Jijamata Mahila Gramin Bigar Sheti Sahakari Pat Sanstha Vs ITO (ITAT Nagpur)
Section 80P Deduction Denied for Late Return Restored for Reconsideration After Section 119(2)(b) Decision
Background of the Case
The assessee was a credit co-operative society registered under the Maharashtra Co-operative Societies Act, engaged in providing credit facilities to its members.
The Income-tax Department received information through the NMS module of the Insight Portal indicating substantial financial transactions during Financial Year 2019-20. However, the society had not filed its return of income for Assessment Year 2020-21.
The Assessing Officer initiated reassessment proceedings and issued a notice under Section 148 after following the prescribed process.
In response, the society filed its return on 11 June 2024, declaring nil total income after claiming deduction of ₹5,68,785 under Section 80P(2)(a)(i).
The principal dispute was whether the deduction could be allowed when the return had not been furnished within the due date under Section 139(1).
Assessing Officer Invokes Section 80AC
During reassessment, the Assessing Officer called for explanations concerning cash deposits and time deposits in the society’s bank accounts. The assessee furnished clarifications and other details.
The Assessing Officer nevertheless found that the society had not filed its return within the time prescribed under Section 139(1).
He therefore invoked Section 80AC and denied the deduction of ₹5,68,785 claimed under Section 80P(2)(a)(i).
A separate disallowance of ₹4,60,527 under Section 40(a)(ia) was also made concerning interest paid on fixed deposits without deduction of tax at source.
The assessment was completed on 18 March 2025 under Section 147 read with Section 144B, determining total income at ₹10,29,312.
CIT(A) Sustains Denial of Section 80P Deduction
The society challenged the assessment before the CIT(A)/NFAC and furnished submissions during the appellate proceedings.
The CIT(A) granted relief on other grounds but confirmed the denial of deduction under Section 80P(2)(a)(i).
The society consequently approached the Tribunal on the surviving deduction issue.
There was a five-day delay in filing the Tribunal appeal. After examining the explanation supported by an affidavit, and noting that the Departmental Representative had no specific objection, the Tribunal condoned that delay and admitted the appeal.
This condonation concerned the Tribunal appeal alone and was separate from the delayed filing of the return of income.
Society Explains Its Bona Fide Belief
Before the Tribunal, the authorised representative submitted that the society had insufficient staff and had proceeded under a bona fide belief that its income was exempt from tax.
It was contended that the failure to file the return within the statutory due date was neither deliberate nor wilful.
The representative also stated that the society regularly filed returns, but had omitted to file the return for the year under consideration because of its understanding concerning the tax treatment of its income.
The society relied on these circumstances to explain the default and requested an opportunity to pursue its deduction claim.
The Departmental Representative supported the CIT(A)’s order.
Section 119(2)(b) Application Remained Pending
A material circumstance was that the society had already filed an application under Section 119(2)(b) before the PCIT, Nagpur, on 21 April 2025, seeking condonation of the delay.
That application remained pending when the appeal was heard.
The assessee placed this fact before the Tribunal and supported its submissions through a paper book.
When the Tribunal queried the Departmental Representative about the delay in disposal of the application, the representative stated that a status report would be obtained.
The pending condonation proceedings therefore became central to the Tribunal’s approach to the disputed deduction.
Tribunal Directs Fresh Examination After Condonation Outcome
Considering the facts, submissions and principles of natural justice, the Tribunal held that the society should receive a further opportunity to substantiate its case.
It set aside the CIT(A)’s order on the disputed Section 80P issue and restored the matter to the Assessing Officer.
The Assessing Officer was directed to adjudicate afresh after considering the outcome of the application under Section 119(2)(b).
The Tribunal also directed that an adequate opportunity of hearing be provided. The society was correspondingly required to cooperate by furnishing the necessary information and supporting evidence.
The appeal was allowed for statistical purposes.
Scope of the Relief
The Tribunal did not itself condone the delay in filing the return or directly allow the Section 80P deduction. It linked fresh consideration of the claim to the decision on the pending condonation application.
It also did not hold that a society’s belief that its income was exempt automatically displaced the filing requirement relied upon by the Assessing Officer.
The relief was confined to reopening the deduction issue for examination in light of the condonation outcome.
Author’s Comments
The decision highlights the distinction between eligibility for deduction based on the society’s activities and compliance with the return-filing condition under Section 80AC.
The society’s explanation was relevant to its condonation request, but the Tribunal left that request to the authority before whom it was pending. The Assessing Officer must now consider its outcome before deciding the deduction claim afresh.
FULL TEXT OF THE JUDGMENT/ORDER OF ITAT NAGPUR
The appeal is filed by the assessee against the order of CIT(A)/NFAC Delhi sustaining the denial of claim of deduction u/sec. 80P(2)(a)(i) of the Act made by the assessing officer.
