ITAT Agra Revives Omitted Section 80C and Section 80CCD(1B) Claims: Appellate Powers Extend Beyond the Original Return

Overview of the Dispute

The Agra Bench of the Income Tax Appellate Tribunal has ruled in favour of an assessee who had inadvertently omitted to claim deductions of ₹1,50,000 under Section 80C and ₹50,000 under Section 80CCD(1B) while filing his return of income for Assessment Year 2020-21. The Tribunal directed the Assessing Officer to allow both deductions, subject to verification of supporting documentary evidence. Importantly, neither a revised return had been filed nor were the claims originally made in the return—yet the ITAT held that such omissions do not permanently extinguish an assessee's right to pursue eligible deductions through the appellate route.

This ruling brings into focus a recurring and practically significant question: when a genuine deduction is left out of a return by oversight, does the assessee lose all recourse? The ITAT's answer, consistent with established judicial precedent, is that appellate authorities retain the power to examine and allow such claims after admitting additional evidence.

Background Facts and Return Filing

The assessee, employed with the Uttar Pradesh State Government, filed his income tax return on 21 July 2020 for Assessment Year 2020-21, declaring a total income of ₹6,94,730. He had made a contribution of ₹1,50,000 to the Public Provident Fund and paid ₹50,000 towards the National Pension System during the relevant year, thereby qualifying for deductions under Section 80C and Section 80CCD(1B) of the Income Tax Act, 1961, respectively.

However, while preparing and filing the return, both deductions were inadvertently omitted. The assessee did not file a revised return to rectify this oversight.

Rectification Route and Its Rejection

Seeking to correct the error, the assessee filed a petition under Section 154 of the Income Tax Act, 1961, before the Centralised Processing Centre (CPC), requesting allowance of the omitted claims. The CPC rejected this petition.

Aggrieved by this outcome, the assessee filed an appeal before the Commissioner of Income Tax (Appeals) [CIT(A)], contending that the underlying investments were genuine and that the deductions deserved to be granted.

CIT(A) Order: Revised Return Was the Only Remedy

The CIT(A) dismissed the appeal through an order that stated, in relevant part:

"Findings & Decision:- I have gone into facts and circumstance of the case. The appellant has pleaded that he forgot to avail deduction u/s 80 of the Act in his original ITR for the A.Y. 2020-21. The appellant applied for rectification u/s 154 of the Act and has not been given opportunity to avail deduction u/s 80 vide rectification order issued u/s 154 for A.Y. 2020-21. It is pertinent to mention here that if the appellant omitted to avail deduction u/s 80 in his original ITR, the option available with him is to file revised return of income. He cannot avail deduction u/s 80 by applying rectification u/s 154 of the Act. Therefore, the demand ascertained after the rectification order u/s 154 dated 04.10.2023 is hereby confirmed and the ground of appeal of the appellant is dismissed."

The CIT(A) thus treated the absence of a revised return as conclusive and confirmed the tax demand arising from the rectification order dated 04.10.2023. No enquiry was made into whether the investments had actually been made or whether supporting evidence existed.

Appeal Before ITAT: 258-Day Delay Condoned

The assessee challenged the CIT(A)'s order before the ITAT Agra. The appeal, however, came with a delay of 258 days beyond the prescribed period. The assessee filed a condonation application accompanied by an affidavit dated 12.02.2026, explaining the circumstances in the following terms: