Late return filing doesn't bar deduction claim! ITAT rules in favor of assessee

The ITAT allowed the appeal of the assessee, emphasizing that the denial of a deduction under section 80P of the Income Tax Act due to late filing of the return for the assessment year 2019-20 was not justified. The ITAT clarified that the amendment in Section 143(1)(a)(v) did not apply for the relevant assessment year, and filing a return beyond the due date did not automatically disqualify the assessee from claiming deductions, especially when filed within the extended period under Section 139(4).

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Issues:
1. Denial of deduction under section 80P of the Income Tax Act due to late filing of return.
2. Interpretation of statutory provisions regarding denial of deduction under section 80P.
3. Applicability of prima facie adjustment under section 143(1)(a)(v) and (ii).
4. Impact of amendment in Section 80AC on denial of deduction.
5. Judicial precedents on late filing of returns and claim of deductions.

Analysis:

1. The appeal concerned the denial of a deduction under section 80P of the Income Tax Act due to the late filing of the return by the assessee for the assessment year 2019-20. The National Faceless Appeal Centre upheld the denial based on the late filing, leading to the appeal before the ITAT Rajkot.

2. The ITAT analyzed the statutory provisions, noting that Section 80AC requires the return to be filed on or before the due date specified under Section 139(1) for deductions to be allowed. However, the amendment in Section 143(1)(a)(v) allows disallowance of deductions if the return is filed beyond the due date under Section 139(1), but this amendment was not applicable for the relevant assessment year.

3. Regarding prima facie adjustment under Section 143(1)(a)(ii), the ITAT found that the denial of deduction for late filing did not fall within the scope of such adjustments as per the Explanation provided in the Act, which specifies cases of "incorrect claims."

4. The ITAT discussed the impact of the amendment in Section 80AC, which denied the benefit of deductions if the return was not filed on time. However, the ITAT concluded that this amendment was not applicable to the assessment year in question, thus supporting the assessee's claim for deduction under Section 80P.

5. Citing judicial precedents, including cases from the Kerala High Court, Hyderabad Tribunal, and Chandigarh Tribunal, the ITAT highlighted that filing a return beyond the due date did not automatically disqualify the assessee from claiming deductions, especially when the return was filed within the extended period under Section 139(4).

6. Considering the totality of facts and the legal provisions, the ITAT allowed the appeal of the assessee, emphasizing that the claim of deduction under Section 80P could not be denied solely based on the late filing of the return under Section 139(1) for the assessment year 2019-20.

This detailed analysis of the judgment provides a comprehensive understanding of the issues involved and the ITAT's reasoning in allowing the appeal of the assessee.

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