ITAT: Section 80P of Tax Deduction Can’t be Refused If ITR Not Filed within Deadline

The Rajkot bench of the Income Tax Appellate Tribunal has ruled that, under Section 80P, the income tax deduction cannot be refused due to failure to file an Income-tax return by the deadline.

The assessee is duly registered with a co-operative society under the Gujarat Co-operative Societies Act. The assessee’s primary source of revenue comes from the exclusive provision of credit to its members. The assessee has accrued interest revenue from both its investors in other cooperative societies and from its members.

According to section 139(4) of the Income Tax Act of 1961, the assessee filed its return of income after the deadline and claimed a deduction of Rs. 7,83,615 under section 80P. The centralised processing centre in Bengaluru processed the assessee’s income tax return after receiving notification under section 143(1), denying the assessee’s claim for a deduction under section 80P because the return of income was not submitted by the deadline outlined in section 139(1) of the Income Tax Act of 1961.

An appeal was filed by the distressed assessee before the CPC centre. It claimed that there is no provision in section 143(1) (a) to adapt to the returned income by refusing under section 80P. In the Finance Act.2021, there was also a revision in section 143(1) (a) (v). It says that from FY 2022-23, such disallowances are possible under the 143(1) proceedings.

The instructions for the assessee asserted that the Finance Act of 2021’s change to Section 143(1) is not relevant to the current assessment year 2019-2020.

The Assessee cannot be denied the deduction under section 80P of the Income Tax Act of 1961 because the Assessee did not file the return of income within the due date prescribed under section 139(1) of the Income Tax Act under proceedings made under section 143(1) of the Income Tax Act for the assessment year 2019–20, according to the Coram included Account Member Waseem Ahmed and the Judicial Member T.R. Senthil Kumar.