PANTHEERANKAVE SERVICE CO-OPERATIVE BANK,KOZHIKODE vs. ITO,WARD -2(3), KOZHIKODE
Facts
The appellant, a co-operative society, failed to file its Income Tax Return for AY 2017-18 despite making a huge cash deposit during demonetisation. The AO issued a notice under Section 142(1) which was not complied with, leading to a best judgment assessment under Section 144 where a deduction under Section 80P was denied. The CIT(A) upheld the AO's order, relying on a jurisdictional High Court decision.
Held
The Tribunal condoned the delay in filing the appeal but dismissed the appeal on merits. It held that the assessee was not entitled to a deduction under Section 80P of the Income Tax Act because no valid return of income was filed, aligning with the jurisdictional High Court's precedent that claiming such deductions requires a return filed within the prescribed due date.
Key Issues
Whether a deduction under Section 80P of the Income Tax Act can be allowed when the assessee has not filed a valid return of income within the prescribed due date.
Sections Cited
139(1), 142(1), 144, 80P, 80A(5), 80AC, 139(4), 148
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, COCHIN BENCH
Before: SHRI INTURI RAMA RAO, AM & SHRI SONJOY SARMA, JM
IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH BEFORE SHRI INTURI RAMA RAO, AM AND SHRI SONJOY SARMA, JM ITA No. 368/Coch/2025 Assessment Year: 2017-18 Pantheerankav Service Co-op. Bank Ltd. .......... Appellant Olavanna, Kozhikode 673019 [PAN: AAAAP6394F] vs. Income Tax Officer, Ward-2(3), Kozhikode .......... Respondent Appellant by: Shri Arun Raj S., Advocate Respondent by: Smt. Leena Lal, Sr. D.R. Date of Hearing: 04.06.2025 Date of Pronouncement: 30.06.2025 O R D E R Per: Inturi Rama Rao, AM This appeal filed by the assessee is directed against the order of the National Faceless Appeal Centre, Delhi [CIT(A)] dated 12.12.2024 for Assessment Year (AY) 2017-18.
Brief facts of the case are that appellant is a co-operative society registered under the Kerala State Co-operative Societies Act, 1969. It is classified as a primary agricultural credit co-operative society. The appellant had not filed return of income under the provisions of section 139(1) of the Income Tax Act, 1961 (the Act) for AY 2017-18. Based on the information that the appellant made
2 ITA No. 368/Coch/2025 Pantheerankav Service Co-op. Bank Ltd. huge cash deposit during the demonetisation period, the AO formed opinion that income escaped assessment to tax. Accordingly, issued a notice u/s. 142(1) of the Act on 22.12.2017 calling upon the appellant to file return of income. The appellant neither complied with the notice issued u/s. 142(1) nor to the letters issued to the appellant on 10.05.2019 and 29.07.2019. In the circumstance the AO proceeded with making best judgement assessment invoking provisions of section 144 at a total income of Rs. 2,54,78,140/-. While doing so, the AO had denied deduction u/s. 80P of the Act and made several disallowances.
Being aggrieved, an appeal was filed before the CIT(A), who vide the impugned order, placing reliance on 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), confirmed the action of the AO.
Being aggrieved, the appellant is in appeal before this Tribunal in the present appeal.
At the outset there is a delay in filing the present appeal by 92 days. The appellant filed a petition seeking condonation of delay on the ground that the delay had occurred on account of obtaining legal opinion on the merits of filing further appeal. Thus he submitted that the delay in filing the appeal may be condoned. Having regard to the averments made in the affidavit seeking condonation of delay, in the absence of any evidence contrary, we are of the considered opinion
3 ITA No. 368/Coch/2025 Pantheerankav Service Co-op. Bank Ltd. that the appellant society is prevented by sufficient reasonable cause in filing the appeal within the prescribed limit. Accordingly, we condone the delay and admit the appeal for adjudication.
We have heard the rival contentions and perused the material available on record. Admittedly, the appellant society had not filed return of income for the assessment year under consideration. Therefore, it can be said that there was no claim made in the return of income. In the absence of claim made by the appellant in the return of income, deduction u/s. 80P cannot be allowed in view of the provisions of section 80A(5) of the Act. The issue is no longer res integra as it stands covered against the appellant society by the decision of 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
4 ITA No. 368/Coch/2025 Pantheerankav Service Co-op. Bank Ltd. 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 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. 12. 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. 13. 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
5 ITA No. 368/Coch/2025 Pantheerankav Service Co-op. Bank Ltd. 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.” Respectfully following the decision of the Hon'ble Jurisdictional High Court we 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, we do not find any merit in the appeal filed by the assessee.
In the result, the appeal filed by the assessee stands dismissed.
Order pronounced in the open court on 30th June, 2025.
Sd/- Sd/- (SONJOY SARMA) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER Cochin, Dated: 30th June, 2025 n.p. Copy to:
The Appellant 2. The Respondent 3. The Pr. CIT concerned 4. The Sr. DR, ITAT, Cochin 5. Guard File Assistant Registrar ITAT, Cochin
