M/S. YASHA PATTINA SOUHARDA SAHAKARI NI,RAICHUR vs. ITO, WARD-1, , RAICHUR

PER CHANDRA POOJARI, ACCOUNTANT MEMBER:

This appeal by assessee is directed against order of NFAC/CIT(A), Delhi dated 30.10.2021 for the assessment year 2019- 20. The assessee has raised following grounds of appeal:- 1. “The order of AO is bad in law and against the decision of higher appellate authority. 2. The order of the Hon'ble CIT(A)- NFAC, Delhi is against the Act and several Appellate Tribunal Orders, like in case of ITAT Bangalore - ITA no. 1234/Bang/2019, Siddartha Pattina SouhardaSahakari Niyainita Manvi Vs. ITO Ward 5, Raichur and ITAT Bangalore - ITA no. 2040 &

ITA No.1177/Bang/2022 M/s. Yaksh Pattina Souharda Sahakari Ni, Raichur

Page 2 of 13 2041/Bang/2019, Mahalakshmi SouhardaCredit Co Operative Ltd. Bangalore Vs. ITO Ward 6(2)(2) Bangalore; where in it was held that A Souharda Sahakari is a form of Co-operative Society and is registered under the KarnatakaSouharda Sahakari Act, 1997and is bound to Statutory Audit under the said Act.Since, the books of accounts of the appellant are subject to audit under c_D-0 '4,e Act apart from the Income Tax Act, the due date for filing of Income tax returns is 30th of September. 3. The order of Hon'ble CIT(A)- NFAC, Delhi is bad in law and without considering the facts of the case relating to the disallowing the deduction claimed u/s 80P(2)(a)(i) due to late filing of return of income. 4. Appellant craves leaves to add, to alter, to amend and to delete any other grounds at the time of hearing.”

ITA No.1177/Bang/2022 M/s. Yaksh Pattina Souharda Sahakari Ni, Raichur

Page 3 of 13 3. At the outset, it is observed that there was a delay of 363 days in filing the appeal before this Tribunal. The CIT(A) order has been served to the assessee on 30.10.2021. As per section 253(3) of the Ac, the time limit to file appeal before this Tribunal is 60 days of the date on which order sought to be appealed served to the assessee or to the Principal CIT as the case may be. Thus, the normal time limit available is 60 days from the date of receipt of the order of the CIT(A). However, in the present case, actual delay has to be computed from the date of 31.5.2022 as the delay up to 31.5.2022 has been condoned by the Hon’ble Supreme Court by judgement in MA No.29 of 2022 in MA No.665/2021 in suo-moto WP(C) No.3/2020 dated 10.1.2022, wherein held that “in computing the period of limitation for any suit, appeal, application or proceeding, the period from 15.3.2020 till 28.2.2022 shall stand excluded.” Further, extended up to 90 days from 1.3.2022. Thus, the Limitation Act has been suspended by above judgement of Hon’ble Supreme Court up to 31.5.2022. Hence, after excluding the Covid period delay of 213 days i.e. from 01.11.2021 to 31.05.2022 and normal limitation period in filing the appeal before this Tribunal after date of receipt of order of CIT(A) i.e. 60 days from 01.06.2022 to 30.07.2022, the assessee in the present case is actually required to explain the delay from 01.06.2022 till 27.12.2022 (210 days) excluding the first 60 days, the actual delay is of 150 days.

3.1 The assessee explained the delay on the reason that there was change in CEO position and the new CEO does not know the password to see the assessee’s case in the Income-Tax portal and submitted that the delay was not attributable to the assessee and prayed that delay be condoned by way of following condonation petition:-

ITA No.1177/Bang/2022 M/s. Yaksh Pattina Souharda Sahakari Ni, Raichur

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ITA No.1177/Bang/2022 M/s. Yaksh Pattina Souharda Sahakari Ni, Raichur

Page 5 of 13 3.2 However, the ld. Standing Counsel submitted that the assessee has failed to exercise sufficient and reasonable care to file appeal in time before the Tribunal. He submitted that assessee is well aware of the fact that appeal order has been passed and it has to be filed within 60 days from the date of receipt of the order of the ld. CIT(A) and assessee has failed to take appropriate steps to file the appeal before this Tribunal and the same be dismissed as the documents produced by the assessee before the Tribunal were so created to satisfy the need of the assessee and they are self-serving documents, which cannot be relied upon to condone the delay.

