Gokulanand Petro Fibres Vs DCIT (ITAT Surat)
Belated Return in First Year of Section 80AC Amendment: ITAT Permits Fresh Examination of Section 80JJAA Claim
Background of the Case
The assessee firm filed its return for AY 2018–19 on 26 December 2018, declaring total income of ₹7,61,47,910, after claiming a deduction of ₹80,27,629 under section 80JJAA.
The case was selected for limited scrutiny, covering expenditure of a personal nature and deductions under Chapter VI-A. During assessment, the Assessing Officer found that the return had been filed after the applicable due date under section 139(1), namely 31 October 2018.
Invoking section 80AC, the Assessing Officer disallowed the entire section 80JJAA deduction. His reasoning was that the statutory requirement of filing the return within the section 139(1) deadline had not been fulfilled.
The CIT(A) confirmed the disallowance, and the assessee approached the Tribunal.
Timely Audit Reports, but Belated Return
The assessee explained that its accounts had been audited under section 44AB. The tax audit reports in Forms 3CB and 3CD were uploaded on 27 October 2018 and accepted on 30 October 2018.
The prescribed report supporting the section 80JJAA claim, Form 10DA, had also been uploaded on 27 October 2018, before the return-filing deadline.
The assessee further submitted that it had paid self-assessment tax of ₹2.50 crore on 29 June 2018 and that its return disclosed a refund entitlement of approximately ₹20.14 lakh. It argued that the delay was not intended to postpone payment of tax.
The explanation centred on the amendment to section 80AC. Before the amendment, its timely-return requirement applied to specified deductions, including sections 80-IA, 80-IAB, 80-IB, 80-IC, 80-ID and 80-IE. From AY 2018–19, the restriction extended to deductions falling under Heading C of Chapter VI-A, bringing section 80JJAA within its scope.
The assessee pleaded that, because this was the first year of the amendment, it had bona fide believed that timely submission of the audit reports completed the necessary compliance.
Assessee’s Claim on Merits
The assessee submitted details concerning 179 employees and additional employee cost of ₹2,67,58,765, along with supporting material.
It maintained that the substantive conditions of section 80JJAA had been fulfilled and that the Assessing Officer had rejected the deduction only because the return was belated.
The Revenue argued that section 80AC expressly required filing within the section 139(1) deadline. Timely audit reports could not overcome the failure to satisfy that requirement.
The Revenue also relied on Parabada Co-op. Milk Producers Society Ltd. v. ITO, ITA No. 128/Ahd/2023, order dated 17 May 2023, where deduction under section 80P had been denied for failure to file the return within the applicable extended deadline.
Tribunal’s Reasoning
The Tribunal noted that, although the return was belated, the tax audit reports and the report supporting the section 80JJAA deduction had been uploaded before the due date.
It relied principally on the Division Bench decision in Super Crop Safe Ltd. v. ACIT, ITA No. 1552/Ahd/2024, order dated 14 May 2025.
That decision concerned section 80JJA and AY 2018–19. The Tribunal there had considered the first-year introduction of the expanded section 80AC restriction and directed a lenient approach, subject to verification of substantive eligibility.
In the present case, the Surat Bench held that the underlying controversy was similar: the return was belated, and the dispute arose in the first year of the section 80AC amendment. It therefore applied the reasoning of Super Crop Safe despite the difference between sections 80JJA and 80JJAA.
Decision and Express Limitation
The Tribunal restored the matter to the Assessing Officer to examine fulfilment of the relevant conditions and re-decide the deduction claim. It specifically noted that section 80JJAA provides deduction for three consecutive assessment years.
Crucially, the Tribunal expressly stated that its decision should not be treated as a precedent for other years, since the relief related to the first year of the amendment.
The appeal was partly allowed for statistical purposes. The deduction of ₹80,27,629 was not finally granted; its substantive eligibility remained subject to examination.
Author’s Comments
This is a narrow first-year concession, not a general relaxation of section 80AC. The Tribunal’s express restriction is central to understanding the decision.
The timely audit reports supported the assessee’s explanation that the deduction had been identified and documented before the deadline. The tax payment and refund position also formed part of its plea of bona fide conduct. However, the ruling does not establish that these circumstances ordinarily substitute for timely filing of the return.
