Section 80P Deduction Allowed Despite Late e-Verification: ITAT Relief to Co-op Society
If you’re a cooperative society wondering whether a delay in e-verification affects your Section 80P deduction, here’s a key update: the Income Tax Appellate Tribunal (ITAT) recently ruled that such delay is not a valid reason to deny the benefit — as long as the ITR was filed in response to a notice under Section 142(1).
Let’s break down what this means for taxpayers and professionals.
What is Section 80P Deduction?
Section 80P of the Income-tax Act, 1961 allows deductions to cooperative societies on income from:
- Banking or credit facility to members
- Cottage industry
- Marketing of agricultural produce
- Supply of seeds, livestock, or agricultural implements
- Processing activities without power
Key Case: ITAT Jaipur Bench | Bharatpur Central Cooperative Bank Ltd.
- Case Citation: Bharatpur Central Cooperative Bank Ltd. vs CPC Bangalore
- Appeal No.: ITA No. 124/JP/2024
- Date: May 2024
- Bench: Jaipur ITAT
Issue:
The assessee filed its ITR in response to a notice under Section 142(1). However, there was a delay in e-verification, so CPC denied processing of the return under Section 143(1) and rejected the Section 80P deduction.
Tribunal’s Verdict:
- The return filed under Section 142(1) remains valid even if e-verification is delayed.
What is Section 142(1) and Why It Matters?
Section 142(1) of the Income-tax Act empowers the AO to:
- Call for a return if not filed
- Ask for specific information
- Require books of accounts or documents
Why This ITAT Ruling Matters
Key takeaway for co-op societies and tax professionals:
- CPC’s automated denial may not be legally tenable — appeal is an option.
- This decision aligns with the principle of substance over form.
Expert View: Practical Tip from a CA
“When a notice u/s 142(1) is served, treat the return filing as a compliance obligation. Even if the system shows a verification delay, document your response timeline and follow up for rectification or file an appeal with supporting documents.”
— CA Manish Sharma, Jaipur
Quick Summary Table
| Particulars | Normal ITR Filing | ITR Filed Under Sec. 142(1) |
|---|---|---|
| E-verification Delay | May impact processing | Not a ground for 80P denial |
| Deduction u/s 80P | Allowed if within deadline | Allowed as per ITAT ruling |
| Processing u/s 143(1) | May be delayed or rejected | Must be processed on merits |
| Remedy if CPC denies | Rectification / Appeal | Appeal with ITAT or CIT(A) |
What You Should Do Next
- CPC denial? File rectification u/s 154 or appeal to CIT(A).
- Always retain a copy of the notice, reply, and filing proof.
Related Reading on Efiletax
Official Source Reference
- Income-tax Act, 1961 – Section 80P
- ITAT Jaipur Order – Bharatpur Central Cooperative Bank Ltd., May 2024 (Unreported case law copy reviewed)
Summary
If the ITR is filed in response to a notice under Section 142(1), it remains valid, and Chapter VIA deductions including 80P are allowed despite system-based rejection.