Case Law Details
Andevanapally Primary Agricultural Co-op. Credit Society Limited Vs ITO (ITAT Chennai)
Delay in Filing Return Condoned U/s 119(2)(b); ITAT Holds Section 80AC Bar Cannot Survive, Restores U/s 80P Deduction Claim
The Chennai ITAT held that once the competent authority condones the delay in filing a return under section 119(2)(b), the disqualification contained in section 80AC for belated returns ceases to operate, and the claim for deduction under section 80P must be considered on merits.
The assessee, a Primary Agricultural Co-operative Credit Society, filed its return for AY 2018-19 on 08.11.2022 in response to a notice issued under section 148, declaring nil income after claiming deduction of ₹5.89 lakh under section 80P. The AO denied the deduction solely on the ground that the return was not filed within the due date prescribed under section 139(1), thereby attracting section 80AC.
Before the appellate authorities, the society explained that its statutory audit was required to be conducted by auditors appointed by the Government of Tamil Nadu and that the delay arose due to audit-related issues. It was further pointed out that an application seeking condonation of delay under section 119(2)(b) had been filed and was subsequently allowed by the Chief Commissioner of Income Tax, Coimbatore, on 31.12.2025.
The Tribunal noted that the AO and the CIT(A) had denied the deduction before the condonation order was passed. However, once the delay in filing the return stood condoned by the competent authority, the embargo under section 80AC no longer survived. Consequently, the assessee became entitled to have its claim under section 80P examined in accordance with law. The matter was therefore restored to the Jurisdictional Assessing Officer with a direction to consider and allow the deduction claimed under section 80P after due verification.
FULL TEXT OF THE ORDER OF ITAT CHENNAI
The present appeal is filed by the assessee against the order of the learned Commissioner of Income Tax (Appeals), NFAC, Delhi (hereinafter referred to as “ld.CIT(A)”), dated 29.09.2025 passed by dismissing the appeal filed by the assessee against the intimation order dated 18.01.2023 passed u/s.143(3) r.w.s 147 of the Income Tax Act, 1961 (hereinafter referred to as the “Act”), pertaining to Assessment Year (A.Y.) 2018-19.
2. 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. 2018-19.
3. Brief facts of the case emanating from the records are that the assessee is a Primary Agricultural Co-operative Credit society and did not file its return of income for the A.Y 2018-19. Based on the information available with the department, the AO found that the assessee has made cash deposits to the tune of Rs.68,46,680/- and cash withdrawals of Rs.22,83,803/- in Dharmapuri DCC Bank Limited. The case was re-opened u/s.147 of the Act, accordingly, a notice u/s.148 of the Act dated 31.03.2022 was issued to the assessee. In response, the assessee filed its return of income on 08.11.2022 admitting an income of Rs. NIL after claiming deduction of Rs.5,88,859/- u/s.80P of the Act. Further, the AO issued statutory notices to the assessee and by calling for details. In response, the assessee filed a reply along with its supporting documents for verification. On perusal of the documents submitted by the assessee, the AO completed the assessment by passing an order u/s.143(3) r.w.s 147 of the Act dated 18.01.2023 by disallowing of deduction of Rs.5,88,859/- claimed u/s.80P of the Act on the ground that the return was filed after the due date as specified u/s.139(1) of the Act.
4. Aggrieved by the order of the AO, the assessee filed an appeal before the ld.CIT(A) vide Form 35 dated 26.04.2023. During the proceedings before the ld.CIT(A), the assessee submitted that it is a Primary Agricultural Co-operative Credit Society and eligible to claim the benefits of its income, a deduction u/s.80P of the Act. As a co-operative society it has to get its accounts audited by the auditors appointed by the Government of Tamil Nadu. Further, the assessee submitted that the audit of the society was completed and audit report was received on 28.12.2018 and the assessee didn’t file its return of income on a Bonafide belief that there was no taxable income. Later, based on the notice received from department filed its return of income along with the audit report on 08.11.2022 claiming deduction u/s.80P(2)(a) amounting to Rs.5,88,860/-. Further, the assessee filed an application u/s.119(2)(b) of the Act before the ld.CCIT, Coimbatore to condone the delay in filing the return of income and allow the deduction u/s.80P of the Act, which is allowed and delay is condoned by the ld.CCIT, Coimbatore by passing an order u/s.119(2)(b) of the Act dated 31.12.2025.
5. 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 31.10.2018. But the assessee has filed the return after the due date i.e., on 08.11.2022. 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 AO with respect to the deduction u/s.80P is correct. Further, the ld.CIT(A) stated that the application for condonation of delay in filing of return of income is a separate proceeding and based on the subsequent decision on such application, necessary action would be taken by the JAO. Thereafter, the ld.CIT(A) rejected the appeal of the assessee by way of an order dated 29.09.2025.
6. Aggrieved by the order of the ld.CIT(A), the assessee has preferred the present appeal before us.
7. The ld.AR for the assessee submitted that the assessee had filed an application under section 119(2)(b) of the Act dated 10.10.2024 before the ld.PCIT to condone the delay in filing the return of income and allow the deduction u/s.80P of the Act, stating that the return of income has been belatedly due to delay in completing the audit by the Department of Co-operative Audit, Government of Tamilnadu. The ld.AR submitted that the delay has been condoned by the ld.CCIT, Coimbatore vide his order u/s.119(2)(b) of the Act dated 31.12.2025 for the A.Y.2018-19. Therefore, the ld.AR prayed for allowing the deduction u/s.80P of the Act as claimed in the return of income.
8. Per contra, the ld.DR fairly agreed for remitting the matter back to Assessing Officer for considering the condonation order of the ld.CCIT to allow the deduction u/s.80P of the Act.
9. We have heard the rival submissions and carefully perused the materials available on record. It is an admitted fact that the assessee filed its return of income for the impugned Assessment Year 2018-19 on 08.11.2022, beyond the due date prescribed u/s.139(1) of the Act, while claiming deduction u/s.80P of the Act and declaring ‘Nil’ income. It is observed that the AO disallowed the claim of deduction u/s.80P of the Act on the ground that the return of income had been filed belatedly, thereby attracting the provisions of section 80AC of the Act. Aggrieved by the said disallowance, the assessee carried the matter in appeal before the ld.CIT(A), who dismissed the appeal on the reasons stated in the impugned order. Against such findings, the assessee is now in further appeal before this Tribunal.
10. During the course of hearing, the ld.AR placed on record a copy of the order passed u/s.119(2)(b) of the Act by the ld.CCIT, Coimbatore, dated 31.12.2025, whereby the delay in filing the return of income for the Assessment Year 2018-19 has been condoned. Once the delay in filing the return of income stands condoned by the competent authority u/s.119(2)(b) of the Act, the embargo contemplated u/s.80AC of the Act would no longer survive. Consequently, the assessee becomes entitled to have its claim of deduction u/s.80P of the Act examined on merits. Accordingly, we deem it appropriate to restore the issue to the file of the Jurisdictional Assessing Officer (JAO) with a direction to consider and allow the deduction claimed u/s.80P of the Act in the return of income filed on 08.11.2022, in accordance with law and subject to due verification.
11. In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open court on 25th May, 2026 at Chennai.
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