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Facts
The assessee, a credit co-operative society, filed its return of income for AY 2020-21 under section 139(4) declaring Nil income after claiming a deduction of Rs. 82,72,479/- under section 80P. The Assessing Officer (AO) denied this deduction, citing the late filing of the return. The CIT(A) upheld the AO's decision.
Held
The Tribunal noted that while the assessee had filed the return under section 139(4) (belatedly), section 80AC of the Income Tax Act mandates that for claiming deduction under section 80P, the return must be filed within the due date specified under section 139(1). However, the assessee had filed an application under section 119(2)(b) for condonation of delay, which was pending before the CBDT. The Tribunal relied on previous judgments where similar matters were restored to the AO to await the outcome of the condonation petition.
Key Issues
Whether the assessee is eligible for deduction under section 80P when the return of income was filed belatedly, and whether the matter should be restored to the AO to await the decision on the condonation of delay petition.
Sections Cited
139(4), 80P, 143(3), 144B, 80AC, 139(1), 119(2)(b)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “B” BENCH : BANGALORE
Before: SHRI GEORGE GEORGE K & SHRI LAXMI PRASAD SAHU
Per George George K, Vice President:
This appeal at the instance of the assessee is directed against CIT(A)’s order dated 08.11.2023, passed under section 250 of the Income Tax Act, 1961 (hereinafter called ‘the Act’). The relevant Assessment Year is 2020-21.
The grounds raised read as follows: 1. The Impugned assessment order is opposed to facts and law, the assessee disagrees with the additions as per the order of the assessment unit. 2. The assessment unit has erred in not providing reasonable time to respond to SCN despite society requesting for adjournment of due date for reply.
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The assessment unit has erred in disallowing an amount of Rs.82,72,480 without considering the fact that the society has moved an application to CBDT for condoning delay in filing of return of income before due date. 4. Disallowed the deduction despite filing the tax audit reports along with audited financial statements well within time and also applying to CBDT for condonation of delay in filing return of Income. The assessment unit erred in not considering the delay in filing of return of income as a mere technical delay since all the other documents were filed within time. 5. The learned Income Tax Officer has erred in disallowing deduction under Section 80P(2)(a) of Rs 31,09,361 being interest earned from Co-operative Banks. 6. The learned assessing officer has erred in considering the amount interest received from Co-operative Banks by the assessee as not in the course of providing credit facilities to its members 7. The learned assessing officer has erred in disallowing deduction in respect of interest income earned from co-operative banks under Section 80P(2)(d) of the Income Tax Act, 1961. 8. Stay of Penalty Proceedings initiated by the assessment unit until the conclusion of the appeal proceedings. 9. The Society craves leave to amend, alter, or delete any of the above grounds of the appeal at any time before the appeal is disposed off.
Brief facts of the case are as follows:
Assessee is a credit co-operative society registered under the Karnataka Co- operative Societies Act, 1959. It is engaged in the business of providing credit facilities to the members. For the Assessment Year 2020-21, the return of income was filed under section 139(4) of the Act on 25.03.2021 declaring ‘Nil’ income after claiming deduction under section 80P of the Act amounting to Rs.82,72,479/-.
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Assessment was completed under section 143(3) r.w.s. 144B of the Act vide order dated 22.09.2022 wherein the claim of deduction under section 80P of the Act was denied. The reason for denying the claim of deduction under section 80P of the Act was that assessee did not file its return of income within the due date specified under section 139(1) of the Act.
Aggrieved by Order of Assessment denying the claim of deduction under section 80P of the Act, assessee preferred appeal before the CIT(A). The CIT(A) confirmed the view taken by the AO in denying the claim of deduction under section 80P of the Act.
Aggrieved by the order of the CIT(A), assessee has filed the present appeal before the Tribunal. The learned AR reiterated that assessee had filed a petition for condoning the delay in filing the return of income and same is pending consideration by the CBDT. Hence, it was submitted that the matter may be restored to the AO so that a decision can be taken subsequent to the outcome of the assessee’s application for condonation of delay in filing the return of income. In this context, the learned AR relied on the order of the Tribunal in the case of Kuruhinasetty Souharda Credit Co-operative Ltd., Vs. ITO in ITA No.909/Bang/2023 (order dated 02.01.2024).
The learned DR supported the orders of the income-tax authorities.