ITA No.1177/Bang/2022 M/s. Yaksh Pattina Souharda Sahakari Ni, Raichur

Page 6 of 13 to this, the ld. Standing Counsel for the department submitted that the assessee’s appeal may not be admitted. 4.1 In my opinion, while considering the similar issue by the Apex court in the case of Collector of Land Acquisition Vs. Master Katiji (166 ITR 471) laid down six principles. For the purpose of convenience, the principles laid down by the Apex Court are reproduced hereunder: (i) Ordinarily, a litigant does not stand to benefit by lodging an appeal late. (ii) Refusing to condone delay can result in a meritorious matter being thrown at the very threshold and cause of justice being defeated. As against this, when delay is condoned, the highest that can happen is that a cause would be decided on merits after hearing the parties. (iii)“Every day’s delay must be explained” does not mean that a pedantic approach should be made. Why not every hour’s delay, every second’s delay? The doctrine must be applied in a rational, common sense and pragmatic manner. (iv) When substantial justice and technical consideration are pitted against each other, the cause of substantial justice deserves to be preferred, for the other side cannot claim to have vested right in injustice being done because of a non- deliberate delay. (v) There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact, he runs a serious risk. (vi) It must be grasped that the judiciary is respected not on account of its power to legalize injustice on technical grounds but because it is capable of removing injustice and is expected to do so.

ITA No.1177/Bang/2022 M/s. Yaksh Pattina Souharda Sahakari Ni, Raichur

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4.2 When substantial justice and technical consideration are pitted against each other, the cause of substantial justice deserve to be preferred, for the other side cannot claim to have vested right for injustice being done because of non-deliberate delay. In the case on our hand, the issue on merit was already decided by this Tribunal in the case of M/s. CSI Credit Co-operative Society Vs. ITO cited (supra). Therefore, I have to prefer substantial justice rather than technicality in deciding the issue. As observed by the Apex Court, if I do not condone the delay ad dismiss the appeal in limine, it would amount to legalize the injustice on technical ground when the Tribunal is capable of removing the injustice to do justice. Therefore, this Tribunal is bound to remove the injustice by condoning the delay on technicalities. If delay is not condoned, it would amount to legalize the bad order, which would result in unjust enrichment on the part of the State by retaining the tax relatable thereto. Under the scheme of Constitution, the Government cannot retain even a single pie of the individual citizen as tax, when it is not authorized by an authority of law. Therefore, if I refuse to condone the delay, that would amount to legalizing a bad order passed by the lower authority. Hence, in my opinion by preferring the substantial justice, the delay of 150 days has to be condoned. Accordingly, the short delay of 150 days is condoned and the appeal is admitted for adjudication.

ITA No.1177/Bang/2022 M/s. Yaksh Pattina Souharda Sahakari Ni, Raichur

Page 8 of 13 7. “I have heard the rival contentions and perused the material on record. In this case the assessment year involved is 2018-19. The regular time limit to file the return of income for the assessee is 31.08.2018. However, the said limit has been extended by CBDT vide circular dated 08.10.2018, which reads as follows: -