The distinction between section 80JJA and section 80JJAA must also be preserved. The former decision supplied the reasoning on the first-year filing default; the present deduction still required independent verification under section 80JJAA.
For AY 2018–19 disputes with comparable facts, the order provides support for seeking a merits examination despite the belated return. For subsequent years, the Tribunal itself has declined to extend that approach. The decision should therefore be cited with its qualification intact, rather than described as holding that section 80AC is merely procedural in every case.
Cases Discussed
- Expert Global Solutions Pvt. Ltd. Vs DCIT (ITAT Pune) – ITA No. 2257/PUN/2025. Cited by the assessee.
- Super Crop Safe Limited Vs ACIT (ITAT Ahmedabad) – ITA No. 1552/AHD/2024; Order dated 14/05/2025. Relied upon and followed. The Tribunal adopted the reasoning concerning the first year of the expanded Section 80AC restriction and directed examination of the substantive conditions for deduction.
- PCIT Vs H.P. Housing & Urban Development Authority (HIMUDA) (Himachal Pradesh High Court) – 157 taxmann.com 598. Cited by the assessee.
- DCIT Vs A.P. Securitas (P.) Ltd. (ITAT Delhi) – 182 taxmann.com 687. Cited by the assessee.
- DCIT Vs Symbiosis Pharmaceuticals (P.) Ltd. (ITAT Chandigarh) – 164 taxmann.com 747. Cited by the assessee.
- The Parabada Co-op. Milk Producers Society Limited Vs ITO (ITAT Ahmedabad) – ITA No. 128/Ahd/2023; Order dated 17/05/2023. Relied upon by the Revenue. Cited for disallowance of Section 80P deduction where the return was not filed within the applicable extended due date.
- DCIT Vs Saurashtra Enviro Projects Pvt. Ltd. (ITAT Surat) – ITA No. 115/SRT/2020. Cited by the assessee. The decision appears twice in the source’s list of authorities.
- PCIT Vs Wipro Ltd. (Supreme Court) – 140 taxmann.com 223. Cited by the assessee.
- CIT Vs M/s. Unitech Ltd. (Delhi High Court) – TAXAP No. 239 of 2015. Cited by the assessee.
- ITO Vs S. Venkatiah (ITAT Hyderabad) – 22 taxmann.com 2. Cited by the assessee.
- Hansa Dalakoti Vs ACIT (ITAT Delhi) – 19 taxmann.com 226. Cited by the assessee.
FULL TEXT OF THE ORIGINAL ORDER OF ITAT SURAT
The appeal filed by the assessee is against the order passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [in short “CIT(A)”] dated 13.11.2025 for the Assessment Year (in short “AY”) 2018-19.
2. The assessee has raised the following grounds of appeal:
“1. On the facts and circumstances of the case as well as law on the subject, the Ld. CIT(A) has erred in confirming the action of assessing officer in assessing the Total Income at Rs. 8,44,39,980/- as against the Returned Income of Rs. 7,61,47,910/- as shown in Return of Income.
2. On the facts and circumstances of the case as well as law on the subject, the Ld. CIT(A) has erred in confirming the action of assessing officer in disallowing the claim of deduction u/s. 80JJAA amounting to Rs. 80,27,629/-.
3. It is therefore prayed that the addition made by the assessing officer and confirmed by Ld. CIT(A) may please be deleted.
4. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of hearing of the Appeal.”
3. The assessee filed Return of Income for AY 2018-19 on 26.12.2018 declaring total income to the tune of Rs.7,61,47,910/-. The assessee claimed deduction of Rs.80,27,629/- u/s. 80JJAA of the Income Tax Act, 1961 (in short “the Act”). The case of the assessee was selected for limited scrutiny for the issues of expenditure of personal nature and deduction from total income under Chapter VI-A. Accordingly, Notice u/s 143(2) was issued to the assessee on 23.09.2019. During the course of assessment proceedings notices u/s 142(1) were issued from time to time and same were replied by the assessee along with details. The Assessing Officer (in short the “AO”) observed that the assessee has claimed deduction u/s 80JJAA at Rs.80,27,629/-, however, the same was found to be not allowable as the assessee did not file return of income within the due date allowed u/s. 139(1) of the Act for A.Y. 2018-19. The assessee filed return on 26.12.2018 i.e. after due date specified u/s 139(1) and Sec. 80AC categorically states that no deduction shall be allowed unless assessee furnishes a return of income for such assessment year on or before the due date specified under sub-section (1) of Sec 139. Thus, the AO disallowed Rs.80,27,629/- claimed by assessee as deduction u/s 80JJAA of the Act.
4. Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee.
5. The Ld. Authorised Representative (in short “Ld. AR”) for the assessee submitted that the assessee had filed its return of income on 26.12.2018 declaring total income at Rs.7,61,47,910/- after claiming deduction of Rs.80,27,629/- u/s 80JJAA of the Act. The assessee firm got its books of accounts audited u/s 44AB of the Act. The assessee has uploaded the audit report u/s 44AB of the Act in Form No.3CB and 3CD on the Portal on 27.10.2018 which was accepted on 30.10.2018. Along with the audit report, the auditor of the assessee had also submitted and uploaded report u/s 80JJAA of the Act in Form No. 10DA on the same day i.e. 27.10.2018 and the same was also accepted by the AO on 30.10.2018. Thus, the audit report u/s 44AB of the Act as well as report in Form No.10DA as a part of statutory requirement u/s 80JJAA on 27.10.2018 before the due date of filing return u/s. 139(1) of the Act which was 31.10.2018. Thereafter, the assessee firm had filed its return of income on 26.12.2016 which was within the time limit prescribed u/s. 139(4) of the Act. The assessee had paid full amount of tax chargeable on the total income shown by the assessee of Rs.7,61,47,910/- and it is evident from the computation of income that the assessee had paid self assessment tax of Rs.2,50,00,000/- on 29.06.2018 and the assessee was entitled to a refund of Rs.20,13,678/- as per the return of income filed by it. The Ld. AR submitted that there was no intention on part of the assessee to intentionally delay in filing the return of income for delaying tax payment liability. In fact, the new provision of Section 80AC of the Act was inserted by the Finance Act, 2018 w.e.f. 1st April, 2018 and the relevant assessment year 2018-19 was the first year after amendment. Before the amendment, as per the old provision of section 80AC, the requirement of filing of return of income before the due date u/s. 139(1) was applicable for claim of deduction u/s. 80IA / 80IAB / 80IB / 80IC / 80ID and 80IE only. Thus, the restrictions laid down in Section 80AC of the Act was not applicable in respect of the claim u/s. 80JJAA before 01.04.2018. Therefore, the assessee was under the bonafide belief that all the compliance of claiming deduction of 80JJAA had been made by submitting the audit report u/s. 44AB of the Act as well as the report in form No. 10DA u/s. 80JJAA before the due date of filing return of income by the auditors of the assessee firm. The assessee paid full amount of tax and the assessee was entitled to the refund of tax and therefore also it was under bonafide belief that total compliance have been made. The assessee submitted the requisite details of 179 employee to whom the payment of Rs.2,67,58,765/- was made giving further details of eligible additional employees and additional cost incurred for such employees as well as instruction sheet to the bank with relevant bank statement of one month showing the details of the partners of the assessee firm. The assessee was entitled to get deduction u/s. 80JJAA of the Act in as much as it had fully complied with all the conditions laid in the said section. Further, the AO did not dispute the claim of the assessee on merits. The AO disallowed the claim on a technical ground by invoking the provisions of Sec. 80AC of the Act. The deduction u/s. 80JJAA cannot be denied just for a technical bonafide default u/s. 80AC of the Act when the assessee is otherwise legally entitled for the deduction. The Ld. AR relied upon the following decisions:
“1. PCIT vs. Wipro Ltd.- 140 taxman.com 223 (SC)
