Case Law Details
Primary Agricultural Credit Co-operative Society Ltd. Vs ITO (ITAT Bangalore)
Belated Return Filed in Response to Section 148 Cannot Revive Section 80P Deduction: Bangalore ITAT
The Bangalore ITAT held that a Primary Agricultural Credit Co-operative Society is not entitled to deduction under section 80P where the return of income was not filed within the due date prescribed under section 139(1). The Tribunal ruled that the mandatory condition introduced by the amended section 80AC from AY 2018-19 applies equally to co-operative societies claiming deduction under section 80P.
The assessee-society had not filed its return within the statutory due date. Subsequently, pursuant to a notice under section 148, it filed a return on 19.04.2022 claiming deduction of ₹11.50 lakh under section 80P. The Assessing Officer denied the deduction on the ground that the return was not filed within the time prescribed under section 139(1).
Before the Tribunal, the assessee argued that section 80P is a beneficial provision and that the deduction claim made in the return filed in response to section 148 ought to be allowed. However, the Tribunal referred to the amended section 80AC(ii), effective from AY 2018-19, which expressly provides that deductions under Chapter VI-A under the heading “C – Deductions in respect of certain incomes”, including section 80P, shall not be allowed unless the return is furnished on or before the due date under section 139(1).
The Tribunal observed that filing a return in response to section 148 cannot cure the failure to file the original return within the due date prescribed under section 139(1). Since the assessee admittedly filed the return only after issuance of the reopening notice and had not obtained any condonation of delay, the statutory condition contained in section 80AC remained unfulfilled.
Accordingly, the Tribunal upheld the denial of deduction under section 80P and also sustained the consequential penalty under section 270A arising from the quantum addition. All three appeals filed by the assessee were dismissed.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
These appeals filed by the assessee are directed against the order of the learned CIT(A), NFAC Delhi vide order Nos. ITBA/NFAC/S/250/2025-26/1086561765(1) dated 26.02.2026 and No. ITBA/NFAC/S/250/2025-26/1086903345(1) dated 05.03.2026 respectively for the Assessment Year 2018-19 arising out of the orders passed under section 147 r.w.s 144B of the Act dt 07.02.2023 and 17.03.2023, for the Assessment Year 2018-19 and penalty order under section 270A dated 04.08.2023. Since the assessee is same, these appeals are clubbed and heard together and a consolidated order is passed. Firstly, we take up appeal in ITA No. 1850/Bang/2026. The facts are culled out there from.
2. Briefly stated the facts of the case are the assessee is a primary agricultural credit co-operative society registered under Karnataka Co-operative Societies Act. 1959 and is engaged in the business of providing agricultural credit facility to its members, distribution of fertilisers, distribution of food and grains under the public distribution system. The case was selected u/s 147 and thereafter notice u/s. 148 dated 25.03.2022 was issued and served on the assessee. In response to the notice u/s148, the assessee filed its return of income on 19.04.2022 claiming a deduction of Rs. 11,50,523/- u/s. 80P of the Act. The Ld. AO observed that assessee has not filed the return of income within the time prescribed u/s 139(1) of the Act and thereafter rejected the deduction claimed by the assessee u/s 80P of the Act and therefore made an addition to the total income of the assessee.
3 On being aggrieved with the order of the Ld. AO assessee carried the matter in appeal before the Ld. CIT(A). Assessee made written submissions before the Ld. CIT(A). The Ld. CIT(A) observing that there is an inadequate compliance by the assessee, upheld the order of the learned AO by dismissing the appeal of the assessee.
4. On being aggrieved by the order of the learned CIT(A) assessee is in appeal before us by raising the following grounds:
1. Was C.I.T. (A) justified in sustaining the addition made due to disallowance of deduction claimed u/s. 80P of the Act by virtue of Sec. 80AC of the Act relying on the decision in Nileshwar Rangekallu Chethu Vyavasaya Thozhilali Sahakara Sangham vs. CIT even when in the said case, the Hon’ble High Court did not consider the legal issue of Respondent’s authority to make adjustment from total income as it stood for relevant A.Y. under Sec. 143(1)(a)(v) of the Act which did not contain disallowance of deduction under Sec. 80P of Chapter VI-A.
2. It is submitted, the appellant could not plead its alternative ground of appeal before both the below Authorities regarding its entitlement for deduction u/s. 57(iii) of the Act in respect of Interest on Investments of Rs. 15,55,553/- earned from CDCC Bank irrespective of the disallowance of deduction u/s. 80P of the Act for belated filing of ITR.
3. In view of the above, it is prayed the matter be remanded to Respondent for considering grant of deduction u/s. 57(iii) to appellant against CDCC Bank interest.
5. At the outset, the learned AR submitted that the provisions of section 80AC of the Act w.e.f. 01.04.2018 cannot be applied to the assessee. He submitted that the returns were furnished in response to notice under section 148 of the Act on 19.04.2022. He also submitted that the claim for deduction under section 80P of the Act was made while filing the return of income under section 148 of the Act. He therefore pleaded that since section 80P of the Act being a beneficial provision, disallowance of the claim under section 80P of the Act is not justifiable.
6. Per contra, the learned Departmental Representative [in short ‘DR’] heavily placed reliance on the orders of the Revenue authorities.
7. According to section 80AC(ii) of the Act, the assessee has to file his return of income under section 139(1) of the Act to claim the benefit under Chapter “C.— Deductions in respect of certain incomes”. Section 80AC of the Act has been amended w.e.f. Assessment Year 2018-19 which reads as follows:
“80AC. Where in computing the total income of an assessee of any previous year relevant to the assessment year commencing on or after—
(i) the 1st day of April, 2006 but before the 1st day of April, 2018, any deduction is admissible under section 80-IA or section 80-IAB or section 80-IB or section 80-IC or section 80-ID or section 80-IE;
(ii) the 1st day of April, 2018, any deduction is admissible under any provision of this Chapter under the heading “C.—Deductions in respect of certain incomes”,
no such deduction shall be allowed to him unless he furnishes a return of his income for such assessment year on or before the due date specified under sub-section (1) of section 139.]
8. In the instant case, the assessee has not filed the return of income on or before the due date prescribed under section 139(1) of the Act, however, has filed belatedly on 19.04.2022, in response to notice under section 148 of the Act. The Finance Act 2018 substituted Section 80AC with effect from 01.04.2018 (AY 2018-19) allowing the deduction admissible only when the assessee filed the return of income u/s 139(1) of the Act. Thus filing of the return of income within due date prescribed u/s 139(1) became a statutory condition for claiming deduction u/s 80P of the Act. No evidences were produced before the authorities or even before us, seeking condonation of delay. In these circumstances, we are of the opinion that the assessee is not entitled for deduction under section 80P of the Act for the claim made in the returns filed under section 148 of the Act on 19.04.2022 for the AY 2018-19. We therefore dismiss the grounds raised by the assessee.
9. ITA No. 1852/Bang/2026
The facts stated in ITA No.1850/Bang/2026 are similar to the present appeal. Therefore, our decision in ITA No. 1850/Bang/2026 shall apply mutatis mutandis to this appeal also. Accordingly, the grounds raised by the assessee ae dismissed. In the result, appeal of the assessee is dismissed.
10. ITA No. 1851/Bang/2026
This appeal is filed by the assessee against the penalty order passed under section 270A of the Act. Since the quantum appeal in ITA No.1850/Bang/2026 is decided against the assessee, penalty levied under section 270A of the Act arising out of the quantum addition in ITA No.1850/Bang/2026 is sustained.
11. In the result, all the appeals are dismissed.
Pronounced in the open court on the date mentioned on the caption page.
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