TaxTMI 
TaxTMI 
2025 (12) TMI 1883
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....red by limitation by 247 days as the appeal of the assessee had filed on 4 June 2025 whereas the order of the learned CIT - A was received on 31st of July 2024. 4. The assessee has filed an application for condonation of delay for both these assessment years and also filing an affidavit showing the clause for delay in filing of the appeal. The affidavit was filed by secretary of the cooperative society stating that the appeal is on income tax matter of the assessee was earlier after by a chartered accountant who has registered himself on behalf of the assessee on the portal of the income tax department. Subsequently the services of this chartered accountant was discontinued and same was given to another chartered accountant who changed the email ID given earlier with new email ID as well as the email ID of the society on income tax portal on 17 July 2024. Subsequently the orders were passed by the appellate authority on 31 July 2024 which was not issued on the updated email ids but were issued on the earlier email ID. Therefore the order passed by the National faceless appeal Centre was not received by the assessee society. Subsequently as the new chartered accountant was appoin....
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....k the clock and allow resuscitation of a claim otherwise barred by delay. The court ought to be cautious while undertaking such an exercise, being circumspect against condoning delay which is attributable to the applicant. Although the actual period of delay might be instructive, it is the explanation for the delay which would be the decisive factor. 9. Hon supreme court as relied by the ld DR in Pathapati Subba Reddy (Died) by L. Rs. v. Special Deputy Collector (LA), reported in MANU/SC/0285/2024 : 2024:INSC:286, summarized the principles governing the exceptions imagined under "sufficient cause" vis-à-vis substantive justice as under :- "26. On a harmonious consideration of the provisions of the law, as aforesaid, and the law laid down by this Court, it is evident that: (i) Law of limitation is based upon public policy that there should be an end to litigation by forfeiting the right to remedy rather than the right itself; (ii) A right or the remedy that has not been exercised or availed of for a long time must come to an end or cease to exist after a fixed period of time; (iii) The provisions of the Limitation Act have to be construe....
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..... The inquiry is not mechanical but principled, resting on the dual pillars of bona fides and diligence. 125. The expression "sufficient cause" is not itself a loose panacea for the ill of pressing negligent and stale claims. The expression is to be construed with justice-oriented flexibility so as not to punish innocent litigants for circumstances beyond their control. 126. Courts must not condone gross negligence, deliberate inaction, or casual indifference, for to do so would undermine the maxim interest reipublicae ut sit finis litium and destabilise the certainty that limitation law seeks to secure. 127. The expression "sufficient cause" must be construed in a manner that advances substantial justice while preserving the discipline of limitation. The courts are not to be swayed by sympathy or technical rigidity, but rather by a judicious appraisal of whether the applicant acted with reasonable diligence in pursuing the remedy. Where explanation is bona fide, plausible, and consistent with ordinary human conduct, courts have leaned towards condonation. Where negligence, want of good faith, or a casual approach is discernible, condonation has been refu....
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....he ultimate focus remains on whether "sufficient cause" has been shown. The doctrine thereby preserves both the integrity of statutory timelines and the imperative of doing justice in deserving cases. 134. Thus, in exercising discretion Under Section 5 of the Limitation Act the courts should adopt a pragmatic approach. A distinction must be made between a case where the delay is inordinate and a case where the delay is of a few days. Whereas in the former case the consideration of prejudice to the other side will be a relevant factor so the case calls for a more cautious approach but in the latter case, no such consideration may arise and such a case deserves a liberal approach. No hard-and-fast Rule can be laid down in this regard. The court has to exercise the discretion on the facts of each case keeping in mind that in construing the expression "sufficient cause", the principle of advancing substantial justice is of prime importance. ii. Technical Considerations vis-à-vis Substantive Justice. 135. In construing "sufficient cause" it must be borne in mind that Rules of procedure are handmaids of justice. Procedural rigidity should not become an i....
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....t there must be a sufficient reason for condoning the delay. 139. However, while substantial justice must be advanced, the law of limitation is equally binding, and "sufficient cause" must be shown in substance, not in empty form. This ensures that the balance between justice and certainty is not skewed in favour of unmerited litigants. 140. However, at the same time, the courts must be mindful that strong case on merits is no ground for condonation of delay. When an application for condonation of delay is placed before the court, the inquiry is confined to whether "sufficient cause" has been demonstrated for not filing the appeal or proceeding within the prescribed period of limitation. The merits of the underlying case are wholly extraneous to this inquiry. If courts were to look into the merits of the matter at this stage, it would blur the boundaries between preliminary procedural questions and substantive adjudication, thereby conflating two distinct stages of judicial scrutiny. The purpose of Section 5 of the Limitation Act is not to determine whether the claim is legally or factually strong, but only whether the applicant had a reasonable justification for ....
