MAHATMA PHULE GRAMIN BIGARSHETI SAHAKAR PAT SANSTHA LTD,KOLHAPUR vs. PCIT-1, PUNE, PUNE

He observed that the provisions of section 80AC were first brought in the statute vide Finance Act, 2006. He also referred to the CBDT Circular No.14/2006 dated 28.02.2006 & CBDT Circular No.8/2018, dated 26.12.2018 and various decisions. Since the assessee failed to file the return of income within the period prescribed u/s 139(1) of the Act, therefore, he was of the opinion that the deduction of Rs.8.40.004/- claimed u/s 80P(2)(a)(i) of the Act was not allowable as per provisions of section 80AC of the Act. Since the Assessing Officer, without any verification and without conducting any enquiry, accepted the assessee’s claim for deduction u/s 80P(2)(a)(i) of the Act and without considering the legal position, therefore, he held the order to be erroneous and prejudicial to the interest of Revenue. He, therefore, set aside the order passed by the Assessing Officer with a direction to conduct proper verification of facts and re-examine the issue.

Aggrieved with such order of the Ld. PCIT, the assessee is in appeal before the Tribunal by raising the following grounds:

None appeared on behalf of the assessee but the assessee has filed its written submission with a request to consider the same. It has been mentioned in the written submission that the issue of cash deposit was examined by the Assessing Officer during the course of assessment proceedings and in the assessment order in para 3.4 at page 3, the Assessing Officer has stated that no variation is proposed on the issue of cash deposit by the assessee society in its bank. It has been mentioned that the Assessing Officer has exhausted his jurisdiction as soon as he was satisfied that the cash deposit of Rs.61,19,654/- in the bank account of the assessee for which the case of the assessee was reopened under the provisions of section 147 of the Act, was satisfactorily explained.

Referring to the decision of Hon’ble Bombay High Court in the case of S V Jadhav vs. ITO reported in (2024) 163 taxmann.com 263 (Bom), it has been mentioned that the Hon’ble High Court applying the decision of Hon’ble Bombay High Court in the case of CIT vs. Jet Airways (I) Ltd. reported in (2011) 331 ITR 236 (Bom), has held that once the Assessing Officer has accepted the contention of the assessee and held that the information report by the Insight portal is accounted for by the assessee in his books and income arising out of those transactions is duly offered for taxation, the order u/s 148A(d) of the Act cannot be sustained.

Referring to the decision of Hon’ble Delhi High Court in the case of ATS Infrastructure Ltd. Vs. ACIT reported in (2025) 473 ITR 595 (Del) it has been mentioned that the Hon’ble High Court has held that once assessment itself is reopened, it would not be confined to those subjects only, this would, however, be subject only to one additional rider and that if, in course of reassessment, Assessing Officer ultimately comes to conclude that no additions or modifications are warranted under those heads, it would not be entitled to make any additions in respect of other items forming part of original return.

Relying on various other decisions, it has been mentioned that the Assessing Officer has no power to make additions beyond reason to believe if there was no addition on account of reasons to believe for which notice u/s 148 of the Act was issued.

Referring to the following decisions it has been submitted that the power of Ld. PCIT u/s 263 cannot exceed the power of the Assessing Officer: a) Jaspreet Singh Sidhu, dated 18.09.2024 b) Ashok Kumar vs. Principal Commissioner of Income-tax [2024] 164 taxmann.com 115 (Delhi-Trib.)/[2024] 207 ITD 583 (Delhi-Trib.) [26-06- 2024] c) Sipura Developers (P.) Ltd v. PCIT [2024] 168 taxmann.com 543 (Delhi) d) Aishwarya Rai Bachchan vs. Principal Commissioner of Income-tax-8 [2022] 135 taxmann.com 335 (Mumbai - Trib) [25-02-2022]

The assessee has also relied on the following decisions: i) Rajya Rakhiv Police Karmachari Sahakari Patsanstha Maryadit vs. ITO vide order dated 16.06.2025 for assessment year 2012-13 ii) Soyala Gram Sewa Sahakari Samiti Litd. Vs. ITO vide order dated 08.01.2025 for assessment year 2015- 16 iii) Jaspreet Singh Sidhu vs. PCIT vide order dated 18.09.2024 for assessment year 2016-17 iv) Ashok Kumar vs. PCIT (2024) 207 ITD 583 (Delhi – Trib.) v) Sipura Developers (P.) Ltd. Vs. PCIT (2024) 168 taxmann.com 543 (Del) vi) Aishwarya Rai Bachchan vs. PCIT (2022) 194 ITD 272 (Mumbai- Trib.)