2. CIT vs. M/s. Unitech Ltd. – TAXAP 239 of 2015 (Delhi HC)
3. DCIT vs. Saurashtra Enviro Projects Pvt. Ltd. [ITA No. 115/SRT/2020 (Surat Trib)]
4. DCIT vs. A.P. Securitas (P.) Ltd.- 182 taxman.com 687 (Delhi- Trib)
5. DCIT vs Symbiosis Pharmaceuticals (P.) Ltd.- 164 taxman.com 747 (Chandigarh-Trib.)
6. PCIT vs. H.P. Housing & Urban Development Authority(HIMUDA)- 157 taxman.com 598 (Himachal Pradesh)
7. ITO vs. S. Venkatiah- 22 taxman.com 2 (Hyderabad)
8. Hansa Dalakoti vs. ACIT- 19 taxmann.com 226 (Delhi)
9. Super Crop Safe Limited vs. ACIT [ITA No. 1552/AHD/2024]
10. LDCIT vs. Saurashtra Enviro Projects Pvt. Ltd. [ITA No. 115/SRT/2020 (Surat Trib)]
11. Expert Global Solutions Pvt. Ltd. vs. DCIT [ITA No. 2257/PUN/2025 (Pune Trib]”
6. The Ld. Departmental Representative (in short “Ld. DR”) relied upon the assessment order and the order of the Ld. CIT(A). The Ld. DR further submitted that the assessee had violated the provisions of section 80AC of the Act by not filing the return of income within the due date of filing the return of income prescribed u/s 139(1) of the Act and accordingly the AO has rightly disallowed the entire claim of deduction u/s 80JJAA of the Act. The Ld. DR also relied upon the decision of Tribunal in case of the The Parabada Co-op. Milk Producers Society Limited vs. The ITO (ITA No.128/Ahd/2023 order dated 17.05.2023). This decision is passed by the SMC Bench of the Tribunal whereby stating therein that the assessee should have filed the return within the extended period of due date but the assessee failed to do so. Therefore, the deduction u/s 80P of the Act was held rightly denied by the AO.
7. We have heard both the parties and perused all the relevant material available on record. The assessee admitted that the assessee filed the return of income on 26.12.2018 but as per the requirement of claiming deduction u/s 80JJAA of the Act the assessee got its books of accounts audited u/s 44AB and uploaded the audit reports u/s 44AB of the Act in Form No.3CB and 3CD on the portal on 27.10.2018 which was accepted on 30.10.2018. It is pertinent to note that along with the audit report, the auditor of the assessee also submitted and uploaded the report u/s 80JJAA of the Act in Form No.10BA on the same day i.e. on 27.10.2018 which is before the due date of filing return of income. The Ld. AR relied upon the decision of the Tribunal in case of Super Crop Safe Limited vs. ACIT [ITA No. 1552/AHD/2024 order dated 14.05.2025). In the said decision which is a Division Bench decision, the Tribunal has held as under:
“9.3 We have considered the rival submissions. The assessee had not raised this ground before the CIT(A)The provision of section 80AC of the Act stipulates that for the A.Y. 2018-19 onwards the deduction under any provision of Chapter VIA of the Act under the heading “C- Deductions in respect of certain incomes”, which includes the deduction under section 80JJA, was admissible only if the return of income was filed on or before the due date specified under section 139(1) of the Act. Admittedly, this condition was not fulfilled by the assessee, The assessee had submitted before the AO that it was unaware of the introduction of this new provision introduced from this year. Considering the fact that this was only a procedural requirement and the change in the statute was effected from this year only, the AO is directed to take a lenient view in the matter and allow the deduction, if otherwise admissible. The deduction under section 80JJA of the Act is admissible for a period of five consecutive assessment years beginning with the assessment year relevant to the previous year in which the business commences. It is not evident from the return of income that the claim of deduction under section 80JJA of the Act for this year was within the prescribed period of five years from the date of commencement of bio-fertilizer business of the assessee. In the Tax Audit Report also this detail is not available. Nothing has been brought on record by the assessee in this regard in the course of this appeal proceeding as well. Under the circumstances, we deem it proper to set aside the matter to the file of the AO with a direction to examine the fulfilment of this condition and thereafter re-decide the matter. The ground taken by the assessee is allowed for statistical purpose.”
As relates to this decision, though the decision is in respect of 80JJA, the basic controversy/issue is same. Therefore, the ratio will apply as in both cases return was not filed in time and amendment is in section 80AC and is first year of amendment. The deduction u/s 80JJAA of the Act is admissible for a period of three consecutive assessment years, thus in the present assessee’s case the same should be taken into account. Therefore, it will be appropriate to set aside the matter to the file of the AO with a direction to examine the fulfilment of these conditions and thereafter re-decide the matter. This should not be taken as precedent for other years as it is applicable for first year.
8. In result, appeal filed by the assessee is partly allowed for statistical purpose.
Order pronounced in the open court on 09.10.2026