“SECTION 139, READ WITH SECTION 119, OF THE INCOME- TAX ACT, 1961 INCOME - RETURN OF - EXTENSION OF DUE DATE FOR FILING OF INCOME-TAX RETURNS AS WELL AS REPORTS OF AUDIT ORDER IEN0.225/358/2018/ITA.11]. DATED 24-9-2018 On due consideration of representations from various stakeholders for extending the due date, being 30th September, 2018, for filing of income-tax returns and various reports of audit pertaining to assessment-year 2018-19 for assessees covered under clause (a) of Explanation 2 to section 139(1) of the Income-tax Act, 1961 (Act) read with relevant pThvisions of the Act g Income-tax Rules, the CBDT, hereby extends the due date for filing of income-tax returns as well as all reports of audit (which were required to be filed by the said specified date), from 30th September, 2018 to 15th October, 2018. However, there shall be no extension of the due date for purpose of Explanation 1 to section 234A (Interest for defaults in furnishing return) of the Act and the assessee shall remain liable for payment of interest as per provisions of section 234A of the Act. F.No. 225/358/2018/17AM Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes North-Block, ITA.II Division New Delhi, the 8th of October, 2018 Order under Section 119 of the income -tax Act,1961 On consideration of representations from various stakeholders for further extension of due date being 3V1 September, 2018 for purpose of filing return of income as well as various reports of audit pertaining to Assessment Year 2018-2019 for assessees covered under clause (a) of Explanation 2 of section 139(1) of the Income-tax Act, 1961 (Act), the Board, in partial modification of its order dated 24.09.2018 in file of even number, hereby, further extends the due date for filing of return of income and reports of audit pertaining to Assessment Year 2018- 2019 from 15th October, 2018 to 31st October, 2018. However, as specified in earlier order dated 21.09,2018, assessees filing their return of income within the extended due date shall he liable for levy of interest as per provisions of section 234A of the Act. (Rajarajeswar R.) Under Secretary to Government of India Copy to:- 1. PS to f M /MO to ;M/PS to MoS(R)/OSD to MoSi(R) 2. PPS to Secretary (Revenue) 3. Chairman (CBDT), All Members, Cenha! Board of Direct Taxes 4 Ali Pr.CCsIT/CCsIT/Pr DsGIT/DsGIT 5. Ali Joint Secretaries/CsIT, CBDT 6 Directors/Deputy Secretaries/Under Secretaries of Central Board of Direct Taxes 7 ADG(Systems)-4 with request to place the order on official website 8. Addl.CIT, Date base Cell for placing the order on officers website 9 The Institute of Chartered Accountants of India, IP Estate, New Dell, 110004 10. CIT (M&TP) with request to issue Press Release & for placing on Twitter handle of the department (Rajarajeswar R.)

Under Secretary to Government of India

ITA No.1177/Bang/2022 M/s. Yaksh Pattina Souharda Sahakari Ni, Raichur

Page 9 of 13 “139. (1) Every person,— (a) being a company or a firm; or (b) being a person other than a company or a firm, if his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to income-tax, shall, on or before the due date, furnish a return of his income or the income of such other person during the previous year, in the prescribed20 form and verified in the prescribed manner and setting forth such other particulars as may be prescribed : Provided that a person referred to in clause (b), who is not required to furnish a return under this sub-section and residing in such area as may be specified by the Board in this behalf by notification in the Official Gazette, and who during the previous year incurs an expenditure of fifty thousand rupees or more towards consumption of electricity or at any time during the previous year fulfils any one of the following conditions, namely :— (i) is in occupation of an immovable property exceeding a specified floor area, whether by way of ownership, tenancy or otherwise, as may be specified by the Board in this behalf; or (ii) is the owner or the lessee of a motor vehicle other than a two-wheeled motor vehicle, whether having any detachable side car having extra wheel attached to such two-wheeled motor vehicle or not; or (iii) [***] (iv) has incurred expenditure for himself or any other person on travel to any foreign country; or (v) is the holder of a credit card, not being an "add-on" card, issued by any bank or institution; or (vi) is a member of a club where entrance fee charged is twenty-five thousand rupees or more, shall furnish a return, of his income during any previous year ending before the 1st day of April, 2005, on or before the due date in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed : Provided further that the Central Government may, by notification in the Official Gazette, specify the class or classes of persons to whom the provisions of the first proviso shall not apply : Provided also that every company or a firm shall furnish on or before the due date the return in respect of its income or loss in every previous year : Provided also that a person, being a resident other than not ordinarily resident in India within the meaning of clause (6) of section 6, who is not required to furnish a return under this sub-section and who at any time during the previous year,— (a) holds, as a beneficial owner or otherwise, any asset (including any financial interest in any entity) located outside India or has signing authority in any account located outside India; or

