Appeal allowed by ITAT, disallowance under section 80P canceled. CPC lacked authority for late return disallowance.

The ITAT allowed the appeal, reversing the order of the ld. CIT(A) and cancelling the disallowance of the deduction claimed under section 80P. The ITAT held that the CPC did not have the authority to disallow the deduction based on a late-filed return, as per the un-amended provisions.

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Issues Involved:
The issues involved in this case are:
1. Disallowance of deduction under section 80P due to late filing of return.
2. Applicability of section 80AC and its constitutionality.
3. Consideration of slight delay in completing the audit.

Disallowance of Deduction under Section 80P:
The Assessee filed its return of income claiming deduction under section 80P of the Income-tax Act, 1961. However, the CPC denied the deduction stating that the return was filed late, after the due date specified under section 139(1) of the Act. The AO rejected the rectification application, citing section 80AC which disallows deductions under Chapter VIA if the return is filed after the due date. The Assessee argued before the Ld. CIT(A) that the delay was due to the completion of the Audit Report, and relied on case law to support the allowance of deduction even for late-filed returns.

Applicability of Section 80AC and Constitutionality:
The ld. CIT(A) dismissed the appeal, stating that section 80AC, effective from assessment year 2018-19, disallows deductions under Chapter VIA if the return is not filed within the time allowed under section 139(1) of the Act. The ld. CIT(A) held that there was no scope for considering reasonable cause under this provision, and since the return was filed late, the deduction under section 80P was disallowed. The Assessee argued that the amendment under section 80AC is advisory and not mandatory, and that the provision is violative of the constitution for denying benefits disproportionately.

Consideration of Slight Delay in Audit Completion:
The Assessee contended that the delay in filing the return was due to the time taken to complete the Audit Report, which was beyond their control. The ld. CIT(A) observed that the return was filed late after obtaining the Audit Report, and upheld the disallowance of deduction under section 80P. However, the ITAT reversed the order, stating that the CPC did not have the jurisdiction to make the disallowance based on a late return, as per the un-amended provisions, and hence cancelled the disallowance.

Conclusion:
The ITAT allowed the appeal, reversing the order of the ld. CIT(A) and cancelling the disallowance of the deduction claimed under section 80P. The ITAT held that the CPC did not have the authority to disallow the deduction based on a late-filed return, as per the un-amended provisions.

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