Wrong Section Selected in ITR Cannot Defeat Genuine Section 80P Claim – ITAT Directs CPC to Grant Full Deduction

Vishnuanna Patil Credit Co-operative Society Ltd. Vs ITO (ITAT Pune)

Wrong Section Selected in ITR Cannot Defeat Genuine Section 80P Claim – ITAT Directs CPC to Grant Full Deduction

The Pune ITAT held that a typographical error in selecting the wrong sub-clause of section 80P in the income-tax return cannot be a ground to deny an otherwise valid deduction. The Tribunal directed the Revenue to allow the full deduction claimed by the co-operative credit society.

The assessee, a credit co-operative society, had claimed deduction under section 80P. However, while filing the return, it inadvertently entered the deduction amount under section 80P(2)(c)(ii) instead of the correct provision, section 80P(2)(a)(i). Consequently, CPC either denied the deduction altogether or restricted it to ₹50,000 while processing the returns under section 143(1). Rectification applications under section 154 were also rejected.

The Tribunal first noted that the returns for both assessment years had been filed within the due date prescribed under section 139(1). Therefore, the CPC’s assumption that the return was belated was factually incorrect. It further observed that prior to 01.04.2021, CPC had no jurisdiction to make certain adjustments under section 143(1)(a)(v) relating to denial of Chapter VI-A deductions on the ground of delayed filing.

On merits, the ITAT found that the assessee was admittedly engaged in providing credit facilities to its members and was otherwise eligible for deduction under section 80P(2)(a)(i). The denial arose solely because the claim was entered in the wrong column of the ITR. Relying on judicial precedents holding that substantive benefits cannot be denied for technical or typographical mistakes, the Tribunal treated the error as a mistake apparent from the record.

Accordingly, the ITAT directed the Revenue authorities to grant the full deduction under section 80P(2)(a)(i) as claimed by the assessee for both years and allowed the appeals.

FULL TEXT OF THE ORDER OF ITAT PUNE

These two appeals at the instance of the same assessee are directed against the different orders of Ld. ADDL/JCIT (Appeals), Mysore [“CIT(A)”], dated 03/12/2025 & 21/10/2025 passed u/s. 250 of the Income Tax Act, 1961 (for short, ‘the Act’) which are arising out of intimations dated 31/05/2019 & 19/02/2020 passed u/s. 143(1) of the Act for the Assessment Years (AY) 2018-19 & 2019-20 respectively.

2. The common grievance for A.Ys. 2018-19 & 2019-20 by the assessee which is a cooperative society is twofold, firstly, the Centralized Processing Center (CPC) erred in making adjustment u/s. 143(1)(a) of the Act denying deduction u/s. 80P of the Act, secondly, legitimate claim of deduction u/s. 80P(2)(a)(i) of the Act not allowed.

3. Facts of the case, in brief, are that assessee is a credit cooperative society registered under the Maharashtra Co-operative Societies Act, 1960. Return of income for A.Ys. 2018-19 & 2019-20 have been furnished on 17.09.2018 & 11.09.2019. However, in the returns of income, assessee has claimed deduction u/s. 80P of the Act at ₹ 4,75,747/- and ₹8,74,180/-, but in place of mentioning the amount under the head 80P(2)(a)(i), the assessee has made claim u/s. 80P(2)(c)(ii). The CPC while processing the return for A.Y. 2018-19 has denied the deduction u/s. 80P observing that the return of income is belated and section 80AC is applicable. However, for A.Y. 2019-20, CPC accepted that return is filed within the prescribed time limit, however, since the assessee has mentioned wrong sub-section of 80P, deduction u/s. 80P has been allowed at ₹ 50,000/- in place of claim at ₹8,75,180/-. Thereafter, assessee has filed an applications u/s. 154 of the Act, but failed to get any relief.

4. Against the rejection of applications u/s.154 of the Act, assessee preferred appeals for both the impugned years before the Ld.CIT(A), but failed to succeed. Now assessee is in appeals before this Tribunal.

5. Learned counsel for the assessee has firstly contended that prior to 01.04.2021, CPC had no powers to make the disallowance u/s. 143(1)(v) of the Act to deny deduction claimed under Chapter VI-A on account of delay in filing the return. He also submitted that for the inadvertent mistake committed by the assessee in mentioning correct sub-section, assessee should not be denied for the valid claim u/s. 80P(2)(a)(i) of the Act. Referring to the judicial precedents (which were filed before the Ld.CIT(A) in the written submissions in support of his contention) stated that valid claim should not be denied on technical grounds.

