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Facts
The assessee, a co-operative credit society, filed its return of income for AY 2019-20 belatedly. The CPC disallowed the deduction u/s.80P claimed in the return, citing the delay. The CIT(A) upheld this disallowance. The assessee appealed to the Tribunal, first seeking condonation of the 610-day delay.
Held
The Tribunal condoned the delay, finding sufficient cause. The key issue was whether the CPC was empowered to disallow the Section 80P deduction based on a delayed return filing, given that the relevant amendment to Section 143(1)(a) came into effect prospectively from April 1, 2021, and the intimation order was passed before this amendment. The Tribunal held that the CPC's adjustment was not empowered at the time.
Key Issues
Whether the CPC was empowered to disallow the Section 80P deduction for delayed filing of return, considering the amendment to Section 143(1)(a) was prospective.
Sections Cited
143(1), 139(1), 80P, 80AC, 143(1)(a)(v)
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Income Tax Appellate Tribunal, ‘D’ BENCH, CHENNAI
Before: SHRI MANU KUMAR GIRI & SHRI S. R. RAGHUNATHA
आदेश /O R D E R
PER S. R. RAGHUNATHA, AM :
The present appeal is filed by the assessee against the order of the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi (hereinafter referred to as “ld.CIT(A)”), dated 12.12.2023 passed by dismissing the appeal filed by the assessee against the intimation order dated 11.01.2021 passed u/s.143(1) of the Income Tax Act, 1961 (hereinafter referred to as the “Act”), pertaining to Assessment Year (A.Y.) 2019-20.
We find that there is a delay of 610 days in filing the present appeal before us. The Ld.AR placed on record an affidavit from the assessee, explaining the reasons for the delay and prayed that the delay be condoned and the appeal be :-2-: ITA. No:3087/Chny/2025 taken up on merits. Per contra, the Ld.DR opposed the petition for condonation of delay and submitted that the assessee has not made out a case for condoning the delay and that the appeal may be dismissed in limine on the grounds of limitation. On going through the reasons for delay, we are satisfied that the assessee had sufficient cause in not presenting the appeal within the period of limitation specified under the Act. We, accordingly, condone the delay in filing the appeal and now proceed to hear the case on merits.
The sole ground raised by the assessee is that the AO has denied the deduction u/s.80P of the Act for the reason that the assessee has filed its return of income after the due date prescribed u/s.139(1) of the Act for the A.Y. 2019-20.
Brief facts of the case emanating from the records are that the assessee is a Co-operative credit society and filed its return of income on 05.10.2020 admitting an income of nil after claiming deduction u/s.80P of the Act to the tune of Rs.13,62,712/-. Thereafter, an intimation order dated 11.01.2021 was passed by the Central Processing Centre (hereafter referred to as “CPC”) wherein the sum claimed for deduction u/s.80P was disallowed on the ground that the return was filed after the due date as specified u/s.139(1) of the Act and a demand of Rs.6,00,099/- was raised against the assessee.
Aggrieved by the order of the CPC, the assessee filed an appeal before the ld.CIT(A) vide Form 35 dated 07.12.2021. Thereafter, the ld.CIT(A) rejected the appeal of the assessee by way of order dated 12.12.2023.
Aggrieved by the order of the ld.CIT(A), the assessee has preferred the present appeal before us.
During the proceedings before the ld.CIT(A), the assessee submitted that it is a Co-operative Credit Society extending credit to its members eligible to claim the benefits of its income, a deduction u/s.80P(a)(i) of the Act. As a co-operative society it has to get its accounts audited by the auditors appointed by the Registrar of Co-operative Societies. Thereafter, return of income would be filed. For the year under consideration, the audit was completed and the return was filed on :-3-: ITA. No:3087/Chny/2025 05.10.2020 wherein an income of Nil was returned after claiming deduction u/s.80P(a)(i) of the Act. The delay in filing the return of income was owing to the fact that the audit was completed belatedly and also owing to COVID restrictions. Reliance was made on the decision of this tribunal in the case of Uthangarai Milk Producers Co-operative Society ltd. [ITA no.544/CHNY/2021] in support of its case.
