Mahatma Phule Gramin Bigarsheti Sahakar Pat Sanstha Vs PCIT-1 (ITAT Pune)
PCIT Rightly Invokes Section 263 for Allowing Section 80P Deduction in Belated Return — ITAT Pune Upholds Revision
The Pune Bench of the ITAT dismissed the assessee’s appeal and upheld the revisionary order passed under section 263, holding that the Assessing Officer (AO) had erroneously allowed deduction under section 80P in a case where the assessee failed to file its return of income within the time prescribed under section 139(1), in clear violation of section 80AC (applicable from AY 2018-19).
Key takeaways from the Tribunal’s ruling:
- Mandatory condition under section 80AC: From AY 2018-19 onwards, deduction under Chapter VI-A (including section 80P) cannot be allowed unless the return is filed on or before the due date u/s 139(1). The assessee, a co-operative credit society, was a non-filer and filed the return only after reopening u/s 148.
- AO’s failure to examine eligibility: While completing reassessment u/s 147 r.w.s. 144B, the AO allowed section 80P deduction without any enquiry into the statutory bar under section 80AC or considering CBDT Circular No. 8/2018. Such non-application of mind rendered the assessment erroneous and prejudicial to the interests of Revenue.
- Revision u/s 263 justified: The Tribunal reiterated that where a claim is allowed without verification or enquiry, the PCIT is justified in invoking section 263. This was distinguished from “change of opinion” cases; here, no opinion was formed at all.
- Jet Airways principle inapplicable: The assessee’s argument that the AO could not go beyond the reasons for reopening was rejected. The Tribunal held that section 263 operates independently of reassessment jurisdiction, and failure to apply a mandatory legal provision can be corrected in revision.
- Power of PCIT co-extensive in such cases: Since the AO had jurisdiction to examine the allowability of deductions claimed in the return filed pursuant to notice u/s 148, the PCIT’s power to revise such erroneous allowance was held valid.
Accordingly, the ITAT affirmed the PCIT’s order directing fresh verification and disallowance of section 80P deduction, and dismissed the assessee’s appeal.
FULL TEXT OF THE ORDER OF ITAT PUNE
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