M/S. ITC EMPLOYEES HOUSING CO-OPERATIVE SOCIETY LIMITED,BENGALURU vs. INCOME TAX OFFICER WARD-1(2)(4), BENGALURU

This appeal at the instance of the assessee is directed against CIT(A)’s order dated 09.01.2023, passed under section 250 of the Income Tax Act, 1961 (hereinafter called ‘the Act’). The relevant Assessment Year is 2018-19.

There is a delay of 273 days in filing this appeal. Assessee has filed a petition for condonation of delay accompanied by affidavit of secretary of assessee society stating therein the reasons for late filing of this appeal. We have perused the reasons stated in the affidavit for belated filing of this appeal and we are of the view that there is reasonable cause and no latches can be attributed to the assessee for belated filing of this appeal. Hence, we condone the delay of 273 days in filing this appeal and proceed to dispose off the same on merits.

The solitary issue that is raised is whether CIT(A) is justified in confirming the disallowance made by the AO of claim of deduction under section 80P of the Act, amounting to Rs.57,85,021/-.

Brief facts of the case are as follows:

Aggrieved by the Order of Assessment, assessee filed appeal before the First Appellate Authority (FAA). Before the FAA, it was submitted that there is no delay in filing the return of income. It was stated that assessee was liable to get its books of accounts audited under the Karnataka Co-operative Societies Act, 1959 [section 63(16)]. Hence, the due date for filing the return of income in the case of the assessee was 31.10.2019 and assessee had filed the return well within the said time i.e., on 29.09.2018. The CIT(A), however, rejected the appeal of the assessee. The CIT(A) observed that in the return of income, assessee had stated that it is not liable to get its books of accounts audited. Further, the CIT(A) observed that assessee has not furnished any proof that its books of accounts are audited under the Karnataka Co-operative Societies Act, 1959.

Aggrieved by the Order of CIT(A), assessee has filed the present appeal before the Tribunal. Assessee has filed a Paper Book comprising of 136 pages enclosing therein copy of the balance sheet along with copy of audit report in vernacular, free English translation of the audit report under the Karnataka Co- operative Societies Act, 1959 for the relevant Assessment Year, copy of the notice issued during the course of appellate proceedings, reply submitted by the assessee, etc. The learned AR reiterated the submissions made before the CIT(A). The learned AR has also taken us through the audit report of the assessee, which was in compliance under the Karnataka Co-operative Societies Act, 1959.

The learned DR supported the order of the CIT(A).

We have heard the rival submissions and perused the material on record. Assessee had made claim of deduction under section 80P(2)(d) of the Act, amounting to Rs.65,81,021/-. The claim of deduction under section 80P(2)(d) of the Act, was denied for the reason that return of income was filed beyond the due date specified under section 139(1) of the Act. It is a case of the assessee that its books of accounts were audited as per section 63(16) of the Karnataka Co- operative Societies Act, 1959. Hence, the due date for filing the return of income in the case of the assessee was on or before 31.10.2018 (extended due date) as per explanation 2(a)(ii) to section 139(1) of the Act. Assessee has also made a claim of deduction under section 80P(2)(a)(i) of the Act, before the CIT(A). The CIT(A), however, rejected the claim of the assessee for the reason that assessee had not furnished the audit report, hence, assessee would not be entitled to the extended time for furnishing the return of income i.e., on or before 31.10.2018.

Assessee fairly admits that while filing the return of income by mistake assessee had stated that it is a non-audit case. Consequently, the CPC processed the return by intimation under section 143(1) of the Act by disallowing the claim of deduction due to the amended provision of section 80AC of the Act. Before us, assessee had produced the audited books of accounts under the Karnataka Co- operative Societies Act, 1959, for the relevant Assessment Year. Assessee submits that a copy of the same was uploaded before the FAA (NFAC). However, the same was not taken note of by the CIT(A) and a decision was taken against the assessee. In the interest of justice and equity, we are of the view that the matter needs to be examined afresh by the AO. Accordingly, the matter is restored to the files of the AO. The AO is directed to examine whether assessee had got its books of accounts audited as per Karnataka Co-operative Societies Act, 1959, and if so, whether assessee would be entitled to extended time limit for filing the return i.e., within 31.10.2018 as per explanation 2(a)(ii) under section 139(1) of the Act. If it is found that return of income is filed within due date specified under section 139(1) of the Act, the claim of deduction under section 80P of the Act is to be decided on merits. It is ordered accordingly.

In the result, appeal filed by the assessee is allowed for statistical purposes.