Deduction Under Section 80P Denied for Late Return Filing; No Valid Return Filed as per Section 80A(5)

The ITAT Cochin upheld the denial of deduction under section 80P for AY 2017-18 due to delayed filing of the return. The assessee filed the return on 16/10/2019 in response to a notice issued on 21/12/2017, which was neither under section 139(1) nor section 142(1), rendering it invalid. Since no valid return was filed, the claim for deduction under section 80P could not be entertained as per section 80A(5). The tribunal found no error in the lower authorities' order and dismissed all grounds of appeal.

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ISSUES:

Whether an assessment under section 144 of the Income Tax Act, 1961 can be upheld when the assessee files a return of income after the prescribed time under a notice issued under section 142(1).Whether a return of income filed in response to a notice under section 142(1) but beyond the prescribed time can be treated as a valid return for claiming deductions under Chapter VI-A, specifically section 80P.Whether deduction under section 80P of the Income Tax Act, 1961 is allowable if the assessee fails to file a valid return of income within the prescribed time.The legal effect of delay in filing a return of income on the allowance of deductions under Chapter VI-A of the Act.

RULINGS / HOLDINGS:

The assessment order passed under section 144 of the Income Tax Act, 1961 was correctly upheld as the return of income filed by the assessee on 16/10/2019 was not a valid return since it was filed beyond the time prescribed under the notice issued under section 142(1).The return of income filed in response to a notice under section 142(1) but after the prescribed time cannot be treated as a valid return for the purpose of claiming deductions under Chapter VI-A, including section 80P.In absence of a valid return of income filed within the prescribed time, the assessee is not entitled to claim deduction under section 80P of the Income Tax Act, 1961.The delay in filing the return is not a mere "technical defect" but a substantive failure which disentitles the assessee from claiming deductions under section 80P as per section 80A(5) of the Act.

RATIONALE:

The Court applied the provisions of section 139(1), section 142(1), section 144, section 80P, and section 80A(5) of the Income Tax Act, 1961.Section 139(1) mandates timely filing of return of income, and section 142(1) empowers the Assessing Officer to call for a return if not filed.Section 80A(5) provides that if the assessee fails to make a claim for deduction under Chapter VI-A in his return of income, no deduction shall be allowed.The Court followed the principle that a return filed beyond the prescribed time under the notice is not a valid return for claiming deductions, rejecting the argument that delay was a "technical defect" that could be cured before assessment completion.The decision aligns with precedent from the Kerala High Court, which supports disallowance of deductions when valid returns are not timely filed despite notices.

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