The Ld. DR on the other hand has also filed a detailed written submission. He submitted that reliance of the assessee on the decision of Hon’ble Bombay High Court in the case of CIT vs. Jet Airways (I) Ltd. (supra) is mis-placed. In that case, the Hon’ble Bombay High Court has held that if the original reason for reopening u/s 147 fails, the Assessing Officer cannot make additions on other issues which were not part of the recorded reasons. This ruling is strictly confined to (a) re-assessment proceedings u/s 147 / 148 (b) the jurisdictional validity of reopening. The Hon’ble High Court has not dealt with the provisions of section 263, changes in law by retrospective or clarificatory amendments, eligibility conditions under Chapter VIA deductions etc. He submitted that the assessee’s reliance on the decision of the Pune Bench of the Tribunal in the case of Rajya Rakhiv Police Karmachari Sahakari Pat Sanstha Maryadit (supra) is also misplaced. In that decision, the Tribunal has decided the issue for assessment year 2012-13. In that case it has been specifically pointed out that section 80AC, which provides that for claiming deduction u/s 80P of the Act the return is to be filed within the statutory time limit has been inserted from 01.04.2018 and is not applicable in the said case as it pertains to assessment year 2012-13. Post amendment to section 80AC vide CBDT Circular No.8/2018 dated 26.12.2018 w.e.f. 01.04.2018, deduction in respect of certain incomes in Chapter VIA shall not be allowed unless the return of income is filed on or before the due date. In the instant case the assessee has not filed its original return of income as per provisions of section 139(1) of the Act, therefore, the said decision relied on by the assessee is misplaced and not applicable to the facts of the present case.

We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and Ld. PCIT and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. It is an admitted fact that the assessee has not filed its return of income but had made cash deposit of Rs.61,19,654/- in the bank account for which the case of the assessee was reopened and notice u/s 148 of the Act was issued to the assessee. We find when the assessee filed return of income the Assessing Officer in the order passed u/s 147 r.w.s. 144B of the Act has accepted the returned income wherein he allowed the claim of deduction u/s 80P of the Act to the tune of Rs.8,40,004/- despite the fact that the assessee is a non-filer for assessment year 2008-09 and has not filed its return of income for the said assessment year within the prescribed time limit u/s 139(1) of the Act and therefore, in view of the provisions of section 80AC w.e.f. 01.04.2018 and the CBDT Circular No.8/2018, dated 26.12.2018 the assessee is not entitled to claim the deduction u/s 80P of the Act. It is the submission of the Ld. Counsel for the assessee that the issue of cash deposit was examined by the Assessing Officer during the course of assessment proceedings and he has accepted the submission of the assessee regarding the source of cash deposit of Rs.61,19,654/- and therefore, once the Assessing Officer has accepted the contention of the assessee regarding the source of such cash deposit, he cannot travel beyond the reasons for which the case was reopened and therefore cannot make any other addition in respect of other items forming part of original return. It is also his submission that the power of PCIT u/s 263 cannot exceed the power of the Assessing Officer.

It is the submission of the Ld. DR that when the assessee filed the return claiming deduction u/s 80P of the Act the Assessing Officer without putting any query has accepted the returned income. He has not examined the applicability of the provisions of section 80P(2)(a)(i) of the Act in view of the binding provisions of section 80AC of the Act which became effective from assessment year 2018-19 and the CBDT Circular No.8/2018, dated 26.12.2018 which is binding on the Revenue.

We find some force in the above arguments of the Ld. DR. Admittedly the assessee was a non-filer and the case of the assessee was reopened on the ground that the assessee has made huge cash deposits in the bank account and has not disclosed the true and correct income. When the assessee filed return in response to the notice u/s 148 of the Act after claiming deduction u/s 80P, the Assessing Officer was duty bound to examine the allowability of deduction u/s 80P of the Act in the light of provisions of section 80AC of the Act and the CBDT Circular No.8/2018 dated 26.12.2018. However, the Assessing Officer in the instant case neither asked any query on this issue nor the assessee has given any justification for claiming such deduction despite not being eligible for the same. Under these circumstances, we are of the considered opinion that the order passed by the Assessing Officer has become erroneous as well as prejudicial to the interest of the Revenue.