ITA No.1177/Bang/2022 M/s. Yaksh Pattina Souharda Sahakari Ni, Raichur

Page 10 of 13 (b) is a beneficiary of any asset (including any financial interest in any entity) located outside India, shall furnish, on or before the due date, a return in respect of his income or loss for the previous year in such form and verified in such manner and setting forth such other particulars as may be prescribed: Provided also that nothing contained in the fourth proviso shall apply to an individual, being a beneficiary of any asset (including any financial interest in any entity) located outside India where, income, if any, arising from such asset is includible in the income of the person referred to in clause (a) of that proviso in accordance with the provisions of this Act: Provided also that every person, being an individual or a Hindu undivided family or an association of persons or a body of individuals, whether incorporated or not, or an artificial juridical person, if his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year, without giving effect to the provisions of clause (38) of section 10 or section 10A or section 10B or section 10BA or section 54 or section 54B or section 54D or section 54EC or section 54F or section 54G or section 54GA or section 54GB or Chapter VI-A exceeded the maximum amount which is not chargeable to income-tax, shall, on or before the due date, furnish a return of his income or the income of such other person during the previous year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed: Provided also that a person referred to in clause (b), who is not required to furnish a return under this sub-section, and who during the previous year— (i) has deposited an amount or aggregate of the amounts exceeding one crore rupees in one or more current accounts maintained with a banking company or a co-operative bank; or (ii) has incurred expenditure of an amount or aggregate of the amounts exceeding two lakh rupees for himself or any other person for travel to a foreign country; or (ii) has incurred expenditure of an amount or aggregate of the amounts exceeding one lakh rupees towards consumption of electricity; or (iii) fulfils such other conditions as may be prescribed, shall furnish a return of his income on or before the due date in such form and verified in such manner and setting forth such other particulars, as may be prescribed. Explanation 1.—For the purposes of this sub-section, the expression "motor vehicle" shall have the meaning assigned to it in clause (28) of section 2 of the Motor Vehicles Act, 1988 (59 of 1988). Explanation 2.—In this sub-section, "due date" means,— (a) where the assessee other than an assessee referred to in clause (aa) is— (i) a company; or (ii) a person (other than a company) whose accounts are required to be audited under this Act or under any other law for the time being in force; or

ITA No.1177/Bang/2022 M/s. Yaksh Pattina Souharda Sahakari Ni, Raichur

Page 11 of 13 (iii) a 21[***] partner of a firm whose accounts are required to be audited under this Act or under any other law for the time being in force 22[or the spouse of such partner if the provisions of section 5A applies to such spouse], the 23[31st day of October] of the assessment year; (aa) in the case of an assessee 24[, including the partners of the firm or the spouse of such partner (if the provisions of section 5A applies to such spouse), being such assessee,] who is required to furnish a report referred to in section 92E, the 30th day of November of the assessment year; (b) in the case of a person other than a company, referred to in the first proviso to this sub-section, the 31st day of October of the assessment year; (c) in the case of any other assessee, the 31st day of July of the assessment year.” As seen from Explanation 2(ii) if the assessee’s books of account requires to be audited under the Income Tax or any other law for the time being in force, the time limit would be extended up to 31st October of that assessment year. In the present case, the learned A.R. submitted that as per Section 63 of the Karnataka Co-Operative Societies Act, 1959 the assessee’s books are required to be audited under the Act.

