2023 (10) TMI 309 - AT - Income Tax

Appeal success for Co-operative Society on tax exemption denial due to late filing

The appeal was allowed in favor of the assessee, a Co-operative Society, regarding the denial of exemption claimed under Section 80P of the Income Tax Act ... Exemption claimed u/s. 80P(2)(b), 80P(2)(d), 80P(2)(c) - Claim denied on the ground of return of income having been filed late without properly appreciating the facts - Considering the fact of Covid, Government Audit having been not done on time and the Suo-Moto extension for limitation allowed by the Apex Court. - HELD THAT:- There is no dispute that the assessee is entitled for deduction under Section 80P of the Act and the circumstances under which the assessee filed the belated return were beyond the control of the assessee. The Government Auditor has given its report belatedly and, therefore, the filing of the return of income was delayed due to the genuine reasons. The submissions of the ld. AR that the mandate of filing the return of income on due date will be applicable from A.Y. 2021-22 appears to be correct. Hence, the Assessing Officer as well as the CIT(A) was not right in disallowing the claim of deduction under Section 80P of the Act to the assessee only on the ground of delay in filing the return. Appeal of the assessee is allowed. Issues Involved:The appeal against the order passed by the CIT(A), National Faceless Appeal Centre (NFAC), Delhi for the Assessment Year 2020-21 regarding the denial of exemption claimed under Section 80P of the Income Tax Act, 1961.Grounds of Appeal:1. The CIT(A) upheld the non-grant of exemption claimed under Section 80P(2)(b), 80P(2)(d), 80P(2)(c) aggregating Rs. 4,18,340/- due to late filing of the return of income.2. The appellant argued that due to Covid and delayed Government Audit, exemption under Section 80P should have been allowed.3. Claimed reasonable cause for late submission of return due to late audit by the Government Auditor.4. Disallowance under Section 80P was challenged citing that clause 143(1)(v) was not applicable for AY 2020-21.5. Exemption under Section 80P should not have been denied based on late filing of the return.6. Disagreement with the application of the decision of Madras High Court in a similar case.Judgment Details:The assessee, a Co-operative Society, filed the return of income on 31.03.2021 claiming a deduction of Rs. 4,18,340/- under Section 80P. The CPC denied the claim, leading to a demand of Rs. 1,61,860. The appeal was filed before the CIT(A) after which the appeal was dismissed.The CIT(A) and Assessing Officer denied the deduction under Section 80P(2)(b) due to the late filing of returns. The return was filed on 31.03.2021, delayed by about one and a half months. The claim included dividend and interest, entitling the assessee to the deduction under Section 80P. Despite extensions granted, the return was filed belatedly. The Government Auditor's delayed report was cited as a reasonable cause for the delay.After hearing both parties, it was concluded that the assessee was entitled to the deduction under Section 80P, and the delay in filing the return was due to circumstances beyond the control of the assessee. The applicability of the mandate for filing returns on the due date from A.Y. 2021-22 onwards was noted. Therefore, the disallowance of the deduction under Section 80P solely based on the delay in filing the return was deemed unjustified.The appeal of the assessee was allowed, and the order was pronounced on 9th August 2023.