2. At the time of hearing, the Ld.AR submitted that there is a delay of 5 days in filing the appeal before Hon’ble Tribunal and the assessee has filed the affidavit of the assessee for condonation of delay. On consideration of facts and information mentioned in the affidavit, there is a reasonable cause explained and the Ld. DR. has no specific objections. Accordingly, the delay is condoned and the appeal is admitted. https://taxguru.in/
3. The Brief facts of the case are that, the assessee is a credit cooperative society registered under the Maharashtra Co-operative Societies Act, 1961 and is engaged in providing credit facilities to its members. The Income Tax Department based on the specific information as per Risk Management strategy formulated by the CBDT in NMS module of Insight portal find that the assessee has made substantial financial transactions in the F.Y.2019-20 and the assessee has not filed the return of income for the A.Y. 2020-21. The Assessing Officer (A.O) has reason to believe that the income has escaped assessment and after following the due process of law has issued notice u/sec148 of the Act and in compliance, the Assessee has filed the return of income on 11.06.2024 disclosing a total income of Rs.NIL after claiming deduction u/sec. 80P(2)(a)(i) of Rs. 5,68,785/-.Subsequently the assessee in response to the notices issued by the A.O, has filed details on various dates. Whereas the A.O find that the assessee has made cash deposits/ time deposits in the bank in the F.Y.2019-20 and explanations were called to substantiate the sources of cash /time deposits and the assessee has furnished the clarifications.
4. Further the A.O find that for the A.Y.2020-21, the assessee has not filed the return of income u/sec 139(1) of the Act and the conditions stipulated under section 80AC of the Act are not complied by the assessee and the A.O has denied the claim of deduction u/sec80P2(a)(i)of the Act of 5,68,785/- and similarly disallowed interest paid on fixed deposits without deduction of TDS by invoking the provisions u/sec40a(ia) of the Act of Rs.4,60,527/- and assessed https://taxguru.in/ the total income of Rs.10,29,312/- and passed the order u/sec147 r.w.s144B of the Act dated 18.03.2025.
5. Aggrieved by the order, the assessee has filed an appeal before the CIT(A), whereas the CIT(A) has considered the grounds of appeal, statement of facts and findings of the AO and has issued notices of hearing and the assessee has filed the details and submissions. But the CIT(A) has confirmed the action of the A.O in denial of claim of deduction u/sec80P2(a)(i) of the Act and granted relief in other grounds of appeal and partly allowed the appeal. Aggrieved by the order of the CIT(A) on the disputed issue, the assessee has filed an appeal before the Hon’ble Tribunal.
6. At the time of hearing, the Ld.AR has restricted his submissions that, the CIT(A) has erred in confirming the action of the Assessing officer in denial of claim of deduction under section 80P2(a)(i) of the Act by invoking the provisions of section80AC of the Act overlooking the information of the assessment proceedings. Further the assessee is a credit cooperative society and does not have sufficient staff and under bonfide presumption that income is exempt from tax and also the delay in filing the return of income before due date u/sec139(1) of the Act was not a wanton or deliberate act and the assessee has filed an application for condonation of delay before the PCIT, Nagpur vide letter dated 21.04.2025 and the same is pending. The Ld.AR supported the submissions with the factual paper https://taxguru.in/ book and judicial decisions. Per Contra, the Ld.DR supported the order of the CIT(A).
7. Heard the rival submissions and perused the material on record. The sole crux of the dispute envisaged by the Ld.AR that the Ld.CIT(A) has erred in sustaining the denial of claim of deduction u/sec. 80P(2)(a)(i) of the Act as the assessee has not filed the return of income within the due date as specified in section 139(1) of the Act. The Ld.AR has contended that the assessee is entitled for deduction and the assessee is regularly filing the returns of income and for the year under consideration, the assessee could not file the return of income on the presumption and bonfide belief that the income earned is exempt. The Ld.AR submitted that the assessee has filed application u/sec119(2)(b) for condonation of delay before the PCIT, Nagpur on 21.04.2025 and the same is pending for disposal. When a query was put to the CIT-DR, regarding delay in disposal of application, the Ld.DR submitted that he shall obtain the status report. Hence, considering the facts, circumstances, submissions and principles of natural justice, shall provide with one more opportunity of hearing to the assessee to substantiate the case with evidences and information. Accordingly, set aside the order of the CIT(A) on the disputed issue and restore the issues to the file of the Assessing Officer to adjudicate afresh considering the outcome of the condonation application u/sec119(2)(b) of the Act and the assessee should be provided adequate opportunity of hearing and shall cooperate in submitting the https://taxguru.in/ information . And the grounds of appeal of the assessee are allowed for statistical purposes.
8. In the result, the appeal filed by the assessee is allowed for statistical purposes