We find the Hon’ble Bombay High Court in the case of CIT, Nagpur vs. Ballarpur Industries Ltd (supra) has held that where the Assessing Officer allowed claim of deduction under section 80HHC without examining said claim with reference to unabsorbed depreciation and investment allowance as referred to in sections 32 and 32A respectively, the Commissioner was justified in invoking revision under section 263 of the Act. The relevant observations of Hon’ble High Court from para 10 to 16 read as under: “10. The law on exercise of jurisdiction under Section 263 of the Act is settled by the decision of the Apex Court in the case of Malabar Industrial Co. Ltd. v. CTT [2000] 243 ITR 83/109 Taxman 66 wherein it has recorded that power of revision under Section 263 of the Art can be exercised only on satisfaction of twin conditions namely the order of the Assessing Officer must be erroneous, and also prejudicial to the interest of the revenue. The Court further observed that where a claim made by the assessee is allowed by the Assessing Officer without having made any enquiry, then the order of the Assessing Officer to the extent it allowed such a claim is erroneous in law. The Apex Court also recorded the fact that where two views are possible, and the Assessing Officer has taken one possible view, then even if the CIT does not agree with the view, it would not give him the jurisdiction to exercise jurisdiction under Section 263 of the Act. 11. In the above view, Mr. Bhattad, learned counsel for the applicant-Revenue submits that it is very clear chat the claim of the respondent- assessee for deduction under Section 80HHC of the Act was allowed without any discussion and/or consideration of the eligibility and / or extent of eligibility of claim under Section 80HHC of the Act. Therefore, the substantial question of law be amended in favour of Revenue. 12. However, Mr. Dewani, learned counsel for the respondent-assessee while not disputing the above position in law with the requirement of satisfaction of twin requirements, submits that in this case the issue was debatable and two views were inherently possible in view of the complexity of Section 80HHC of the Act. In support he placed reliance upon the decision of the Apex Court in Max India Ltd. (supra) which also reiterates that where two views are possible, the exercise of the revisional power under Section 263 of the Act is not called for. The two views he submits by inviting our attention to the fact that statement of case refers so the decision of the Tribunal placing reliance upon its decision in Mysore Exports Ltd. (supra) taking the same view. Further in support that there were two views possible at the time when the Assessing Officer passed the order, reliance was placed upon the decision of the Andhra Pradesh High Court in CIT v. Gogineni Tobacco Ltd (1999) 238 ITR 970 which relies upon the orders passed under the Act indicating the issue is debatable. Without prejudice to the above, it is also submitted that from a bare reading of the statement of case it is clear that the Assessing Officer had allowed deduction under Section 80HHC of the Act only after due application of mind. In support of the aforesaid, he relied upon the fact of the statement of case refers to the words "allowed deduction under Section 80HHC of the Act”. Further observation in the statement of case Assessing Officer is thus seemed to have allowed deduction under Section 80HHC without subjecting the claim to due verification and subsequent quantification and allowability".

The decision of the Apex Court in Max India Ltd. (supra) relied upon by the respondent-assessee to our mind would not come to its rescue for the reason that in the present facts the statement of the case does not indicate that the view taken to allow the claim under Section 80 HHC of the Act was after examination/inquiry. Mere taking of a view by the Assessing Officer without having subjected the claim to examination would not make it a view of the Assessing Officer. A view has necessarily to be preceded by examination of the claim and opting to choose one of the possible results. In the absence of view being taken, merely because the issue itself is debatable, would not absolve the Assessing Officer of applying his mind to the claim made by the assessee and allowing the claim only on satisfaction after verification/enquiry on his part. A view in the absence of examination is no view but only a chance result. Therefore, even the decision of the Andhra Pradesh High Court in Gogineni Tobacco Ltd. (supra) will also have no application.

It appears from the decision of the Apex Court in Max India Ltd. (supra) that the Assessing Officer had taken one of the two views of the word "profit" as occurring in Section 80 HHC of the Act. Therefore, it was in that context that the Apex Court held that Section 263 of the Act would not be attracted particularly when the view of the Assessing Officer was found to be a view taken by various authorities under the Act. In passing we may point out that as recorded in the statement of case, the Tribunal held the exercise of powers under Section 263 of the Act by the Commissioner of Income Tax to be bad in law as the view of the Assessing Officer was in line with the decision of the Tribunal in Mysore Exports Lad (supra). It is relevant to note that on the date when the Commissioner of Income Tax exercised his powers under Section 263 of the Act on 31.03.1995, the decision of the Tribunal in Mysore Exports Ltd (supra) was not available before him as it was rendered on 19.05.1995.

So far as the decision of Hon’ble Bombay High Court in the case of CIT vs. Jet Airways (I) Ltd. (supra) is concerned, we find the said decision is not applicable to the facts of the present case. In that case the ruling was confined to re-assessment proceedings u/s 147 / 148 and the jurisdictional validity of reopening. The Hon’ble High Court has not dealt with revisional jurisdiction u/s 263, changes in law by retrospective or clarificatory amendments, eligibility conditions under Chapter VIA deductions etc. In the instant case the Ld. PCIT has only dealt with the applicability of section 80AC and the said action of the Ld. PCIT is consequence to assessment order passed u/s 147 r.w.w.s. 144B of the Act by the Assessing Officer. Since the provisions of applicability of section 80AC of the Act has not been considered by the Assessing Officer while allowing the claim of deduction u/s 80P(2)(A)(i) of the Act, therefore, the decision relied upon by the Ld. Counsel for the assessee in our opinion is distinguishable and is not applicable to the facts of the present case. The various other decisions relied upon by the assessee in the paper book are also distinguishable and not applicable to the facts of the present case. Since the Assessing Officer in the instant case without verifying the allowability of deduction u/s 80P(2)(a)(i) of the Act in light of provisions of section 80AC and the CBDT Circular No.8/2018, dated 26.12.2018 which is binding on the Revenue, has allowed the claim of deduction made by the assessee in the belated return of income, therefore, the order has become erroneous and prejudicial to the interests of the Revenue. Therefore, we uphold the order passed by the Ld. PCIT by invoking the powers vested in him u/s 263 of the Act. The grounds raised by the assessee are accordingly dismissed.

In the result, the appeal filed by the assessee is dismissed.