Deduction u/s 80P denied as return not filed u/s 139(1) but in response to notice u/s 148

Deduction u/s 80P denied as assessee did not file return u/s 139(1) but beyond the due date only in response to notice u/s 148

In a recent judgment, Hon’ble Karnataka High Court has upheld denial of deduction under section 80P as by no stretch of imagination a return of income filed pursuant to a notice under Section 148 can be construed as a return filed within the due date u/s 139(1) of Income Tax Act

ABCAUS Case Law Citation:
5004 (2026) (01) abcaus.in HC

The instant appeal was filed calling in question the order passed by the ITAT relating to the Assessment Year 2018–19 in holding that, the assessee was not entitled to claim benefit of deduction under Section 80P of the Income Tax Act, 1961 (the Act) on the ground that Return was filed after the due date.

The assessee was a Co-operative Society. The assessee failed to file its return of income for the Assessment Year 2018–19 within the time prescribed. The Assessing Officer, based on information relating to cash deposits in Co-operative Bank issued notice under Section 148 of the Act.

In response to the notice issued under Section 148 of the Act, the assessee filed its return of income admitting ‘Nil’ income and claiming deduction under Section 80P of the Act. The Assessing Officer disallowed the said deduction and raised a demand.

The assessee preferred an appeal before the Commissioner of Income Tax. The CIT(A), having regard to the provisions of Section 80AC of the Act, held that since the assessee had not filed its return of income within the due date prescribed under Section 139(1) of the Act, it was not entitled to claim deduction under Section 80P of the Act.

The assessee, being further aggrieved, preferred an appeal before the Income Tax Appellate Tribunal. The Tribunal, by the impugned order following the judgment of the Kerala High Court held that the assessee was not entitled to deduction under Section 80P of the Act, in view of the mandatory requirement under Section 80AC of the Act to file the return of income within the due date prescribed under Section 139(1) of the Act.

Before the Hon’ble High Court the assessee submitted that although the return of income was not filed within the due date prescribed under Section 139(1) of the Act, the same was filed in compliance with the notice issued under Section 148 of the Act and within the time stipulated herein. It is therefore contended that the requirement of Section 80AC of the Act stands satisfied. He further submitted that the judgment of the Kerala High Court was not applicable to the facts of the case.

The Hon’ble High Court observed that the claim for deduction under Section 80P of the Act is governed by the provisions of Section 80AC of the Act. In view of the amendment introduced by the Finance Act, 2018 with effect from 01.04.2018, no deduction under any provision of Chapter VI-A under the heading “C” shall be admissible unless the assessee furnishes a return of income for the relevant assessment year on or before the due date specified under sub-section (1) of Section 139 of the Act.

The Hon’ble High Court further noted that Section 80P of the Act falls under Chapter VI-A under the heading “C” – Deductions in respect of Certain Incomes. Consequently, any claim for deduction under Section 80P of the Act must necessarily satisfy the mandatory requirement prescribed under Section 80AC of the Act.

The Hon’ble High Court further observed that it was undisputed that the assessee had not filed the return of income on or before the due date specified under sub-section (1) of Section 139 of the Act. The assessee filed a return of income claiming deduction under Section 80P of the Act only in compliance with the notice issued under Section 148 of the Act.

The Hon’ble High Court opined that by no stretch of imagination can a return of income filed pursuant to a notice under Section 148 of the Act be construed as a return filed within the due date specified under sub-section (1) of Section 139 of the Act. The due date prescribed under sub-section (1) of Section 139 had expired much prior to the issuance of notice under Section 148 of the Act and the same would not revive on issue of notice under Section 148 of the Act.

The Hon’ble High Court held that the findings and conclusions recorded by the CIT(A) and the Tribunal were fully justified.

Accordingly, the appeal was dismissed.

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