2025 (4) TMI 145 - AT - Income Tax

Assessment valid without section 143(2) notice when assessee fails to file ITR; section 80P deduction denied

ITAT Dehradun upheld the assessment completed without issuing notice under section 143(2), ruling that since the assessee failed to file a valid ITR ... Validity of assessment without issuance of notice u/s 143(2) - HELD THAT:- The material available on the record clearly show that the assessee has not filed any valid ITR of the relevant year either suo moto or in response to the notice u/s 142(1). The assessee has not established and demonstrated that it has filed a valid ITR. Since there is no valid ITR; therefore, the question of issuance of notice u/s 143(2) does not arise. Accordingly, it is held that the assessment without issuance of notice under section 143(2) of the Act has been rightly completed by the AO. Thus, the additional ground challenging validity of assessment without issuance of notice under section 143(2) of the Act is dismissed. Denial of deduction u/s 80P - assessee has not filed the ITR within the due date prescribed u/s 139(1) - HELD THAT:- We are of the considered view that this case is squarely covered by the decision of Shri Kalabhairaveshwara Multi-purpose Co-op. Society Ltd. [2024 (10) TMI 1644 - ITAT BANGALORE] as held for claiming deduction under Chapter VIA under the head, 'Deductions to be made in computing total income', which covers section 80P also, the assessee has to file return of income. The assessee did not file return of income at all and therefore the assessee is not eligible for deduction u/s. 80P. The Hon'ble Kerala High Court in the case of Nileshwar Rangekallu Chethu Vyavasaya Thozhilali Sahakarana Sangham [2023 (3) TMI 1055 - KERALA HIGH COURT] has held as under we hold that the assessee is not eligible for deduction u/s. 80P of the Act. ISSUES PRESENTED and CONSIDEREDThe Appellate Tribunal considered the following core legal questions:i. The validity of the assessment without the issuance of notice under section 143(2) of the Income Tax Act, 1961.ii. The allowance of deduction under section 80P without filing the Income Tax Return (ITR) under section 139(1) of the Act.iii. The chargeability of interest under sections 234A and 234B of the Act.iv. The initiation of penalties under the Act.ISSUE-WISE DETAILED ANALYSISi. Validity of Assessment without Notice under Section 143(2)The relevant legal framework involves section 143(2) of the Income Tax Act, which mandates the issuance of notice for scrutiny assessments. The Court examined whether the absence of such a notice invalidated the assessment.The Tribunal concluded that since the assessee did not file a valid ITR, the requirement for issuing a notice under section 143(2) did not arise. The assessment was completed based on available records, and the Tribunal upheld the AO's action, dismissing the additional ground raised by the assessee.ii. Allowance of Deduction under Section 80PThe legal framework for this issue is governed by sections 80A(5) and 80P of the Act, which stipulate that deductions must be claimed in a return filed within the due date specified under section 139(1).The Tribunal referred to the decision of the ITAT, Bengaluru, and the Hon'ble Kerala High Court, which emphasized that deductions under section 80P can only be claimed if the return is filed within the prescribed timeframe. The Tribunal found that the assessee's failure to file a timely return rendered it ineligible for the deduction.The Tribunal dismissed the assessee's arguments, which were based on precedents prior to the amendment effective from 01.04.2018, rendering them irrelevant.iii. Chargeability of Interest under Sections 234A & 234BThe Tribunal noted that the issues related to interest under sections 234A and 234B were consequential to the main issues of assessment validity and deduction eligibility. As the primary issues were resolved against the assessee, the interest charges were upheld.iv. Initiation of PenaltiesThe initiation of penalties was considered premature by the Tribunal, as the primary issues had not been resolved in favor of the assessee. Consequently, the grounds related to penalties were dismissed.SIGNIFICANT HOLDINGSThe Tribunal preserved the following crucial legal reasoning:'The statutory scheme permits the allowance of a deduction under section 80P of the IT Act only if it is made in a return recognized 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.'The core principles established include the strict adherence to statutory deadlines for claiming deductions and the non-requirement of notice under section 143(2) in the absence of a valid ITR.The final determinations were as follows:- The assessment without notice under section 143(2) was upheld.- The deduction under section 80P was denied due to the late filing of the return.- The interest charges under sections 234A and 234B were upheld as consequential.- The initiation of penalties was deemed premature and dismissed.The appeal filed by the assessee was dismissed in its entirety.