BALAJI VIVIDODDESHA SOUHARDA SAHAKARI NIYAMITHA,HOSPET vs. INCOME TAX OFFICER, WARD NO - 1, HOSPET, HOSPET

The learned departmental representative also did not object to the same.

Considering the circumstances outlined above and the minimal nature of the delay, which occurred due to bona fide reasons, the appeal

The ld. CIT(A) did not excuse the four-year delay in filing the appeal. The assessing officer’s order was served on 20 December 2019, but the assessee filed the appeal only on 4 June 2024, resulting in a clear delay of about four years.

The assessee delayed due to initially filing the appeal electronically on 14 January 2020 with the incorrect assessment year—2017–18 instead of 2015–16. This error led to a timely appeal being submitted for the wrong year. The assessee stated that the incorrect assessment year was discovered upon receiving a notice on 22 May 2024, which revealed that no appeal had been filed for assessment year 2017–18, although notices were received, while an appeal was pending for assessment year 2015–16. Upon reviewing Form No. 35, the assessee realized that the assessment year had been erroneously entered as 2017–18 instead of 2015–16. Immediately after identifying this error, the assessee filed a corrective appeal on 4 June 2024, amending the assessment year from 2017–18 to 2015–16. The delay was attributed to the assessee mistakenly listing the wrong assessment year. The learned CIT(A) provided another hearing, requiring the assessee to justify the late appeal. On 24 July 2025, the assessee reiterated that the error caused the delay. However, the CIT(A) found the delay excessive, noting that the assessee should have realized the mistake upon receiving the first notice on 22 January 2021. Since the assessee did not address this point, the ld. CIT(A) refused to condone the more than four-year delay and dismissed the appeal.

The learned authorized representative presented a paper book before us, asserting that the assessee inadvertently indicated an incorrect assessment year in the original appeal. Nonetheless, it is undisputed that the appeal was filed timely. The original appeal referenced assessment year 2017–18 instead of the intended assessment year 2015–16. This discrepancy came to the assessee's attention only upon receiving a notice for assessment year 2017–18 from the CIT(A) office. The representative explained that the initial notices were issued in financial year 2021; however, due to the second wave of Covid-19, the assessee was unable to respond. A subsequent notice was issued on 22 May 2024. Upon discovering the error in Form No. 35 with respect to the assessment year, the assessee promptly filed a fresh appeal reflecting the correct assessment year. The assessee argued that they could have amended the original Form No. 35, which was filed on time, by changing the assessment year from 2017–18 to 2015–16, ensuring the appeal would be timely. Since a new appeal was filed as an alternative, this resulted in a delay. The authorized representative explained that the delay occurred for a valid reason and requested that the CIT(A) should have condoned it.

The learned departmental representative strongly opposed the assessee's arguments, stating that the initial notices were issued to the assessee during the financial year 2021–22, and any necessary

After reviewing the rival arguments and CIT–A's order, we note that the assessee originally filed an appeal for the incorrect assessment year—2017–18 instead of 2015–16. Upon receiving the final notice on 22 May 2024, the assessee realized the mistake. Instead of requesting CIT–A to treat the initial appeal as one for 2015–16, the assessee submitted a fresh appeal with the correct year, resulting in significant delay. As a result, CIT–A refused to condone the delay, citing lack of sufficient cause. It is observed that earlier notices to the assessee regarding the appeal for the assessment year 2017–18 were issued in July 2021 and November 2022. The assessee contends that the second wave of Covid-19 was ongoing as of 15 July 2021, which could have impacted their ability to respond. Furthermore, the notice dated 4 November 2022 may not have come to the assessee’s attention. Upon receipt of the third notice on 22 May 2024, the assessee filed the appeal, specifying the correct assessment year and clarifying before the CIT(A) that the prior error was solely due to an incorrect mention of the assessment year. Consequently, this resulted in a significant delay of four years in filing the appeal. Although the delay is significant, it should be condoned if sufficient cause is shown. Here, the assessee originally filed an appeal with the incorrect assessment year but promptly corrected it by submitting a new appeal for 2015–16, rather than requesting the CIT(A) to amend the original appeal from 2017–18 to 2015–16. Based on these facts, we conclude that since the original appeal, despite referencing the incorrect assessment year, was filed within the prescribed timeframe—and the assessee, exercising due diligence, subsequently submitted a fresh appeal citing the correct assessment year, thereby causing the delay—there exists sufficient cause for condonation. Accordingly, we find that the learned CIT(A) erred in not condoning the delay, and thus, we set aside the order of the learned CIT(A).

