2023 (11) TMI 126 - HC - Income Tax

Admissibility of benefit u/s 80P on delay in filing ITR - delay of 61 days in filling ITR - HELD THAT - The embargo on the admissibility of deductions under Chapter VIA, in view of the provisions of Section 80AC, is if the ITRs are not filed before the due date specified under sub-section (1) of Section 139 of the IT Act. The provisions of Section 80AC do not stipulate in express terms that the deductions will be inadmissible if the delay in filing the ITR is condoned. This would be crucial because it remains redoubtable that in the peculiarities of each case, the concerned, in exercise of powers conferred under Section 119(2)(b) of the IT Act could condone the delay in filing ITR beyond the due date contemplated under Section 139(1). This Court must also refer to the Circular dated 26.07.2023 in No. 13/2023 issued by the Central Board of Direct Taxes on condonation of delay in filing ITR and allowing deductions under Section 80P of the IT Act for various assessment years starting from 2018-19. The petitioner had to file ITR on or before 31.10.2018 in terms of Section 139(1) of the IT Act, and because of the provisions of Section 139(1) ITR could have been filed until 31.12.2018. The petitioner has filed the ITR on 31.12.2018. There is no dispute that the elections to the Managing Committee is held on 27.01.2019. This Court must observe that elaborate electoral processes such as finalization of voters list are contemplated under the provisions of the Karnataka Co-operative Societies Act/Rules, and these processes which will have to be commenced within certain timeline will have to be completed on or before the calendar of events of elections are announced. When an application is filed for condonation of delay by a Co-operative Society, as clarified by the above Circular dated 26.07.2023, the concerned will have to examine whether the delay in filing ITR was caused due to circumstances beyond control, and in the circumstances of this case, it must be opined that the delay is for reasons beyond the petitioner s control. In the light of the aforesaid, this Court is of the considered view that the impugned order must be quashed and the delay in filing ITR has to be condoned but observing that the time for commencement of limitation for the purposes of Section 143(2) of the IT Act must be reckoned from the end of 31.12.2023. The petition is allowed, and the third respondent's impugned order is quashed condoning the delay of 61 days in the petitioner filing ITR for the Assessment year 2018-19. Timeline for completion of the assessment will have to be necessarily reckoned from the expiry of three months now provided for viz., 31.03.2024.

Summary

Issues Involved:
The judgment involves the condonation of delay in filing Income Tax Returns (ITR) by a co-operative society under the Karnataka Co-operative Societies Act, 1959, and the subsequent implications on deductions under Section 80P of the Income Tax Act, 1961.

Issue 1: Condonation of Delay in Filing ITR:
The petitioner, a co-operative society, filed an application for condonation of the delay in filing the ITR for the assessment year 2018-19 under Section 119(2)(b) of the IT Act. The Assessing Officer's report highlighted the reasons for the delay, including engagement in election-related activities and the potential undue hardship on society members from rural backgrounds. However, the third respondent rejected the condonation request citing lack of proof of hardship beyond the control of the assessee.

Issue 2: Implications on Deductions Under Section 80P:
The respondents argued that condonation of the delay would enable the petitioner to avail benefits under Section 80P of the IT Act, despite the provisions of Section 80AC(ii) which require timely filing of ITR for deductions. The court noted that the delay between the audit of accounts in August 2018 and the elections in January 2019 was not satisfactorily explained, potentially impacting the admissibility of deductions.

Key Observations and Decision:
The court examined the provisions of Section 80AC and the power of condonation under Section 119(2)(b) of the IT Act. Referring to a Circular allowing condonation of delay for genuine hardship cases, the court emphasized the need to consider reasons beyond the petitioner's control for the delay. Ultimately, the court quashed the impugned order, condoning the 61-day delay in filing the ITR for the assessment year 2018-19. The demand issued based on the delayed filing was also quashed, and the limitation for assessment purposes was set from the end of 31.12.2023.

This summary outlines the legal judgment's focus on the condonation of delay in filing Income Tax Returns by a co-operative society, the implications on deductions under Section 80P of the IT Act, and the court's decision to quash the impugned order while considering factors of genuine hardship and statutory provisions.