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Facts
The assessee, a co-operative credit society, claimed a deduction of Rs. 39,31,062 under section 80P(2)(a)(i) of the Income Tax Act, 1961. The CPC processing the return restricted this deduction to Rs. 13,54,431. The assessee's appeal to the CIT(A) was dismissed on grounds of delay.
Held
The Tribunal held that the CIT(A) erred in not condoning the delay in filing the appeal. The delay was attributed to the pendency of rectification applications and a bonafide belief that the issue would be resolved. On merits, the Tribunal found no basis to deny the complete deduction claimed under section 80P(2)(a)(i) as the assessee is a co-operative credit society.
Key Issues
Whether the CIT(A) was justified in dismissing the appeal on grounds of delay without adjudicating the grounds on merits, and whether the assessee is entitled to the full deduction claimed under Section 80P(2)(a)(i).
Sections Cited
249(2) of the Income Tax Act, 1961, 143(1) of the Income Tax Act, 1961, 80P(2)(a)(i) of the Income Tax Act, 1961, 154 of the Act, Section 5 of the Limitation Act, 1963
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Income Tax Appellate Tribunal, “H (SMC
Before: SHRI PRASHANT MAHARISHISHRI SANDEEP SINGH KARHAIL
The present appeal has been filed by the assessee challenging the impugned order dated 24/05/2024 passed under section 250 of the Income Tax Act, 1961 (“the Act”) by the learned Additional/Joint Commissioner of Income (Appeals), Bhubaneshwar, [“learned Addl./Joint CIT(A)”], for the assessment year 2019-20.
In this appeal, the assessee has raised the following grounds: - “
1. On the facts and in the circumstances of the case and in law, the order of the Ld. JCIT(A), NFAC, erroneously disallowed the condonation of delay, despite there being sufficient causes with the assessee for not filing the appeal in time as per section 249(2) of the Income Tax Act,1961, which obstructed his action to file the appeal within the time limit.
2. On the facts and in the circumstances of the case and in law, the order of the Ld. JCIT(A), NFAC, erroneously disallowed the condonation of delay, attributing it to constraints faced by the assessee rather than negligence or inaction, preventing the timely filing of the appeal within the 30day limit.
3. On the facts and in the circumstances of the case and in law, the Hon'ble JCIT-(A), has aggrieved your appellant by dismissing the appeal on the ground of rejection of petition for condonation of delay without going into the merits of the appeal.
4. On the facts and in the circumstances of the case and in law, the Hon'ble JCIT-(A), has aggrieved your appellant by dismissing the appeal and denied the opportunity of being heard as the order cum intimation appealed against is not a speaking order of the Ld. ACIT, CPC and therefore the basic principle of natural justice was denied to your appellant.
5. On the facts and in the circumstances of the case and in law, the Hon'ble JCIT-(A), has aggrieved your appellant by erroneouslydisallowed the condonation of delay, failing to recognize that no negligence occurred on the appellant's part in treating the Intimation u/s 143(1) of the Ld. ADIT, CPC, Bengaluru as serious. The cause for delay was beyond the control of the assessee as the Jurisdictional AO did not acted upon it.
6. On the facts and in the circumstances of the case and in law, the order of the Ld. JCIT(A), NFAC, erroneously disallowed the condonation of delay, not acknowledging that the assessee was prevented by a reasonable cause from filing the appeal in time. The delay was not due to dilatory tactics, lack of bona fide, deliberate inaction, or negligence on the part of the appellant, who always acted diligently and remained active.
7. On the facts and in the circumstances of the case and in law, the order of the Ld. JCIT(A), NFAC, erroneously disallowed the condonation of delay, failing to recognize that the term "sufficient cause" for condonation of delay should be interpreted liberally to advance substantial justice.
8. On the facts and in the circumstances of the case and in law, the order of the Ld. JCIT(A), NFAC, erroneously disallowed the condonation of delay, overlooking that the Income Tax Act, 1961, is a self-contained enactment and section 249(3) provides for condonation of delay at the discretion of the CIT(A), with sufficient cause for delay as envisaged in section 5 of the Limitation Act, 1963.
9. On the facts and in the circumstances of the case and in law, the order of the Ld. JCIT(A), NFAC, erroneously disallowed the condonation of delay, not considering that the law of limitation is substantive and impacts the rights and obligations of a party. This principle should be appropriately applied depending on the facts and circumstances of each case, granting an extension to the assessee for filing an appeal as there are "sufficient causes" for the delay of 1100 days.
10. On the facts and in the circumstances of the case and in law, the order of the Ld. JCIT(A), NFAC, erroneously disallowed the condonation of delay, failing to provide justice to the appellant while attending to therespondent, who showed gross negligence in deciding the case under section 154 of the Act.
11. On the facts and in the circumstances of the case and in law, the order of the Ld. JCIT(A), NFAC, erroneously disallowed the condonation of delay, not acknowledging that there was no malafide or deliberate intention on the part of the assessee in filing the appeal with a delay of 1100 days, and that the delay in filing the appeal within the limitation period under section 249(2) was due to sufficient causes.
12. On the facts and in the circumstances of the case and in law, the order of the Ld. JCIT(A), NFAC, erroneously disallowed the condonation of delay, holding that a party should not suffer due to no fault of his own, rather the appellant acted as per the guidance of his legal or tax advisers.
13. On the facts and in the circumstances of the case and in law, the order of the Ld. JCIT(A), NFAC, erroneously disallowed the condonation of delay, not appreciating that the term "sufficient cause" should be interpreted pragmatically in a justice-oriented approach rather than a technical detection of sufficient cause for explaining every day's delay, as illustrated in the case of Collector of Land Acquisition vs Mst. Kati Ji AIR1987 SC 1353. A pedantic approach should be avoided while dealing with an explanation of the delay, applying the doctrine in a rational and pragmatic manner.
14. On the facts and in the circumstances of the case and in law, the order of the Ld. JCIT(A), NFAC, erroneously disallowed the condonation of delay, presupposing that the delay was deliberate or the applicant was guilty of culpable negligence, ignoring that no litigant deliberately delays the filing of his application.
15. On the facts and in the circumstances of the case and in law, the order of the Ld. JCIT(A), NFAC, erroneously disallowed the condonation of delay, failing to consider the other grounds filed with the JCIT(A), NFAC, which are now being pleaded before the Hon'ble ITAT, Mumbai. A remedy is sought from the Hon'ble ITAT as the case is meritorious on the legal front. There is neither negligence nor a lack of regard for the legislature of the country, but inaction by the Jurisdiction AO in disposingof the appeal, which is beyond a shadow of doubt and which caused the delay in filing the appeal.
16. On the facts and in the circumstances of the case and in law, the Hon'ble JCIT-(A), NFAC has aggrieved your appellant by not going into the merits of the case and thereby consequently partially denying the eligible deduction of Rs. 25,76,631/- out of Rs.39,31,062/- as claimed u/s 80P (2)(a)(i) of Income Tax Act, 1961.
17. Alternatively, on the facts and in law, the Hon'ble JCIT-(A), NFAC and the learned A.O. erred in not appreciating that the appellant is entitled for deduction u/s 80P(2)(a)(i) of Income Tax Act, 1961, in respect of Rs.39,31,062/- from the various judgments of Hon'ble High Courts & ITAT benches.
18. Without prejudice to the above, the case laws relied by the JCIT-(A) NFAC, are not applicable to the facts of the appellant and hence the order of the JCIT-(A) NFAC may be quashed. 19. Your appellant also humbly submits & prays for allowing the entire deduction under section 80P(2)(a)i) of Income Tax Act, 1961 for Rs. 39,31,062/- as claimed in the Income tax return as such adjustment is not permissible U/s 143(1) or rather beyond the preview of section 143(1) not being prima facie in nature. 20. Your appellant also humbly submits & prays for granting stay against the entire demand, penalty and all recovery proceedings including automatic adjustments of refunds of the future years by the CPC which is initiated or may be initiated in future against your appellant in this respect till the disposal of this appeal.”
2. The solitary grievance of the assessee is against the part disallowance of deduction claimed under section 80P(2)(a)(i) of the Act.
