3148 KANAKKAMPALAYAM PRIMARY AGRICULTURUAL COOPERATIVE CREDIT SOCIETY,TIRUPUR vs. ADDITIONAL / JOINT / DEPUTY / ASSISTANT COMMISSIONER OF INCOME TAX/ INCOME-TAX OFFICER, NFAC

During assessment proceedings, it transpired that the assessee filed return of income belatedly on 09/03/2019 and therefore, Ld. AO confirmed denial of impugned deduction by CPC while processing the return of income u/s 143(1). The said deduction was denied considering the provisions of Sec.80AC. The Ld. CIT(A) confirmed the action of Ld. AO on the ground that condonation application filed by the assessee u/s 119(2)(b) before appropriate authority was dismissed. Aggrieved, the assessee is in further appeal before us.

Upon perusal of case records, it could be seen that the assessee is a registered cooperative society and subjected to audit. The auditors were to be appointed by Registrar of Co-operative societies. The audit was completed on 31.10.2018 and the audit report was released to the assessee during February, 2019. Upon receipt of the same, the assessee filed return of income during March, 2019. Thus, it could be concluded that the late filing of return of income was not intentional but beyond the control of the assessee. In such a case, the denial of impugned deduction, which the assessee is otherwise eligible to claim, could not be held to be justified as held by this Tribunal in M/s M/s TPD 101 Uthangarai Milk Producers Co-operative Society Ltd. vs. ITO (ITA No.544/Chny/2021 dated 31.05.2022) as under: - 7. We have heard both the parties, perused the materials available on record and gone through orders of the authorities below. Admittedly, the assessee being a Co- operative Society registered under the Tamil Nadu Co operative Societies � Act, 1983, is subject to Audit u/s.80 of the Act, by the Co-operative Audit Department. It is also an admitted fact that the Audit of the assessee’s books of accounts has been carried out by the Department and such Audit was completed on 08.10.2019. The assessee claims that the delay in filing of the return for the relevant AY is on account of delay in completion of Audit by the Co-operative Audit Department and such delay cannot be attributed to the assessee, because, completion of Audit by the Department, is not in the hands of the assessee. We have gone through the reasons given by the assessee in light of provisions of Sec.80AC of the Act, and we find that the assessee is, otherwise, entitled for deduction u/s.80P(2) of the Act, in respect of profits derived from its business, because, it has satisfied all conditions prescribed therein. The only reason for the AO to reject the deduction claimed u/s.80P(2) of the Act, was that the assessee does not file its return on or before due date specified u/s.139(1) of the Act. Except this, the AO has not brought on record any other reasons to deny deduction claimed u/s.80P(2) of the Act. Therefore, from the reasons given by the assessee for not filing return of income within the due date specified under the Act, we are of the considered view that the delay in filing of return, cannot be attributable to the assessee, because, completion of Audit by the Co-operative Department, is not under the control of the assessee. Further, the assessee has filed its return of income as soon as it has received the Audit Report from the Department. Further, the delay in filing of the return for the relevant AY is very small in as much as the extended due date for filing of return of income for the AY 2019-20 was 31.10.2019, whereas, the assessee has filed its return of income on 14.11.2019. Therefore, considering reasons given by the assessee for delay in filing of return of income for the relevant AY and also taken note of the fact that the assessee is, otherwise, entitled for deduction u/s.80P(2) of the Act, we are of the considered view that the ACIT/CPC were erred in rejecting deduction claimed u/s.80P(2) of the Act. Hence, we direct the AO to allow deduction as claimed by the assessee u/s.80P(2) of the Act, and delete additions made to total income.

In the result, the appeal filed by the assessee is allowed.

Considering the same, we direct Ld. AO to allow the impugned deduction. The decision of Hon’ble High Court of Madras in AA520 Veerappampalayam PACS vs. DCIT (138 Taxmann.com 571) as referred to by revenue is primarily with respect to scope of Sec. 143(1)(a) and do not address the impugned issue and therefore, this case law is not applicable. 4. In the result, the appeal stand allowed. Order pronounced on 12th April, 2023.