Ahmedabad ITAT Cancels Tax Deduction U/S 80P Due to Late ITR Filing

In a recent decision, the Income Tax Appellate Tribunal (ITAT), Ahmedabad disallowed a deduction under Section 80P because of the late submission of the return. The assessee, Parabada Co-op. Milk Producers Society Limited, a Co-operative Milk Producers Society, filed its income tax return for Assessment Year 2019–20 on November 5, 2019, exceeding the extended due deadline of October 31, 2019. A deduction of Rs. 4,61,664 was requested by the company under Section 80P of the Income Tax Act of 1961.

Upon processing the return, the Centralised Processing Centre (CPC) in Bangalore disapproved the entire deduction claimed under Section 80P of the Income Tax Act in an intimation issued under Section 143(1) of the Act on 16th April 2020. The basis for disallowance was the inadmissible claim of the assessee and the belated filing of the return.

Aggrieved by the intimation dated 16th April 2020, the assessee appealed to the Commissioner of Income Tax (Appeals) [CIT (A)]. However, CIT (A) dismissed the appeal.

The counsel appeared for the assessee and argued that although the return was filed late, the intimation received fell under Section 143(1)(a) of the Income Tax Act, not Section 143(3). It was contended that adjustments related to Clause (b) of the aforementioned section only effect from 1st April 2021. Consequently, it was argued that the claimed deduction under Section 80P should have been allowed instead of being rejected solely due to the late filing of the return.

The counsel for the revenue, on the other hand, maintained that Section 80AC(ii) of the Income Tax Act explicitly states that deductions claimed under Part C of Chapter VIA are admissible only if the return of income is filed within the prescribed due date.

Upon careful consideration of a single bench Judicial Member, Suchitra Kamble concluded that the assessee should have filed the return within the extended due date, which he did not. As a result, the Assessing Officer issued an intimation under Section 143(1) of the Income Tax Act and explicitly disallowed the deduction under Section 80P due to the belated filing of returns.

It was further observed that the assessee indeed filed the return late, rendering Section 80AC(ii) of the Act inapplicable to the case. Consequently, the CIT (A) was justified in denying the claim for deduction under Section 80P of the Income Tax Act. Accordingly, the assessee’s appeal was dismissed.