Chennai ITAT: Section 80P Deduction Unavailable When Return Filed Only in Response to Section 148 Notice

Case Overview

Case: Ramanaickenpet Primary Agricultural Co-Operative Credit Society Ltd. Vs ITO (ITAT Chennai)
Assessment Year: 2019-20
Order Date: 13th July, 2026

The Chennai Income Tax Appellate Tribunal has rendered a significant ruling concerning the eligibility of co-operative societies to claim deductions under Section 80P of the Income Tax Act, 1961. The Tribunal firmly held that where an assessee fails to furnish its return of income within the prescribed due date under Section 139(1), and subsequently submits a return only upon receipt of a notice under Section 148, such belated filing cannot validate a claim for deduction under Section 80P. The appeal filed by the assessee society was consequently dismissed.

Background and Facts of the Case

The assessee, a primary agricultural co-operative credit society engaged in extending credit facilities to its members, had not filed any return of income for Assessment Year 2019-20 within the time limit mandated under Section 139(1) of the Income Tax Act, 1961.

The Assessing Officer, acting on information accessed through the Insight Portal under the category of 'non-filing of return' (RMS), observed that the society had made substantial cash deposits amounting to ₹21,35,68,000/- in bank accounts (other than current accounts). On the basis of this information, a notice under Section 148 of the Act was issued on 31.03.2023, initiating reassessment proceedings against the assessee.

In response to the said notice, the assessee filed its return of income on 24.08.2023, declaring total income at Nil after claiming a deduction of ₹26,55,001/- under Section 80P of the Act.

Assessment Proceedings and Denial of Deduction

Following the filing of the return in response to the Section 148 notice, the Assessing Officer proceeded with scrutiny assessment, issuing statutory notices under Section 143(2) and Section 142(1) of the Act. Upon completion of the assessment vide order dated 08.03.2024, the AO denied the claimed deduction under Section 80P, citing the assessee's failure to file the return of income within the due date prescribed under Section 139(1) of the Act.

The AO's position was unambiguous — since the assessee had not complied with the mandatory requirement of timely return filing, the benefit of deduction under Section 80P could not be extended.

Arguments Advanced Before CIT(A)

Aggrieved by the AO's order, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals), NFAC, Delhi, raising the following contentions: