Nanawan Co-operative Agriculture Society Ltd. Vs ITO (ITAT Chandigarh)
The Chandigarh Bench of the Income Tax Appellate Tribunal considered an appeal concerning denial of deduction under section 80P(2)(a)(i) of the Income-tax Act, 1961 for Assessment Year 2019–20. The assessment had been framed under section 147 read with section 144B after the case was reopened on the basis of information relating to cash deposits. The assessee, a co-operative agricultural society, had not filed its return of income within the due date under section 139(1). In response to notice under section 148, it filed a return declaring nil income after claiming deduction of ₹13,62,092 under section 80P(2)(a)(i).
Although the Assessing Officer accepted the returned income, the deduction was denied by invoking section 80AC, which mandates that deductions under Chapter VI-A shall not be allowed unless the return is furnished within the due date prescribed under section 139(1). The Commissioner of Income Tax (Appeals), NFAC, upheld the disallowance, holding that the statutory provisions required strict compliance and that a belated return disentitled the assessee from claiming the deduction.
Before the Tribunal, it was noted that the Central Board of Direct Taxes had issued Circular No. 13 of 2023 dated 26 July 2023, authorising condonation of delay under section 119(2)(b) in cases where co-operative societies failed to file returns on time due to delay in audit under respective State laws. The circular specifically covers assessment years from 2018–19 to 2022–23 and empowers Chief Commissioners or Directors General of Income Tax to decide such applications on merits, subject to verification of genuine hardship and absence of tax avoidance.
