Z.253 Annappanpettai Primary Agricultural Co-operative Credit Society Ltd. Vs Chief Commissioner of Income Tax (Madras High Court)
Summary: Madras High Court considered a writ petition filed by Z.253 Annappanpettai Primary Agricultural Co-operative Credit Society Ltd., a Primary Co-operative Society governed by the Tamil Nadu Co-operative Societies Act, 1983, challenging rejection of its request for condonation of delay in filing its return of income for Assessment Year 2020-21. The return was filed on 26.04.2024, whereas the prescribed timeline under Section 139 of the Income Tax Act, 1961 had expired on 15.02.2021. The Court noted that at the time the return-filing period expired, the country was under the impact of the COVID-19 pandemic and was subsequently confronted with the second wave.
The Court referred to the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Ordinance, 2020, subsequently enacted as the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020. It also referred to Union of India v. Ashish Agarwal, Civil Appeal No. 3005 of 2022 dated 04.05.2022 and Union of India v. Rajiv Bansal, Civil Appeal No. 8629 of 2024 dated 03.10.2024. The Court further noticed the extensions granted by the Supreme Court in Suo Motu W.P.(C) No. 3 of 2020, under which the last date of extension was up to 28.02.2022. Nevertheless, the petitioner had filed its return only on 26.04.2024 and there was therefore a delay.
The Court examined CBDT Circular No. 13/2023 dated 26.07.2023 dealing with condonation of delay under Section 119(2)(b) in filing returns claiming deduction under Section 80P for Assessment Years 2018-19 to 2022-23. The Circular authorises Chief Commissioners of Income Tax and Directors General of Income Tax to deal with applications for condonation of delay and decide them on merits. It requires consideration, inter alia, of whether the delay was caused by circumstances beyond the assessee’s control, whether it arose from delay in statutory audit under the applicable State law, and whether any issue indicating tax avoidance or evasion emerges during verification.
The High Court observed that there had thus been a delegation to Chief Commissioners of Income Tax to dispose of applications seeking condonation of delay in filing returns under Section 139(1), in terms of Section 119(2)(b), for Assessment Years 2018-19 to 2022-23. The petitioner had admittedly filed its return belatedly and, because of Section 80AC, the delay would ordinarily result in loss of the deduction available under Section 80P.
However, the Court recorded that it had consistently taken the view that a substantive deduction under the Income Tax Act cannot be denied merely because of delay in filing the return of income, particularly in cases involving Primary Co-operative Societies such as the petitioner. At the same time, appropriate terms could be imposed as a deterrent against officers committing such breaches in future.
Accordingly, the High Court quashed the impugned order subject to the petitioner depositing ₹5,000 to the credit of the Madurai Bar Association of the Madurai Bench of Madras High Court. 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 the case may be, and by accepting the return of income filed belatedly under Section 139(1). The writ petition was disposed of without costs and the connected miscellaneous petitions were closed. The matter was directed to be posted on 25.09.2026 for reporting compliance.
Cases Discussed
- Union of India v. Ashish Agarwal, Civil Appeal No. 3005 of 2022, decided on 04.05.2022 (Supreme Court) — referred to while noticing the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020.
- Union of India v. Rajiv Bansal, Civil Appeal No. 8629 of 2024, decided on 03.10.2024 (Supreme Court) — referred to as clarifying the position concerning the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020.
- In Re: Cognizance for Extension of Limitation, Suo Motu W.P.(C) No. 3 of 2020 (Supreme Court) — orders dated 23.03.2020, 08.03.2021, 27.04.2021 and 23.09.2021 were noticed while considering the extensions granted during the COVID-19 period.
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 on 26.04.2024, 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 26.04.2024 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;https://taxguru.in/wp-content/uploads/2026/10/z-253-annappanpettai-primary-agricultural-co-operative-credit-society-ltd-vs.pdf
(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. 3, 4 and 5, 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 furnishing 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 or the powers conferred under section 119 of the Act, hereby directs that the Chief Commissioners of Income· tax (CCsIT) / Directors General of Income 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.