The ld.CIT(A), however observed in the order passed u/s.250 of the Act, that the last date for filing return u/s.139(1) of the Act was 31.08.2019. But the assessee has filed the return after more than 13 months, on 05.10.2021. Since the deduction u/s.80P can be claimed only if it is filed within the due date as per Section 80AC of the Act, the ld.CIT(A) confirmed that the disallowance of the CPC with respect to the deduction u/s.80P is correct. In regard to the case relied by the assessee, the ld.CIT(A) remarked that in the said case, the delay was not significant unlike the case of the assessee and further cited the CBDT circular no.13/2023 dated 26.07.2033 which provides certain guidelines for CCIT/DGIT for condonation of delay u/s.80P return from AYs 2018-19 to 2022-23. The ld.CIT(A) also took note of the fact that the assessee has applied for condonation before the CCIT, Coimbatore, in accordance with the CBDT circular (supra), the CCIT has not condoned the delay for the reason that the assessee failed to furnish any document to substantiate any hardship that the assessee went through, which led to the delay in filing the return. For these grounds, the ld.CIT(A) rejected the appeal of the assessee vide order dated 12.12.2023.
The ld.AR for the assessee submitted that the assessee having fulfilled all the substantive requirements u/s.80P of the Act is eligible to claim the deduction. Moreover, Section 80AC is directory and that benefit u/s.80P cannot be disallowed on mere procedural non-compliance, i.e., delay in filing the return, which is attributable to delay in conduct of the audit by auditors appointed by the registrar of the co-operative societies. Also, that the ld.CIT(A)’s reliance on Section 80AC of the Act is misplaced, since the CPC has no power to make disallowance u/s.143(1) of the Act. Even considering the fact the current provision u/s.143(1)(a) enables CPC to make specified adjustment for Section 80P of the Act, such an amendment came into effect only from 01.04.2021 and hence the CPC could not :-4-: ITA. No:3087/Chny/2025 have done adjustment prior to the amendment u/s.143(1)(a) of the Act, even if the return was filed beyond the due date. In the present case, the intimation order was passed on 11.01.2021, which is much before the amendment and hence the disallowance is untenable. In support of these contentions, the ld.counsel for assessee relied on the decision of the division bench of this tribunal in the case of Salem District Child Welfare Org. Asst. TCS Ltd. V. ITO [ITA no.402/CHNY/2023] and thus prayed that the appeal be allowed.
Per contra, the ld.DR argued that the order of the ld.CIT(A) confirming the disallowance made by the CPC is right and reiterated the findings of the ld.CIT(A).
We have heard rival submissions and perused the material on record. It is undisputed facts that the assessee filed its return of income for the impugned Assessment Year on 05.10.2021 which is beyond the due date u/s.139(1) of the Act while claiming deduction u/s.80P and thereby admitting an income of nil for the A.Y.2019-20. Thereafter, the CPC disallowed the deduction on the ground that the return was filed beyond the due date of filing the return of income in violation of section 80AC of the Act. Subsequently, the assessee preferred an appeal before the ld.CIT(A), who rejected the appeal on the grounds as stated earlier, against which the present appeal is being filed. The question before us is, whether the CPC is empowered to make the disallowance of claim made u/s.80P of the Act, on account of delay in filing the return of income. It can be seen that the disallowance of claim u/s.80P of the Act on account of belated filing of return of income could be done by the CPC u/s.143(1) of the Act only w.e.f.01.04.2021, whereas in the present case, the adjustment was made on 11.01.2021 itself, which was much before the amendment. The said amendment made in section 143(1)(a)(v) of the Act would operate only prospectively and not retrospectively.
Therefore, we are of the considered view that the CPC making an adjustment towards the deduction claimed to the tune of Rs.13,62,712/- u/s.80P of the Act is incorrect when the CPC was not empowered to do so at the time of passing the intimation order dated 11.01.2021. Moreover, the ld.CIT(A)’s reference to the circular no.13/2023 is for CCIT/DGIT and therefore, is irrelevant for the :-5-: ITA. No:3087/Chny/2025 appeal before him, since the rejection was on account of submission of evidence pertaining to the reasonable cause for the delay in filing the return. Moreover, the ld.CIT(A) ought to have decided the case of the assessee on the facts and circumstances before him, instead of basing it on the decision of the CCIT. We also respectfully follow the decision of the coordinate bench of this Tribunal in Salem District Child Welfare Org. Asst. TCS Ltd. (supra) wherein the impugned issue has already been decided on identical facts, in favour of the assessee.
Thus, in view of the foregoing reasons, we direct the AO to allow the deduction u/s.80P of the Act to the assessee.
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 11th February, 2026 at Chennai.