Narasimha Rao Palem Primary Agricultural Credit Society Limited Vs ITO (ITAT Visakhapatnam)
The Income Tax Appellate Tribunal (ITAT), Visakhapatnam, dismissed the appeal filed by a Primary Agricultural Credit Society (PACS) and upheld the denial of deduction under Section 80P(2)(a)(i) of the Income-tax Act, 1961 for Assessment Year 2017-18. The Tribunal held that the assessee was not entitled to the deduction because it had failed to file a valid return of income in accordance with Section 139 of the Act, thereby attracting the bar contained in Section 80A(5).
The assessee, a Primary Agricultural Credit Society, had made substantial cash deposits during the demonetisation period. Since no return of income was filed within the due date prescribed under Section 139(1), the Assessing Officer (AO) issued notices under Section 142(1) and several show cause notices seeking information. During the assessment proceedings, the assessee furnished details such as the list of members, bank statements, sales of fertilisers, trading account, profit and loss account, and balance sheet. The assessee also filed its return of income on 18 November 2019 declaring nil income and claiming deduction under Section 80P. However, the AO held that the return was invalid as it was not filed within the time permitted under either Section 139(1) or Section 139(4). Treating the return as non est, the AO invoked Section 80A(5), denied the deduction under Section 80P(2)(a)(i), assessed the net profit of ₹21,10,281 as taxable income, and also made an addition of ₹2,000 under Section 69A. The Commissioner (Appeals) upheld the assessment.
