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Facts
The assessee, a Cooperative Society, failed to file its income tax return for AY 2016-17. The AO made additions based on escaped income. The assessee claimed deduction under Section 80P, but the AO denied it due to the delay in filing the return.
Held
The Tribunal held that a claim for deduction under Section 80P can only be allowed if it is made in a valid return filed within the prescribed due dates. The return filed in response to a notice under Section 148, or belatedly under Section 139(4) or 142(1), is considered non-est for claiming such deductions if not filed within the due dates specified in Section 139(1).
Key Issues
Whether the assessee society is eligible to claim deduction under Section 80P when the return of income was filed beyond the due date.
Sections Cited
139, 139(1), 139(4), 148, 142(1), 80P, 80A(5), 80AC
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Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI
Before: HON’BLE SHRI INTURI RAMA RAO & SHRI SS VISWANETHRA RAVI
Assessment Years: 2016-17 Income Tax Officer, 41.Uttiramerur Urban Cooperative Ward-1, Credit Society Ltd., Kanchipuram. No.96, M.M.Avenue, Kancheepuram, Tamil Nadu-631 502. [PAN: AACAT8468Q] Appellant Respondent Assessee by : Mr.V.Padmanabhan, C.A. Revenue by : Ms.R.Anitha, Addl.CIT Date of Hearing : 14.01.2026 Date of Pronouncement : 20.01.2026 O R D E R PER INTURI RAMA RAO, A.M :
This appeal filed by the Revenue is directed against the order of the NFAC, Delhi (herein after called CIT(A)’ in short], dated 13.08.2025 for the Assessment Year-2022-23.
2.0 Briefly, the facts of the case are that the appellant is a Cooperative Society incorporated under the provisions of the Tamil Nadu Cooperative Society Act 1983. It is formed with object providing credit facilities to its members. No return of income for the Assessment Year 2016-17 was filed under the provisions of section 139 of the Act. The AO formed an opinion that income got escaped assessment from tax, based on the information that the appellant society made cash deposits of Rs.8,55,00,000/- Kancheepuram Central Co-operative Bank during the Financial Year 2015-16 relevant to Assessment Year 2016-17. Accordingly, the AO issued a notice u/s 148 on 22.07.2022 after duly complying the procedure laid down u/s 148A of the Act. The appellant society had failed to comply with notice u/s 148. In response to notice u/s 142(1) of the Act, the appellant filed detailed submissions stating that the cash deposits were made out of the collections from the members and also submitted that the appellant is eligible for deduction u/s. 80P of the Act. The AO while accepting the explanation of the appellant with regard to the source of the cash deposits, however, denied the claim for deduction u/s 80P of the Act on the ground that the appellant society had not filed the return of income within the due date prescribed u/s 139(1) of the Act. Accordingly, the AO made addition of Rs.2,95,48,012/-.
3.0 Being aggrieved by the above assessment order, the appellant preferred an appeal before the National Faceless Appeal Centre (hereinafter called “NFAC”), who vide impugned order allowed the claim for deduction u/s 80P the Act by holding that the appellant filed the return of income in compliance to notice u/s 148 of the Act and the appellant made a claim for deduction u/s. 80P in the return of income, and provisions of Page - 2 - of 7 section 80AC have no retrospective application. Being aggrieved by the above order, the Revenue is in appeal before us in the present appeal.
4.0 The learned Sr.DR submits that the order passed by the CIT(A) is erroneous, in as much as, the CIT(A) had failed to appreciate that the respondent assessee Cooperattive Society is not eligible to claim deduction u/s 80P, as it failed to file the return of income under the provisions of 139 and its is a Cooperative bank hit by provisions of sub-sectionn-4 of section 80P of the Act.
5.0 On the other hand, the learned A.R submits that the respondent Cooperative society is not a Cooperative bank, but a member Cooperative society not enjoying licence to carry on the business of banking. He further submits that the appellant has filed return of income in response to notice u/s 148 duly made claim in the return of income for deduction u/s 80P of the Act. He further submits that the provisions of section 80AC have prospective application from assessment year 2018-19. Thus, he submits that the order of the CIT(A) is in consonance with the settled provision of law and requires no interference by this tribunal.
5.0 We have heard the rival submissions and perused the material available on record. The issue that arises for our consideration is whether the appellant society is eligible to claim deduction u/s 80P or not. Admittedly, the appellant society is Cooperative Society registered under Page - 3 - of 7 Tamil Nadu Cooperative Act 1983. It is not a Cooperative bank as no banking licence was granted by RBI to carry on business of banking. Therefore, the provisions of sub-section-4 of section 80P have no application to the facts of the present case. The contention of the learned Sr.DR that the deduction u/s 80P cannot be granted in view of the provisions of section 80AC, cannot be accepted for the reason that the provisions of section 80AC were explicitly made applicable from the assessment year 2018-19 onwards.
6.0 With regard to the satisfaction of the condition laid down under the provision of section 80A(5) of the Act, the provisions of 80A(5) provides that no deduction u/s 80P can be allowed unless a claim is made in the return of income. The AO categorically recorded a finding that vide para 3.2 of the assessment order that the appellant had failed to comply with the notice issued u/s 148 of the Act. Further, the AO also recorded a finding that no regular return of income under the provisions of section 139 of the Act was filed by the respondent assessee. However, the CIT(A) granted relief by returning finding that the return of income for the Assessment Year 2016-17 was filed on 01.06.2018. This return of income neither a valid return of income u/s 139(1) nor 139(4). Admittedly, the appellant had not filed the return of income in response to notice u/s 148. Thus, the conditions laid down u/s 80A(5) of the Act does not stand satisfied in the present case.
Page - 4 - of 7 Therefore, the NFAC had clearly fell in error in holding that the condition laid down u/s 80A(5) of the Act stand satisfied. The return of income filed beyond the due date prescribed under the provisions of 139(1), 139(4), 142(1) of 148 are non est in the eyes of law. The ratio of decision of the Hon’ble Kerala High Cart in the case Nileshwar Range Kallu Chethu Vyavasaya Thozhilali Sahakarana Sangham Vs Commissioner of Income Tact 459 ITR 730 is squarely applicable to the facts of the present case. The relevant paras of the judgement are extracted below:-
“….10. We have considered the rival submissions of Sri.S.Arun Raj, the learned counsel appearing for the appellant/assessee and Sri.Christopher Abraham, the learned Standing Counsel for the Income- tax Department.
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 Page - 5 - of 7 139(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.
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 pre- condition 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 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….”
Page - 6 - of 7 In view of the above judgement of Hon’ble Kerala High Court, the order passed by NFAC is illegal and contrary to the facts of the case. Therefore, the order of the NFAC is reversed, the additions made in the assessment order is sustained.
7.0 In the result the appeal of the revenue is stands allowed. Order pronounced on 20th , January-2026 at Chennai.