TaxTMI 
TaxTMI 
2025 (8) TMI 1806
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....bers. For the year under consideration, the assessee was required to furnish its return of income within the time prescribed under section 139(1) of the Act. However, the assessee did not file its return of income within such prescribed time, nor was any return filed within the extended period under section 139(4). Thereafter, a notice under section 142(1) dated 12.03.2018 was issued calling upon the assessee to furnish its return of income. The assessee again failed to comply. 3. Thereafter, a further statutory notice under section 142(1) dated 05.08.2019 was issued. In response to the latter notice, the assessee submitted a reply enclosing a statement of total income of Rs. 5,40,088/- and the working of deduction under section 80P, with the specific plea that only bank interest of Rs. 26,194/- was chargeable to tax and the balance was deductible in terms of section 80P having regard to its status as a co-operative credit society. 4. Subsequently, a show-cause notice dated 24.09.2019 was issued proposing to deny deduction under section 80P of the Act and intimating that assessment would be completed under section 144 in the absence of compliance. The assessee did not respond....
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..... 7. The learned CIT(A) rejected the plea. After noticing the assessee's non-filing within section 139(1) and 139(4) and examining the subsequent filing on 30.09.2019, he held that section 80A(5) creates a statutory pre-condition that a deduction under Chapter VI-A shall not be allowed unless claimed through a return furnished within the time permitted. He further observed that the amended section 80AC now covers Chapter VI-A deductions, and though the amendment operates from A.Y. 2018-19, the pre-existing mandate of section 80A(5) itself was sufficient to deny the claim for A.Y. 2017-18. Placing reliance inter alia on Kerala High Court in Nileshwar Rangekallu Vyavasaya Thozhilali Sahakarana Sangham v. CIT [(IT Appeal No. 120 of 2019/11 of 2022), (2023) 152 taxmann.com 347], he affirmed the action of the Assessing Officer in not allowing the deduction under section 80P and sustained the assessed income at Rs. 5,40,088. The ground on merits was dismissed and the other ground was treated as general. 8. Aggrieved by the order of CIT(A), the assessee is in appeal before us raising following grounds of appeal: 1.1 The order passed by u/s. 250 passed on 21.02.2025 for A.Y.....
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.... under section 142(1), the assessee had duly filed its reply enclosing the statement of total income and computation of deduction under section 80P. Thereafter, the assessee also e-filed the return of income on 30.09.2019 disclosing claim of deduction of Rs. 4,31,055. Once the claim was before the Assessing Officer in the course of assessment proceedings, it was incumbent upon him to examine the same on merits and not to disallow summarily on technical grounds. 11. The AR further submitted that reliance placed by the Assessing Officer and the CIT(A) on section 80A(5) is misplaced. Section 80A(5) merely provides that where no return of income has been furnished by the assessee within the time allowed under section 139(1), deduction under Chapter VI-A shall not be allowed. However, this restriction was never intended to apply to claims under section 80P in the years prior to the amendment of section 80AC by the Finance Act, 2018. Prior to its substitution, section 80AC covered only deductions under sections 80-IA to 80- IE, and it was only with effect from 01.04.2018 that section 80AC was expanded to cover the entire Chapter VI-A, including section 80P. Therefore, for A.Y. 2017-18....
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....not cover section 80P. The enlarged provision of section 80AC, covering the entire Chapter VI-A including section 80P, has been made operative only with effect from 01.04.2018, i.e., from assessment year 2018-19 onwards. For A.Y. 2017-18, therefore, belated filing of return was not fatal to the claim of deduction under section 80P. 17. At this stage, it is pertinent to note the scheme of section 80A(5) and section 80AC. Section 80A(5), as it stood during the relevant assessment year, provided that where no return of income has been furnished by the assessee within the time allowed under section 139(1), no deduction under Chapter VI-A shall be allowed. This provision has to be read in harmony with section 80AC. Prior to its substitution by the Finance Act, 2018 with effect from 01.04.2018, section 80AC mandated timely filing of return only in cases where deduction was claimed under sections 80-IA to 80-IE. It was only after the amendment by Finance Act, 2018 that section 80AC was expanded to cover "any deduction under the heading C of Chapter VI-A", thereby including section 80P within its scope. The legislative intent is thus clear that up to assessment year 2017-18, the conditi....