6. On the other hand, Ld. Departmental Representative (DR) vehemently argued supporting the orders of Ld. CIT(A).

7. I have heard rival contentions and perused the records placed before me. The assessee is a credit cooperative society. The return of income for A.Y. 2018-19 has been filed on 17/09/2018 and for A.Y. 2019-20 on 11/09/2019. As the assessee is required to get books of account audited under the societies Act, the due date of filing return for A.Y. 2018-19 is 30.09.2018, but the CPC has mentioned the due date as 31.08.2018. However, for A.Y. 2019-20, the CPC has accepted that since the books of account are required to be audited, therefore, due date of filing the return is 30.09.2019 (extended to 31.10.2019) and that the assessee has furnished the return on 11.09.2019.

8. On perusal of the date of filing the returns, I find that there is no delay on the part of the assessee in filing the return of income for A.Y. 2018-19 since the due date was 30.09.2019 and the assessee furnished on 17.09.2019. Therefore, returns of income for A.Ys. 2018-19 & 2019-20 are filed within the prescribed time limit u/s. 139(1) of the Act.

9. As per the first-fold contention is that CPC has no jurisdiction to make prima-facie adjustment u/s. 143(1)(a)(v) of the Act prior to 01.04.2021 for denying deduction under Chapter VI-A for belated filing of return, I find force in the contention of the learned counsel for the assessee as it has been consistently held in plethora of decisions of coordinate Benches as well as of this Tribunal that prior to 01.04.2021 CPC was not having power to make disallowance of deduction claimed u/s. 10AA or under any of the provisions of Chapter VI-A under the heading (C)-Deduction in respect of certain income, if the return is furnished beyond due date specified under sub-section (1) of section 139. However, since I have held that the return of income of the assessee for A.Ys. 2018­19 & 2019-20 are not belated, therefore any prima-facie adjustment made u/s. 143(1)(a)(v) of the Act is out of the purview of CPC.

10. So far as quantum deduction u/s. 80P of the Act available to the assessee is concerned, I find that for both the impugned assessment years, assessee has intended to claim deduction u/s. 80P(2)(a)(i) at ₹ 4,75,747/- and ₹ 8,74,180/-respectively. But due to ignorance on the part of a person furnishing return of income, the amount of deduction eligible to the assessee u/s. 80P(2)(a)(i) of the Act has been wrongly mentioned in column for deduction 80P(2)(c)(ii) of the Act which only provides for deduction at ₹ 50,000/-. Because this inadvertent mistake, the CPC in the processing of A.Y. 2018­19 has not been given any deduction allegedly for belated filing of return and for A.Y. 2019-20 has restricted it to ₹ 50,000/-only. I find that the assessee is engaged in business of providing credit facilities to its members and Ld.CIT(A) has not disputed the nature of activity carried out by the assessee. The assessee has not been granted deduction solely for typographical error and for not mentioning the claim under correct sub-clause of the ITR. Hon’ble High Court of Rajasthan in the case of CIT vs Rajasthan Fasteners (P.) Ltd. (2014) 43 taxmann.com 175 (Raj. HC) has held that “if the assessee has fulfilled all conditions laid down u/s. 10B of the Act, merely because section 80-IB was wrongly mentioned in e-return as against section 10B, claim of the assessee u/s. 10B cannot be disallowed”. Similarly, coordinate Bench at Rajkot in the case of Smt. Chandrikaben Thakarshibhai Langhnoja v. ITO (2023) 146 taxmann.com 515 has held that “where assessee in e-return by typographical mistake declared income from salary of ₹ 54,97,370/- as against total income of ₹ 4,97,370/- as per Form No. 16, it was a clear case of mistake apparent on record which was rectifiable u/s. 154 of the Act.”

11. In the light of the above judicial precedents and considering the facts of the case, I find that assessee who filed returns within the prescribed time limit u/s. 139(1) of the Act and also mentioned the correct amount of deduction claimed u/s. 80P(2)(a)(i) of the Act except mentioning claim under the correct column, is a clear case of mistake apparent from record and therefore I direct the Revenue authorities to allow the claim of deduction u/s. 80P(2)(a)(i) of the Act at ₹ 4,75,747/- and ₹ 8,74,180/- made by the assessee for A.Ys. 2018-19 & 2019-20. Effective grounds of appeals raised by the assessee are allowed.

12. In the result, both the appeals filed by the Assessee are allowed.

Order pronounced in the open Court on 20.02.2026.