13-Year Delay Condoned – Genuine 80P Claim Can’t Be Buried Under Technicalities” – Mumbai ITAT Gives Fresh Chance to Housing Society

Bakhtawar Co-Operative Housing Society Ltd. Vs ITO (ITAT Mumbai)

13-Year Delay Condoned – Genuine 80P Claim Can’t Be Buried Under Technicalities” – Mumbai ITAT Gives Fresh Chance to Housing Society

In a relief-oriented ruling, the Mumbai ITAT condoned an extraordinary 13-year delay in filing appeal by a co-operative housing society and held that a legitimate claim for deduction u/s 80P(2)(d) deserves proper adjudication rather than rejection on technical grounds alone.

The dispute arose after CPC, Bengaluru while processing the return u/s 143(1), denied deduction of about ₹13.77 lakh u/s 80P(2)(d) claimed by Bakhtawar Co-operative Housing Society Ltd.. The society’s appeal before the CIT(A) was dismissed solely on limitation grounds since it was filed after more than 13 years.

Before the Tribunal, the society explained that the delay occurred due to multiple practical difficulties — reliance on a part-time accountant, belief that rectification would be carried out by the AO, incorrect professional advice against filing appeal, change in managing committees every three years, and disruptions caused during the Covid period.

The ITAT found merit in the explanation and observed that there was nothing to suggest any mala fide intention or deliberate negligence on part of the society. The Bench accepted that the delay had occurred due to circumstances genuinely beyond the control of the assessee.

Importantly, the Tribunal also noted that the assessee appeared otherwise entitled to deduction u/s 80P(2)(d), and denial of such claim merely through adjustment u/s 143(1) required proper examination.

Relying on several co-operative housing society decisions and following its earlier ruling in Torino Co-operative Housing Society Ltd., the ITAT condoned the delay and restored the matter back to the AO for fresh adjudication after factual verification.

The Tribunal emphasized that the assessee should be granted reasonable opportunity in the set-aside proceedings and directed the society to proactively cooperate during fresh adjudication.

Accordingly, the appeal was allowed for statistical purposes with directions for fresh examination of the 80P deduction claim.

FULL TEXT OF THE ORDER OF ITAT MUMBAI

This appeal is preferred by the assessee, directed against the order of Commissioner of Income Tax Appeal, ADDL/JCIT (A), Thiruvanantpuram [in short, “the Ld. CIT(A)”] dated 10.02.2026 for the assessment year 2012-13, which in turn arises from assessment order u/s 143(1) of the Income Tax Act, 1961 (“the Act”) dated 27.02.2013, passed by CPC, Bengaluru (in short, “the Ld. AO”). The grounds of appeal raised by the assessee are as under:

1. On the facts and the circumstances of the case and in law, the learning AddI/JCIT (A) erred in dismissing the appeal on account of delay in filing of an appeal without condoning the delay though the appellant had reasonable cause for delay in filing of an appeal.

2. On the facts and the circumstances of the case and in law, the learning Addl/JCIT (A) erred in dismissing the appeal in limine without considering the merits of the case.

3. On the facts and the circumstances of the case and in law, the learning Addl/JCIT (A) erred in not considering the following Grounds of Appeal:

a) On the fact and circumstances of the case and in law C.P.C. Bangalore erred in disallowing deduction u/s 80P amounting to Rs. 13,77,502/- of the Income Tax Act 1961, CPC is also erred in considering due date of filing is 31/08/2012, however as accounts of all co-operative societies are subject to statutory audit provisions under respective governing laws, therefore due date for filing return of income under the Income-tax Act, 1961 is September 30 of every year.

b) On the fact and circumstances CPC erred in not allowing deduction u/s 80P amounting to Rs. 13,77,502/- of the Income Tax Act 1961.c

c) The CPC has erred in making addition of Rs.13,77,502/- by disallowing the claim of Provision of Sec 80P(2)(d). The CPC has assessed income of Rs.14,80,720/- as against the returned Income of Rs.1,03,210/-.

4. The appellant craves leave to add, amend, modify, substitute and/or cancel any of the ground of the appeal.”

2. The sole issue in the present appeal arises on account of denial of deduction under section 80P amounting to Rs. 13,77,502/- by the CPC vide intimation under section 143(1) of the Act dated 27.02.2013. The issue has been raised before the Ld. CIT(A) Appeals, who had dismissed the appeal of assessee treating the same barred by limitation being delayed by more than thirteen years in filing of the appeal. The assessee, being aggrieved with the decision of the Ld. CIT(A) Appeals, filed the present appeal before us.