We have heard the rival submissions and perused the material on record. In the instant case, assessee had filed the return of income under section 139(4) of the Act. For claiming deduction under section 80P of the Act, the return of income has to be filed within the due date specified under section 139(1) of the Act. In
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view of the provisions of section 80AC of the Act, (which was introduced w.e.f. 01.04.2018), assessee cannot be allowed deduction under section 80P of the Act. However, assessee has filed application under section 119(2)(b) of the Act for condonation of delay in filing the return of income and the same is pending consideration by the CBDT. In this context, learned AR had relied on the CBDT’s Circular No.13/2023 dated 26.07.2023. On identical facts, the Bangalore Bench of the Tribunal in the case of Kuruhinasetty Souharda Credit Co-operative Ltd., Vs. ITO (supra) had restored the matter to the files of the AO to await the outcome of the decision rendered in the condonation application petition filed by the assessee. The relevant finding of the Bangalore Bench of the Tribunal reads as follows: “7. We have heard the rival submissions and perused the material on record. The due date for filing the return of income for Assessment Year 2018-19 under section 139(1) of the Act was 30.09.2018. In the instant case, assessee had filed the return of income under section 139(4) of the Act on 01.03.2019. Therefore, in view of the provisions of section 80AC of the Act, (which was introduced w.e.f. 01.04.2018), assessee cannot be allowed deduction under section 80P of the Act. However, assessee has filed application under section 119(2)(b) of the Act before the CCIT, Bangalore, for condonation of delay in filing the return of income. In this context, learned AR had relied on the CBDT’s Circular No.13/2023 dated 26.07.2023. The relevant portion of the CBDT’s Circular reads as follows:
“5. The Board hereby further directs that the CCsIT/DGsIT, henceforth, shall admit all pending as well as new applications for condonation of delay in furnishing returns of income claiming deduction u/s 80P of the Act, filed either in the Board or in field formation for the assessment years 2018-19 to 2022-23 and decide such applications on merits in accordance with the law where such person is required to get his accounts audited under respective State Laws. ….. …..
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The CCsIT/DGsIT shall preferably dispose the application within three months from the end of the month in which such application is received from the applicant or transferred by the Board. No order rejecting the application under section 119(2)(b) of the Act shall be passed without providing the applicant an opportunity of being heard.” 8. On identical facts, the Bangalore Bench of the Tribunal by following ITAT order of the Chennai Bench in the case of Papathiyammal Pitchai Educational Trust in ITA No.18/Chy/2023 (order dated 19.10.2023) had restored the matter to AO to take a decision after the outcome of the condonation petition filed by the assessee. The relevant finding of the Bangalore Bench of the Tribunal in the case of Lord Venkateshwara Ladies Educational and Welfare Trust (supra) reads as follows: “8. We have heard the rival submissions and perused the material on record. From 10 and Form 10B have been filed belatedly by the assessee. However, the delay in filing Form 10 and Form 10B has been condoned by the CIT(E). There is a delay in filing the return of income and assessee has filed application for condonation, which is pending consideration. The limited prayer of the learned AR is to remand this matter to the AO and direct him to take a decision in matter after PCCIT(E), Delhi, had disposed off the assessee’s application for condonation of delay in filing the return of income. On identical situation, the Chennai Bench of the Tribunal in the case of ITO (E), Trichy Vs. Ms/. Papathiyammal Pitchai Education Trust (supra), had restored the matter to AO and directed the AO to take a decision after the outcome of the condonation petition filed by the assessee. The relevant finding of the Chennai Bench of the Tribunal reads as follows: “5. We are of the considered opinion that though the assessee has valid registration u/s 12AA, still, it has to comply with the mandatory requirements of law to lay claim on impugned deduction. The law mandates the assessee to file return of income within due date as prescribed u/s 139(1) along with Form No.10B so as to lay claim on this deduction. Certainly, the assessee has defaulted in the same. Now, Ld. AR has submitted evidences of seeking relevant condonation from appropriate authorities. Therefore, considering the same, we set aside the order of Ld. CIT(A) and restore the appeal back to the file of Ld. CIT(A) for fresh adjudication in the light of condonation petitions filed by the assessee. All the issues are kept open.”
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Taking into consideration the prayer of the learned AR and the order of the Chennai Bench of the Tribunal, the matter is restored to the files of the AO. The AO is directed to take a decision in accordance with law after the assessee’s application for condonation of delay in filing the return of income has been disposed off by the relevant authority. It is ordered accordingly.” 9. Taking into consideration the prayer of the learned AR and the order of the Bangalore Bench of the Tribunal in the case of Lord Venkateshwara Ladies Educational and Welfare Trust (supra), the matter is restored to the files of the AO. The AO is directed to take a decision in accordance with law after the assessee’s application for condonation of delay in filing the return of income belatedly has been disposed off by the relevant authority. It is ordered accordingly.” 9. Taking into consideration the prayer of the learned AR and the order of the Bangalore Bench of the Tribunal in the case of Kuruhinasetty Souharda Credit Co- operative Ltd., Vs. ITO (supra), we restore the matter to the files of the AO. The AO is directed to take a decision in accordance with law after the assessee’s application for condonation of delay has been disposed off by the relevant authority. It is ordered accordingly.
In the result, appeal filed by the assessee is allowed for statistical purposes.
Pronounced in the open court on the date mentioned on the caption page. Sd/- Sd/- Sd/- (LAXMI PRASAD SAHU) (GEORGE GEORGE K) Accountant Member Vice President Bangalore. Dated: 06.03.2024. /NS/*
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Copy to: 1. Appellants 2. Respondent 3. DRP 4. CIT 5. CIT(A) 6. DR, ITAT, Bangalore. 7. Guard file By order
Assistant Registrar, ITAT, Bangalore.