Deduction under Section 80P denied for failure to file return and claim before assessment officer

ITAT Pune denied deduction u/s 80P to assessee who failed to file return of income and never claimed the deduction before AO during assessment proceedings. Tribunal held that as per Section 80A(5), deduction u/s 80P must be claimed in return of income. Since no return was filed and no documents proved claim was made before AO, deduction was rightly disallowed. Tribunal relied on Gujarat HC decision in Rachna Infrastructure case establishing similar principle for Section 80IA deduction. Appeal decided against assessee.

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Issues Involved:

1. Non-filing of Income Tax Return by the Assessee.
2. Denial of Deduction under Section 80P of the Income Tax Act.
3. Interpretation and Application of Section 80A(5) and 80AC of the Income Tax Act.

Summary:

Non-filing of Income Tax Return by the Assessee:
The assessee did not file a return of income for A.Y. 2017-18, which led the Assessing Officer (AO) to issue a notice under section 142(1) of the Income Tax Act. Despite multiple notices, the assessee failed to file the return within the stipulated time. The AO assessed the total income based on the net profit shown in the Profit and Loss account.

Denial of Deduction under Section 80P:
The main grievance of the assessee was the denial of deduction under section 80P. The assessee argued that the provisions of Section 80A(5) are directory and not mandatory, relying on various ITAT decisions. However, both the AO and the Commissioner of Income Tax (Appeals) upheld that since the return was not filed, the deduction under section 80P could not be allowed.

Interpretation and Application of Section 80A(5) and 80AC:
The Tribunal noted that Section 80A(5) mandates that a claim for deduction must be made in the return of income. As the assessee did not file any return, the claim for deduction under section 80P was not admissible. The Tribunal cited several judgments from the Hon'ble Supreme Court, Bombay High Court, Kerala High Court, and Gujarat High Court, which emphasized that deductions under Chapter VIA must be claimed in a valid return of income. The Tribunal also noted that the decisions relied upon by the assessee were from ITAT and did not consider the higher court rulings.

Conclusion:
The Tribunal upheld the assessment order, denying the deduction under section 80P due to the non-filing of the return. All grounds raised by the assessee were dismissed, and the appeal was rejected. The Tribunal emphasized the necessity of filing a return to claim deductions under the Income Tax Act.

Order:
The appeal of the assessee is dismissed. Order pronounced in the open Court on 8th March, 2024.

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