3. Since the appeal of assessee was delayed before the Ld. CIT(A) Appeals, an affidavit for condonation of delay in filing of appeal has been filed, stating the reasons for delay. As per the contents of the affidavit, it is explained that when the claim of deduction under section 80P(2)(d) of the assessee was rejected by the CPC, the part time accountant, who was dealing with the matters, under impression that the matter can be resolved by explaining it to the Ld. AO had pursued the same before the Ld. AO. Also, the assessing office informed that the rectification will be carried out. The Tax Consultant of the assessee society also advised for not filing of an appeal against the aforesaid adjustment. Further, due to the Pandemic Covid the office bearers as well as the accountant, who were changed, the matter remained unattended without anyone’s knowledge. Meanwhile, the refunds in respect of certain years were getting adjusted against the demand of assessment year 2012-13. The new committee, who had come into effect approached the New Tax Consultant to resolve the issue. Accordingly, they approached the Ld. AO for rectification and also advised that an appeal is to be filed with the Commissioner of Appeals. As per advice, an appeal was filed before the Ld. CIT(A) Appeals on 04.02.2026. It was the submission that the delay was neither willful nor intentional but occurred due to circumstances beyond control. The delay was caused because of dependance on the accountant and change of incumbents in the managing committee every three years. Further, the Covid conditions, also added the reasons for delay. It was the prayer that since the delay was purely on account of number of problems and circumstances faced by small societies, the same may be condoned in the interest of justice. On the contrary, the Ld. DR representing the revenue objected to the contentions of the assessee and have vehemently supported the orders of the Ld. CIT(A) Appeals. In rebuttal,the Ld. AR strongly placed his reliance on various decisions wherein the 80P(2)(d) was granted to the Co-Operative Housing Societies on similar facts and circumstances, as in the assessee’s case. The cases relied upon and listed as under:

4. We have considered the rival submissions, perused the material available on record and decisions relied upon by the assessee. Admittedly, an adjustment was made by CPC under section 143(1), by denying the claim of assessee regarding exemption under section 80P(2)(d) of the Act. It seems that the assessee society is entitled for such claim and the legitimate claim of the assessee society was denied by making a variation in the return of income. Regarding condonation of delay, we find substance in the submissions of the assessee that the delay was on account of certain reasons, which were beyond the control of assessee and it cannot be assumed that there would be any mala fide intentions or deliberate attempt of the assessee’s society in the incidence of such delay. We, thus, condone the delay in filing of appeal before the Ld. CIT(A) Appeals.

5. Further, under similar facts and circumstances, this bench had decided the issue by setting it aside to examine the claim of assessee under section 80P(2)(d), after factual verifications. This issue is equally covered by the decision of ITAT, Mumbai “SMC” bench in the case of Torino Co-operative Housing Society Ltd. Vs. ITO in ITA No. 1788/Mum/2026 vide order dated 05.05.2026, wherein the relevant findings of tribunal are as under:

“7. We have considered the submissions of assessee and reasons furnished before us. We find that the assessee is a Co-operative Housing Society, which had tried its level best to get the rectification done through various communications with the department. In view of such facts and circumstance, while the bona fides of the assessee society cannot be disbelieved and in absence of any default on the part of the assessee. In the interest of justice, we condone the delay in filing of appeal before ld. CIT(A) and direct to decide the issuesin set aside afresh on merits.”

6. Being the case of assessee identical and at parity with the facts and circumstances to the case of Torino Co-operative Housing Society Ltd. (supra),we, therefore, respectfully follow the aforesaid decision,as deemed appropriate set aside the matter to the file of Ld. AO for fresh adjudication.

7. Needless to say, the assessee shall be afforded with reasonable opportunity of being heard in the set aside proceeding. The assessee is also directed to cooperate and proactively assist in the set aside proceedings, failing which the Ld. AO would be at liberty to decide the appeal in accordance with the mandate of law.

8. In result, the appeal of assessee stands allowed for statistical purposes, in above terms.

Order pronounced in the open court on 25 -05-2026.