The assessee, a member’s credit cooperative society registered under the Karnataka Souharda Sahakari Act 1997, declared nil income by claiming a full deduction under section 80P(2). After scrutiny, an order dated July 31, 2017, found the assessee operated as a banking cooperative society and disallowed the deduction under section 80P(2)(d). The assessee appealed to both the learned CIT (A) and the coordinate bench. The coordinate bench remanded the matter to the assessing officer for a fresh decision based on its ruling in a similar case. Accordingly, the assessment was restarted as directed.

The learned AO found that the assessee has a registration certificate under the Karnataka Souharda Sahakari Act, 1997. He held that such a society is not eligible for deduction because it is not a co- operative society and therefore, he denied the deduction to the assessee. Therefore, accordingly a sum of ₹ 1,007,008 being income from business and profession disallowed deduction u/s 80P of the Act. Accordingly, the total income of the assessee was assessed at ₹ 1,007,008/–. Therefore, the only issue in the assessment proceedings was that the assessee is not a co-operative society because it is not registered under the Karnataka State Co-operative Societies Act but was registered under the different Act.

The assessee preferred an appeal before the learned CIT – A who did not admit the case of the assessee and dismissed the appeal in limine.

The authorised representative argued that the Karnataka High Court held that a cooperative society, even if registered under an act other than the Karnataka State Co-operative Societies Act, is still eligible for deduction under section 80P.

In Government of India Ministry of Finance vs. Karnataka State Souharda Federal Co-operative Ltd. [2022] 134 taxmann.com 170 (Karnataka)/[2022] 285 Taxman 529 (Karnataka)[20-12-2021] and in Swabhimani Souharda Credit Co. v. Government of India [Writ Petition nos. 14381/2019 and 48414/2018, dated 16-1-2020] Honourable Karnataka High court has held that the provisions of section 80P offers tax deduction in respect of income of co-operative societies which is enacted with a laudable object of promoting co- operative moment. Such benefit cannot be denied to the so called Co- operatives under the Souharda Act merely on hyper technicalities. The interpretation given by the revenue to section 2(19) is untenable. A harmonious reading of the said provisions would indicate that Co-

Since the assessee is registered under the Act, deduction under section 80P should not have been denied. Following the Karnataka High Court's decision, the appeal is allowed, and the assessee is entitled to the deduction.

The issue that now arises is the quantification of and the satisfaction of the conditions mentioned under section 80 P of the Act. The assessee has earned bank interest from cooperative societies and cooperative banks. It has claimed deduction under section 80 P (2) (a) (i) of the Act on the bank interest. We find that this issue is also covered in favour of the assessee by the decision of the honourable Karnataka High Court in 2 cases viz., Totgars Co-Operative Sale Society Ltd. vs. Income-tax officer, Ward -1, Sirsi [2015] 58 taxmann.com 35 (Karnataka)/[2015] 231 Taxman 794 (Karnataka)[25-03-2015] and Tumkur Merchants Souharda Credit Cooperative Ltd. vs. Income-tax officer Ward-V,

Based on the facts, the appeal submitted by the assessee is hereby allowed. The assessing officer is instructed to allow the deduction to the assessee under section 80 P (2) (a) (i) of the Act, amounting to ₹ 1,007,008/–.