of Section 80A(5) and Section 80AC of the IT Act as they stood prior to 1.4.2018, when the latter provision was amended by Finance Act 2018, would reveal that the statutory scheme under the IT Act was to admit only such claims for deduction under Section 80P of the IT Act as were made by the assessee in a return of income filed by him. That return can be under Sections 139(1), 139(4), 142(1) or Section 148, and to be valid, had to be filed within the due date contemplated under those provisions. Under Section 80A(5), the claim for deduction under Section 80P could be made by an assessee in a return filed within the time prescribed for filing such returns under any of the above provisions. The amendment to Section 80AC with effect from 1.4.2018, however, mandated that for an assessee to get a deduction under Section 80P of the IT Act, he had to furnish a return of his income for such assessment year on or before the due date specified in Section 139(1) of the IT Act. In other words, after 1.4.2018, even if the assessee makes his claim for deduction under Section 80P in a return filed within time under Sections 139(4), 142(1) or Section 148, he will not be allowed the deduction, unless the return in question was filed within the due date prescribed under Section 139(1). Thus, it is clear that the statutory scheme permits the allowance of a deduction under Section 80P of the IT Act only if it is made in a return recognised as such under the IT Act, and after 1.4.2018, only if that return is & 394/Coch/2025 Mannuthy Town Co-op. Society Ltd. No. R 1143 one filed within the time prescribed under Section 139(1) of the Act. As the return in these cases, for the assessment years 2009- 10 and 2010-11, were admittedly filed after the dates prescribed under Sections 139(1) and 139(4) or in the notices issued under Section 142(1) and Section 148, the returns were indeed non-est and could not have been acted upon by the Assessing Officer even though they were filed before the completion of the assessment.
There is yet another aspect of the matter. The requirement of making the claim for deduction in a return of income filed by the assessee can be seen as a statutory pre-condition for claiming the benefit of deduction under the IT Act. It is trite that a provision for deduction or exemption under a taxing Statute has to be strictly construed against the assessee and in favour of the Revenue. Thus viewed, a failure on the part of an assessee to comply with the precondition for obtaining the deduction cannot be condoned either by the statutory authorities or by the courts.
It is in the backdrop of the aforesaid discussion that we must consider the findings of a Division Bench of this Court in The Chirakkal Service Co-operative Bank Ltd. [supra]. The findings therein, that appear to suggest that a claim for deduction under Section 80P can be entertained even if it is made in a return filed beyond the time permitted under the IT Act, ignores the perspective that sees the requirement of the claim for deduction being made in a valid return as a pre-condition for obtaining the benefit of the statutory deduction. The said findings also fly in the face of the express statutory provisions that requires the claim to be made in a return filed by the assessee, by which term is meant a valid return under the Act, and therefore have necessarily to be seen as per incuriam. We also find that the subsequent amendments to Section 80AC by the Finance Act 2018 fortifies the view that we have taken for, it makes the claim for deduction under Section 80P conditional on filing a return within the due date prescribed under Section 139(1) of the IT Act. In other words, the pre-condition for claiming the deduction under Section 80P of the IT Act has now been made more stringent by reducing the time available to an assessee for making the claim.”
& 394/Coch/2025 Mannuthy Town Co-op. Society Ltd. No. R 1143 6. Respectfully following the decision of the Hon'ble Jurisdictional High Court, I hold that the assessee is not entitled for deduction u/s. 80P of the Act as no valid return of income was filed by the assessee society and the decision of the Hon'ble Jurisdictional High court prevails over the coordinate bench’s decision of this Tribunal. Thus, I do not find any merit in the appeal filed by the assessee. Accordingly the appeal stands dismissed.
The appeal filed by the assessee in ITA No.384/Coch/2025. Therefore, no separate adjudication is required in the same is dismissed.
In the result, appeals filed by the assessee are dismissed. Order pronounced in the open court on 31st July, 2025.