Case Law Details
Ramanaickenpet Primary Agricultural Co-Operative Credit Society Ltd. Vs ITO (ITAT Chennai)
Chennai ITAT: Section 80P Deduction Not Available Where Return Is Filed Only in Response to Section 148 Notice
The Chennai ITAT held that a Primary Agricultural Co-operative Credit Society is not entitled to deduction under section 80P if it fails to file its return of income within the due date prescribed under section 139(1), even though it subsequently files the return in response to a notice issued under section 148.
The assessee had not filed its original return for AY 2019-20. Based on information received through the Insight Portal regarding substantial cash deposits, the Assessing Officer initiated reassessment proceedings by issuing a notice under section 148. The assessee thereafter filed its return declaring nil income after claiming deduction under section 80P. It contended that, being a co-operative society governed by the Tamil Nadu Co-operative Societies Act, its accounts were audited by Government-authorised auditors and it was under a bona fide belief that filing an income-tax return was not mandatory where the entire income was eligible for deduction under section 80P.
Rejecting these contentions, the Tribunal held that there was no dispute that the assessee had failed to file the return within the due date under section 139(1) and had filed it only after issuance of notice under section 148. Following the Madras High Court’s decision in AA520 Veerappampalayam Primary Agricultural Cooperative Credit Society Ltd. v. DCIT, the Tribunal held that timely filing of the return is a mandatory condition for claiming deduction under section 80P, and a return furnished in response to a reassessment notice cannot cure the original default. Accordingly, the denial of deduction under section 80P was upheld and the assessee’s appeal was dismissed.
Cases Discussed:
- Ramanaickenpet Primary Agricultural Co-Operative Credit Society Ltd. Vs ITO (ITAT Chennai) (Order pronounced on 13th July, 2026).
- AA520 Veerappampalayam Primary Agricultural Cooperative Credit Society Ltd. v. DCIT [2022] 138 taxmann.com 571 (Mad.).
FULL TEXT OF THE ORDER OF ITAT CHENNAI
This appeal filed by the assessee is directed against the order dated 20.03.2026 passed by the Id. Commissioner of Income Tax (Appeals), NFAC, Delhi for the assessment year 2019-20.
2. At the outset, it is noted that the assessee is a primary agricultural cooperative credit society engaged in providing credit facilities to its members. According to the AO, no return of income was filed within the due date prescribed under Section 139(1) of the Income-tax Act, 1961 (for short, “the Act”), and based on the information received from the Insight Portal under the category ‘non-filing of return’ (RMS), with reference to cash deposits aggregating to 21,35,68,000/- in bank accounts (other than current accounts), the AO issued a notice under Section 148 of the Act on 31.03.2023. We find that, in response to the said notice, the assessee filed its return of income on 24.08.2023 declaring total income at Nil after claiming deduction of Z26,55,001/-under Section 80P of the Act. Thereafter, under scrutiny, after issuing statutory notices under Sections 143(2) and 142(1) of the Act, the AO completed the assessment vide his order dated 08.03.2024, denying deduction under Section 80P of the Act for not filing the return of income under Section 139(1) of the Act. Being aggrieved by the order of the AO, the assessee preferred an appeal before the Id. CIT(A), contending that the assessee is controlled by the authorities appointed under the Act by the Government of Tamil Nadu and the Registrar shall cause the accounts to be audited by a person authorized by him by general or special order. The said provision under Section 80 of the Tamil Nadu Cooperative Societies Act provides the manner of audit, the examination of various books of accounts of the societies, etc., and the submission of a report for appropriate action to rectify the defects. Further, it was contended that all the adjustment entries are made by the cooperative auditors only, and they will arrive at the actual profit or loss of the society. It was further contended, and we find, that it is a government body and the cooperative societies are entitled to get deduction under Section 80P of the Act on the entire income of the society and, on a bona fide belief, it was presumed that it was not mandatory for the society to file the income-tax return. The Id. CIT(A), after considering the submissions of the assessee, confirmed the order of the AO by recording his reasons from para Nos. 7.1 to 7.7 of the impugned order. Being aggrieved by the order of the Id. CIT(A), the assessee is before us.
3. Ld. AR Mr. N. Arjun Raj, Advocate, relied on the grounds of appeal.
4. Ld. DR Mr. S. Manoj Prakash, JCIT, relied on the order of the Id. CIT(A).
5. After hearing both the parties, we note that the Id. CIT(A), in order to confirm the order of the AO in denying the deduction under Section 80P of the Act, relied on the decision of the Hon’ble Madras High Court in AA520 Veerappampalayam Primary Agricultural Cooperative Credit Society Ltd. v. DCIT [20221 138 com 571 (Mad.), wherein it was held that no deduction is admissible if no return of income was filed within the prescribed due date under Section 139(1) of the Act. On a perusal of the reasons recorded by the Id. CIT(A), we note that it was held that no return of income has been filed by the assessee under Section 139 of the Act and the assessee is not entitled to get deduction under Section 80P of the Act. There is no dispute with reference to the non-filing of the return of income under Section 139(1) of the Act, and the assessee filed the return of income in response to a notice under Section 148 of the Act. Having these facts on hand, we find no infirmity in the order of the Id. CIT(A) in confirming the order of the AO in denying the deduction under Section 80P of the Act for not filing the return of income within the specified due date under Section 139(1) of the Act. Thus, the order of the Id. CIT(A) is justified, and the grounds raised by the assessee are dismissed.
6. In the result, the appeal of the assessee is dismissed.
Order pronounced on 13th July, 2026 at Chennai.
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