8.1 For clarity the same is reproduced as under: - “Extract of Section 63 of the Karnataka Cooperative Societies Act, 1959 CHAPTER VIII AUDIT, INQUIRY, INSPECTION AND SURCHARGE. 63 Audit. - (1) Every Cooperative society shall get its accounts audited at least once in a year before the first of September following the close of the cooperative year by an auditor or an auditing firm appointed by the general body of the cooperative society from a panel of auditors or auditing firms approved by the Director of cooperative audit; Provided that the Director of co-operative audit shall be the authority competent to prepare and maintain a list of auditors and auditing firms who satisfy the prescribed qualification and experience for undertaking the audit of accounts of co-operative societies in the state. [Provided further that, the National Bank shall prepare a list of auditors and auditing firms who satisfy, the prescribed qualification and experience for undertaking the audit of accounts of State Co- operative Bank and District Central Co-operative Banks.]” 9. A conjoint reading of Section 139(1) of the Act read with the Explanation 2(ii) of the section and Section 63 of the Karnataka Co-Operative Societies Act, 1959 makes it clear that the assessee’s books are required to be audited under the Co-Operative Societies Act, the extended time is available to the assessee upto 31.10.2018 to the file the return of income for the AY 201819. Admittedly in the present case the assessee filed the return of income on 31.10.2018. The assessee cannot be denied deduction under Section 80P(2)(a)(i) of the Act if the assessee

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Page 12 of 13 filed the return of income on or before 31.10.2018 and the same has been disclosed in the return of income as required in ITR-5 stating that assessee is liable to audit under Cooperative Society Act and mentioned the date of audit in the return of income filed by the assessee. If it is so, the assessee could avail the benefit of circular issued by CBDT cited supra and the assessee has to be granted with the deduction under Section 80P(2)((i)(a) of the Act. 10. Further the learned D.R. strongly placed reliance on the order of the coordinate bench in the case of Syndicate Bank Staff Co-operative Society Ltd. in ITA No. 1062/Bang/2022 dated 03.01.2023 wherein the Tribunal upheld the denial of deduction under Section 80P(2)(a)(i) of the Act. Since the assessee has filed the return of income only on 30.12.2018 for AY 2018-19 this case law cannot be applied to the facts of the present case. Further the learned D.R. relied on the order of the Tribunal’s Mumbai Bench in the case of Janki Vaishali Co-operative Housing Society Ltd. in ITA No. 944/Mum/2022 dated 31.10.2022 wherein the Tribunal upheld the denial under Section 80P(2)(i)(d) of the Act on the reason that the assessee has filed return of income on 24.12.2018 which is beyond the due date for filing the return of income under Section 139(1) of the Act. As discussed earlier in the present case assessee has filed return of income on 31.10.2018, which is within the extended time limit in the case of the present assessee whose books are to required to be audited under the relevant Co-operative Societies Act and Explanation 2(ii) of Section 139(1) of the Act is applicable to the assessee’s case. 11. Being so, I find no force in the argument of the learned D.R. Accordingly, I direct the AO to grant deduction claimed by the assessee under Section 80P(2)(i)(a) of the Act if the assessee establish that it has disclosed the fact that assessee is liable to audit under Cooperatives Societies Act and mentioned the date of furnishing audit report in the return of income filed by the assessee on 31.10.2018 for the impugned AY 2018-19. Accordingly the issue in dispute is remitted to the file of AO for fresh consideration in the light of above observations. 12. In the result, the appeal filed by the assessee is partly allowed for statistical purposes.”

5.1 In view of the above order of the Tribunal, since the facts are the same, taking a consistent view, I remit this issue to the file of AO for fresh consideration in the light of above order in the case of M/s. CSI Credit Co-Operative Society Vs. ITO cited (supra).

ITA No.1177/Bang/2022 M/s. Yaksh Pattina Souharda Sahakari Ni, Raichur

Page 13 of 13 6. In the result, the appeal filed by the assessee is partly allowed for statistical purposes. Order pronounced in the open court on 7th Feb, 2023

(Chandra Poojari) Accountant Member

Bangalore, Dated 7th Feb, 2023. VG/SPS

Copy to:

Asst. Registrar, ITAT, Bangalore.