ITAT Grants Relief Under Section 80JJAA: Deduction Cannot Be Denied Merely for Non-Filing of Form 10DA Due to Technical Portal Limitation




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ITAT Grants Relief Under Section 80JJAA: Deduction Cannot Be Denied Merely for Non-Filing of Form 10DA Due to Technical Portal Limitation

 

In an important ruling concerning deduction under section 80JJAA of the Income Tax Act, the Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) has held that deduction cannot be denied merely on technical grounds where the assessee was unable to upload Form 10DA due to system-related limitations on the income-tax portal.

The Tribunal observed that procedural or technical difficulties beyond the control of the assessee should not defeat a legitimate deduction claim, particularly where the claim represented continuation of deduction already allowed in earlier years.

The ruling came in the case of Akshar Elecinfra Pvt. Ltd. vs. DCIT [ITA No.751/Ahd/2025] and carries significant importance for taxpayers claiming deduction under section 80JJAA relating to employment generation.

In the present case, the assessee had claimed deduction under section 80JJAA for Assessment Year 2021-22. The deduction, however, was not a fresh claim relating to newly hired employees during the relevant year. Rather, it represented the second- and third-year continuation of deduction pertaining to employees who had already been recruited in earlier years, namely AY 2019-20 and AY 2020-21.

It was an undisputed fact that Form 10DA, which is the audit report prescribed for claiming deduction under section 80JJAA, had already been duly furnished in the earlier years when the employees were originally hired and the deduction was initially claimed.

During AY 2021-22, no new employees were recruited by the assessee. Consequently, when the assessee attempted to electronically upload Form 10DA for the relevant year, the income-tax portal itself did not permit filing of the form because there was no fresh employee addition or new claim generated during the year.

Despite this factual position, the Centralized Processing Centre (CPC), while processing the return under section 143(1), disallowed the deduction solely on the technical ground that Form 10DA had not been filed along with the return of income for AY 2021-22.

The CIT(A) also upheld the adjustment by relying upon section 80JJAA(2)(c) of the Income Tax Act which prescribes furnishing of audit report before the due date specified under section 44AB.

Before the Tribunal, the assessee explained that the inability to file Form 10DA was not deliberate but arose because of a technical limitation of the income-tax portal itself. It was argued that where the portal does not permit uploading of the form in absence of new employment, the assessee cannot be penalized for circumstances beyond its control.

After examining the factual matrix, the ITAT found considerable force in the assessee’s submissions. The Tribunal observed that the disallowance made by CPC was purely technical in nature. It noted that:

  • The deduction represented continuation of earlier years’ claim,
  • Form 10DA had already been furnished in the initial years,
  • No new employees were hired during AY 2021-22, and
  • The portal itself did not permit filing of Form 10DA in absence of fresh employment.

The Tribunal held that such technical and procedural barriers should not result in outright denial of substantive deduction otherwise allowable under law.

Accordingly, the ITAT set aside the matter to the file of the Jurisdictional Assessing Officer (JAO) for proper verification of the claim and directed reconsideration of the deduction in accordance with law.

This ruling assumes considerable importance in the era of faceless and system-driven tax administration where many legitimate claims are often denied due to technical portal constraints, software limitations, or procedural mismatches. The decision reinforces the settled principle that substantive benefits cannot be denied merely because of technical impossibilities or procedural hurdles beyond the assessee’s control.

The judgment is likely to provide relief in several cases where deductions or exemptions are denied solely because the system did not permit filing of forms, reports, or disclosures despite genuine compliance efforts by taxpayers.

The ruling also highlights an important practical reality of modern tax compliance – while tax administration has become increasingly digital, technological limitations cannot override substantive legal entitlements available under the Income Tax Act.

 

The copy of the order is as under:

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