3. We have considered the submissions of both sides and perused the material available on the record. The brief facts of the case are that the assessee is a co-operative credit society. It is primarily and mainly engaged in providing credit facilities to its members since its inception apart from various other objectives as listed and approved by the Registrar of Societies at the time of Registration. For the year under consideration, the assessee filed its return of income on 21/09/2019 declaring a total income of Rs. 1,72,760, inter-alia, after claiming a deduction of Rs. 39,31,062 under section 80P(2)(a)(i) of the Act. The return filed by the assessee was processed by the Central Processing Centre, Bengaluru (“CPC”) vide intimation dated 19/02/2020 issued under section 143(1) of the Act computing the total income of the assessee at Rs. 27,49,390 by partly disallowing the deduction claimed under section 80P(2)(a)(i) of the Act and restricting the deduction only to Rs. 13,54,431.
The learned CIT(A), vide impugned order, dismissed the appeal filed by the assessee against the intimation issued under section 143(1) of the Act on the ground of delay without adjudicating the grounds raised by the assessee on merits. Being aggrieved, the assessee is in appeal before us.
As per the assessee, it filed the online rectification applications before the CPC on 25/02/2020 and 24/07/2020 which were rejected and thereafter the assessee also approached the Jurisdictional Assessing Officer and filed a rectification application on 03/02/2001 which was not processed by him and thereafter the assessee again filed second rectification application on 16/02/2023. It was submitted that since the assessee’s rectification applications were pending consideration and it was hopeful of a favourable result, therefore, the appeal before the first appellate authority was not filed within the limitation period. It was further submitted that since the assessee failed to seek recourse from either CPC or the Jurisdictional Assessing Officer, it preferred an appeal before the learned CIT(A) after a delay of 1100 days. It was also submitted that both rectification applications are still pending before the Jurisdictional Assessing Officer for consideration.
We find that in a similar factual matrix wherein due to the pendency of rectification applications under section 154 of the Act, the appeal before the learned CIT(A) was delayed by 8-10 years, the coordinate bench of the Tribunal in Vishva Villa Co-opHousing Society Ltd v/s ITO, in 684/Mum./2024, vide order dated 27/06/2024 condoned the delay in filing the appeal before the learned CIT(A) by observing as follows: -
“7. We heard both the parties and also peruse the relevantmaterial based on record. First of all the assessee has explainedthe reason for delat in filing of the first appeal before CIT(A) thatealier CA of the assessee had filed rectification application u/154 before the AO/CPC, thenassessee was under bonafide beliefthat the adjustment would get rectified and even CA also did notadvice the society to file an appeal when application wasdisposed of for certain period. It is later on when demand noticewas issued then assessee was advised to file an appeal. Thus,looking to the fact that assessee is cooperative housing societyand it was under a bonafide belief that it has filed a rectificationwhich was not disposed of till date, therefore delay in filing offirst appeal cannot be held to latches on part of the assessee.Thus, delay infiling appeal before the first apppellate authority iscondoned.”
Thus, concurring with the findings rendered in the aforesaid decision, we are of the considered view that in the present case also the delay in filing the appeal before the learned CIT(A) was not due to any latches on the part of the assessee, as it was pursuing the remedy provided under the Act against the partial disallowance of deduction claimed under section 80P(2)(a)(i) of the Act. Therefore, we are of the considered opinion that the learned CIT(A) erred in not condoning the delay in filing the appeal by the assessee and thus, the same is hereby condoned.
On merits, it is undisputed that the assessee claimed a deduction of Rs. 39,31,062 under section 80P(2)(a)(i) of the Act while filing its return of income, however, the CPC vide intimation issued under section 143(1) of the Act restricted the deduction to Rs. 13,54,431. Thus, the deduction claimed under section 80P(2)(a)(i) of the Act was partially allowed to the assessee.It is further undisputed that the assessee is a co-operative credit society and is engaged in providing credit facilities to its members. As per the assessee, its entire income is from providing credit facilities to its members and the interest income earned from the co-operative societies by the assessee is purely business income and the assessee has correctly claimed deduction under section 80P(2)(a)(i) of the Act. Since the deduction claimed under section 80P(2)(a)(i) of the Act was partially allowed to the assessee, in the peculiar facts of the present case and also in the absence of any material contrary to the claim of the assessee, we find no basis in denying the complete deduction claimed under section 80P(2)(a)(i) of the Act. As a result, the grounds raised by the assessee are allowed.
In the result, the appeal by the assessee is allowed. Order pronounced in the open Court on 16/10/2024