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Facts
The assessee, an individual, did not file his income tax return for Assessment Year 2018-19. The Assessing Officer (AO) reopened the case and made additions based on information received from the assessee's employer, assessing total income from salary and disallowing TDS credit. The CIT(A) confirmed the addition, citing Section 80AC for non-deductibility.
Held
The Tribunal held that deductions under sections 15-17 of the Act, including HRA and perquisites, should be allowed if in accordance with law, irrespective of whether a return was filed. It further clarified that deductions under Sections 80C, 80D, and 80TTA are not prohibited by Section 80AC, even if the return was not filed on time, as these fall under different categories.
Key Issues
Whether deductions for salary income, HRA, perquisites, and chapter VI-A deductions are admissible when the return of income is not filed on time, and whether Section 80AC restricts such deductions.
Sections Cited
147, 144, 144B, 148, 133(6), 15, 17, 80AC, 80C, 80D, 80TTA, 139(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘SMC’ BENCH : BANGALORE
Before: SHRI PRASHANT MAHARISHI, VICE – & SHRI KESHAV DUBEY
PER PRASHANT MAHARISHI, VICE – PRESIDENT
This captioned appeal is filed by Shri Ajith M Kumar (the Assessee/ Appellant ) for Assessment Year 2018-19 against the Appellate Order passed by the National Faceless Appeal Centre, Delhi (the Ld. CIT(A))
Page 2 of 5 dated 08.09.2025 wherein the Appeal filed against the reassessment order dated 20.12.2023 passed u/s. 147 r.w.s. 144 r.w.s. 144B of the Income Tax Act, 1961 was partly allowed. Therefore, the Assessee is aggrieved.
The brief facts of the case show that Assessee is an individual who did not file his return of income for Assessment Year 2018-19. As per the information, it was found that the Assessee has received salary of Rs 32,45,753/- during this year and therefore the case of the Assessee was reopened by issuance of notice u/s. 148 of the Act. The Assessee remained non-responsive during the Assessment proceedings and therefore the notice u/s. 144 of the Act was issued to the Assessee wherein there was no response. The Ld. Assessing Officer issued a notice u/s. 133(6) of the Act to Tata Starbucks Private Limited which has provided the information that Assessee has recipient of salary of Rs. 37,98,389/- on which TDS of Rs. 6,92,621/- has been deducted. As there is no reply from the Assessee Ld. Assessing Officer passed the Assessment Order wherein the total income of the Assessee from salary was assessed at Rs. 37,98,390/- and further no credit for TDS was granted.
The Assessee preferred an Appeal before the Ld. CIT(A) wherein he filed a detailed written statement stating that due to the death of his father and ill health of his mother, assessee could not file return of income. The Assessee submitted that his salary income is Rs. 32,45,753/- after considering the HRA exemption of Rs. 5,52,636/- and further he has also earned the bank interest and dividend. He has also claimed deductions u/s. 80C, 80D and 80TTA of the Act. The Ld. CIT(A) referred to the provisions of section 80AC of the Act stating that as the Assessee has not furnished his return of income, no such deduction shall be allowed to him. Accordingly, the addition
Against the Appellate Order, the Assessee is in appeal.
Before us, the claim of the Assessee is that as per Form No. 16, the Assessee is entitled to exemption of the perquisites of Rs. 21,600/- as well as deduction of HRA of Rs. 5,52,636/-. With respect to the deduction, it was stated that provisions of 80AC prohibit the deduction under chapter VI part C and the deduction claimed by the Assessee under 80C and 80D are not with respect to that. Thus, he submits that the deduction shall be allowed to the Assessee.
The Ld. Departmental Representative Shri Ganesh R Ghale, Standing Counsel for Revenue vehemently supported the orders of the Ld. lower authorities.
We have carefully considered the rival contentions and perused the orders of the Ld. lower authorities. We find that the income of the Assessee earned from salary has already been chargeable to tax and further the Assessee’s claim of deduction of HRA as well as perquisites was not allowed. We find that if the salary income is to be computed under the provisions of section 15 to 17 of the act , all the deduction contained therein are required to be provided to the Assessee, if found in accordance with law. There is no bar in any of the section that certain deductions claimed under the head salary are allowable only on filing of the return of income. When the Ld. AO has received Form No. 16 from the employer of the Assessee, naturally the deduction should have been granted to the Assessee.
Section 80 AC of the Act provides as under :-
80AC. Where in computing the total income of an assessee 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.]
Further, with respect to the claim of deduction u/s. 80C and 80D we find that deduction u/s. 80C and 80D is claimed under chapter VIA B.-Deductions in respect of certain paymentsof the Act. Provisions of section 80AC of the Act prohibit deduction which are covered under heading of chapter VIA -C of the act. In view of this, we find that there is no bar for granting deduction u/s. 80C and 80D of the Act to the Assessee if return of income is not filed on or before the due date specified u/s. 139(1) of the Act.
Further, the deduction u/s. 80TTA claimed is alsofalling under chapter VIA [CA.-Deductions in respect of other incomes]. Therefore, there is no bar in allowing the deductions stated above to the Assessee even if the return of income is not filed on time.
Further, the Ld. Assessing Officer has not given exemption to the various claims claimed by the Assessee before the Ld. CIT(A). Therefore, in the interest of justice, we restore the whole issue back to the file of the Ld. Assessing Officer with a direction to the Assessee Page 5 of 5 to substantiate the claim of exemption and of deduction and thereafter the Ld. Assessing Officer after considering the explanation of the Assessee may decide the issue in accordance with the law as indicated above.
In the result, Appeal filed by the Assessee is allowed for statistical purposes.
Order pronounced in the open court on 27th January, 2026.