A 1757 Kamatchipuram Primary Agricultural Co-operative Credit Society Ltd. Vs Chief Commissioner of Income Tax (Madras High Court)
Summary: The Madras High Court held that the substantive benefit of deduction under section 80P cannot be denied merely because a Primary Co-operative Society filed its return of income belatedly, particularly where the case falls for consideration under the CBDT’s special condonation framework for co-operative societies. The Court quashed the Chief Commissioner’s order dated 08.08.2024, subject to the petitioner depositing Rs.5,000 with the Madurai Bar Association.
A 1757 Kamatchipuram Primary Agricultural Co-operative Credit Society Ltd., a society governed by the Tamil Nadu Co-operative Societies Act, 1983, filed its return for AY 2020-21 on 26.12.2023. The statutory timeline under section 139 had expired on 15.02.2021. The Court noted the extraordinary circumstances arising from the COVID-19 pandemic and the statutory relaxation measures introduced through the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) legislation.
The Court also referred to the Supreme Court’s decisions in Union of India v. Ashish Agarwal and Union of India v. Rajiv Bansal, besides the limitation-extension orders passed in Suo Motu W.P.(C) No.3 of 2020. It noted that the extensions granted by the Supreme Court ultimately operated up to 28.02.2022, whereas the petitioner’s return was filed only on 26.12.2023. Thus, the return was admittedly delayed.
The material consideration was CBDT Circular No.13/2023 dated 26.07.2023, issued in exercise of powers under section 119. The Circular authorised Chief Commissioners/Directors General of Income Tax to consider condonation applications concerning belated returns claiming section 80P deduction for AYs 2018-19 to 2022-23. The prescribed examination includes whether delay resulted from circumstances beyond the assessee’s control, whether delay was connected with completion of statutory audit under State law, and whether any tax avoidance or evasion issue existed.
The High Court observed that, because of section 80AC, a belated return would ordinarily result in loss of the section 80P deduction. However, the Court recorded its consistent view that substantive deductions under the Income-tax Act should not be denied merely on account of delay in filing the return, particularly in cases involving Primary Co-operative Societies, though suitable terms may be imposed as a deterrent against future defaults.
Accordingly, the impugned order was quashed subject to payment of Rs.5,000. Upon compliance, the concerned Assessing Officer was directed to extend the benefit of section 80P by revising the assessment already made under section 143(1) or section 143(3), as applicable, and accepting the belated return filed under section 139(1). The writ petition was disposed of without costs, and the matter was directed to be posted on 25.09.2026 for reporting compliance. Pasted text
Cases Discussed
- Union of India v. Rajiv Bansal, Civil Appeal No. 8629 of 2024, decided on 03.10.2024 (Supreme Court) — Referred to while discussing the statutory relaxation regime introduced during COVID-19 and the operation of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) legislation.
- Union of India v. Ashish Agarwal, Civil Appeal No. 3005 of 2022, decided on 04.05.2022 (Supreme Court) — Referred to in the context of the COVID-era statutory relaxation framework.
- In Re: Cognizance for Extension of Limitation, Suo Motu W.P.(C) No.3 of 2020 (Supreme Court) — The Court referred to the Supreme Court’s orders dated 23.03.2020, 08.03.2021, 27.04.2021 and 23.09.2021 extending limitation during the COVID-19 pandemic.
FULL TEXT OF THE ORDER OF MADRAS HIGH COURT
Mr.J.Parekh Kumar, learned Senior Standing Counsel, takes notice for the respondent.
2. This Writ Petition is taken up for final hearing at the time of admission with the consent of the learned counsel for the petitioner and learned Senior Standing Counsel for the respondent.
3. The petitioner is a Primary Co-operative Society under the provisions of the Tamil Nadu Co-operative Societies Act, 1983. The petitioner had filed the Return of income for the Assessment Year 2020-21 (Financial Year 2019-20) on 26.12.2023, after the timeline specified for filing the Return under Section 139 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’), had expired on 15.02.2021.
4. However, when the time specified for filing the Return had expired on 15.02.2021, the country was still under the spell of the COVID-19 pandemic (from March 2020) and was bracing for the second onslaught of the second wave of COVID-19 in May 2021.
5. In this connection, earlier, the Government had issued a Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Ordinance, 2020, which was later enacted as the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020, the contents of which have also been taken note of by the Hon’ble Supreme Court in the case of Union of India v. Ashish Agarwal, in Civil Appeal No.3005 of 2022 dated 04.05.2022 and has clarified in Union of India v. Rajiv Bansal in Civil Appeal No.8629 of 2024 dated 03.10.2024.
6. Meanwhile, taking note of the piquant situation, the Hon’ble Supreme Court in Suo Motu W.P.(C) No.3 of 2020 had independently issued orders on 23.03.2020, 08.03.2021, 27.04.2021 and 23.09.2021.
7. As per the extensions granted by the Hon’ble Supreme Court, the last date for extension is upto 28.02.2022. Despite the same, the petitioner filed the Return of Income only on 26.12.2023 and thus, there was a delay.
8. It is noticed that an Audit Report was also prepared long before the outbreak of COVID 19 and long before the extension granted by the Government under Section 139 of the Act.
9. In this context, the Central Board of Direct Taxes has also issued a Circular in Circular No.13/2013 dated 26.07.2023 in File No.173/21/2023-ITA-I, wherein taking note of the amendment to Section 80P of the Act, it is inserted by Section 80AC of the Act with effect from 01.04.2018. The Board has clarified the said Circular as under:
“6. In the context of para·5 above, the CCslT/DGsIT while deciding such applications for condonation of delay in furnishing return of income, shall satisfy themselves that the applicant’s case is a fit case for condonation under the existing provisions of the Act. The CCsIT/DGsIT shall examine the following while deciding such applications –
(i) the delay in furnishing the return of income within the due date under sub·section (I) of section 139 of the Act was caused due to circumstances beyond the control of the assessee with appropriate documentary evidence/s;
(ii) where delay in furnishing return of income was caused due to delay in getting the accounts audited by statutory auditors appointed under the respective State Law under which such person is required to get his accounts audited, the date of completion of audit vis·a·vis the due date of furnishing the return of income under sub·section (I) of section 139 of the Act; and
(iii) any other issue indicating towards tax avoidance or tax evasion specific to the case, which comes into the light in the course of verification and having bearing eitHer in the relevant assessment year or establishing connection of relevant assessment year with other assessment year/s.”
10. The reasons for giving the above clarifications have been spelt out in paragraph Nos.2, 3 and 4, which also stand extracted below:
“3. Applications have been received in the Central Board of Direct Taxes (hereafter referred to as ‘the Board’) from co-operative societies claiming deduction u/s 80P of the Act for various assessment years from A Y 2018-19 to A Y 2022-23, regarding condonation of delay in furn ishing return of income and to treat such returns as ‘returns furnished within the due date under sub- section (I) of section 139 of the Act stating that delay in furnishing return of income was caused due to delay in getting the accounts audited under respective State Laws.
4. In order to mitigate genuine hardship in cases referred to in para 3, the Board, in exercise orthe powers conferred under section 119 of the Act, hereby directs that the Chief Commissioners of Income· tax (CCsIT) / Directors General of lncome·tax (DGsIT) are authorised to deal with such applications of condonation of delay pending before the Board, upon transfer of such applications by the Board, and decide such applications on merits, in accordance with the law.
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.”
11. Thus, there has been a delegation to the Chief Commissioners of Income Tax for disposing of the applications filed for condonation of delay in filing of Return of Income under Section 139(1) of the Act in terms of Section 119(2)(b) of the Act, for the Assessment Years 2018-19 to 2022-23.
12. There is no doubt that the petitioner has filed the Return of Income belatedly and therefore, in terms of the above Circular, the petitioner will be losing the benefit of deduction under Section 80P read with Section 80AC of the Act in view of the insertion with effect from 01.04.2018.
13. This Court has, however, taken a consistent view that the substantive benefit of deductions under the Act cannot be denied, merely because there is a delay in filing the Return of Income, particularly in the case of Primary Co-operative Societies, like the petitioner, however, on terms, so that there is a deterrent on the officers to not to commit such breaches in future.
14. Considering the same, I am inclined to quash the impugned order, subject to the petitioner depositing a sum of Rs.5,000/- (Rupees Five Thousand only) to the credit of the Madurai Bar Association of Madurai Bench of Madras High Court (A/c.No.729895277, IFSC Code: IDIB000H040, Indian Bank, High Court Branch, Madurai).
15. Subject to the compliance of the above stipulations, the impugned order shall stand quashed, with consequential directions to the concerned Assessing Officer to extend the benefit of Section 80P by revising the assessment already made earlier either under Section 143(1) or under Section 143(3), as the case may be, by accepting the Return of Income filed belatedly under Section 139(1) of the Act.
16. This Writ Petition is disposed of, with the above observations. No costs. Consequently, connected miscellaneous petitions are closed.
17. Post the case on 25.09.2026, for reporting compliance.