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....fter the assessee came to know about the appellate orders. Therefore, we find that there is a sufficient cause for delay in filing f these appeals. Hence, delay condoned and appeals admitted. 12. Briefly stated the facts for assessment year 2018 - 19 shows that assessee filed its return of income at Rs. Nil on 26 September 2018. The return was picked up for limited scrutiny assessment for verification of deduction from total income under chapter VI - A. Notice under section 143 (2) was issued on 28 September 2019, the assessee furnished the necessary details stating that assessee is a co-operative society registered under cooperative societies act and carrying on the business by sanctioning loan to its members from amounts are available with it which is collected from members. The assessee stated that it has a total income of Rs. 2,680,554/- which is offered for deduction under section 80P(2)(a)(i) as business income. The learned assessing officer was also confronted with the details that it is a credit cooperative society collecting deposits from its members are paying them interest and further loans were advances to its member according to the rules and regulation of the socie....
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.... under section 80P(2)(a)(i) or alternatively under section 80P(2)(d) of the act. Thus, the assessee is in appeal before us. 16. The learned authorised representative vehemently supported the claim of the assessee in the return of income and stated that assessee is entitled to deduction under section 80P(2)(a)(i) of the act as the interest income received from the cooperative banks is business income of the assessee. He further submitted that there is no finding in the assessment order that such interest income is income from other sources. He submits that the case of the assessee squarely covered by the decision of the honourable Karnataka High Court by two decisions which have already considered the decision of the honourable Supreme Court which is relied upon by the learned assessing officer. Therefore, the assessee should be allowed the deduction. 17. The learned departmental representative advocate Mr Ghale, vehemently supported the decision of the learned lower authorities and submitted that the issue is squarely covered by the decision of the honourable Karnataka High Court in case of Totgars credit cooperative societies wherein the honourable High Court after consideri....
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....s the interest earned from short- term deposits and from savings bank account. The assessee is a Cooperative Society providing credit facilities to its members. It is not carrying on any other business. The interest income earned by the assessee by providing credit facilities to its members is deposited in the banks for a short duration which has earned interest. Therefore, whether this interest is attributable to the business of providing credit facilities to its members, is the question. In this regard, it is necessary to notice the relevant provision of law i.e., Section 80P(2)(a)(i): "Deduction in respect of income of co-operative societies: 80P(1) Where, in the case of an assessee being a co-operative society, the gross total income includes any income referred to in sub-section (2), there shall be deducted, in accordance with and subject to the provisions of this section, the sums specified in sub-section (2), in computing the total income of the assessee. (2) The sums referred to in sub-section (1) shall be the following, namely: (a) in the case of co-operative society engaged in- (i) carrying on the business of banking or providing cre....
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....embers, earns profits and gains of business by providing credit facilities to its members. The interest income so derived or the capital, if not immediately required to be lent to the members, they cannot keep the said amount idle. If they deposit this amount in bank so as to earn interest, the said interest income is attributable to the profits and gains of the business of providing credit facilities to its members only. The society is not carrying on any separate business for earning such interest income. The income so derived is the amount of profits and gains of business attributable to the activity of carrying on the business of banking or providing credit facilities to its members by a co-operative society and is liable to be deducted from the gross total income under Section 80P of the Act. 9. In this context when we look at the judgment of the Apex Court in the case of M/s. Totgars Co-operative Sale Society Ltd., on which reliance is placed, the Supreme Court was dealing with a case where the assessee-Cooperative Society, apart from providing credit facilities to the members, was also in the business of marketing of agricultural produce grown by its members. The sa....
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....ale Society [2017] 78 taxmann.com 169 (Karnataka)/ [2017] 392 ITR 74 (Karnataka) [05-01-2017] it is held that: 7. However, the contention being taken by the learned counsel is untenable. For the issue that was before the ITAT, was a limited one, namely whether for the purpose of Section 80P(2)(d) of the Act, a Co-operative Bank should be considered as a Co-operative Society or not? For, if a Co-operative Bank is considered to be a Co-operative Society, then any interest earned by the Co-operative Society from a Co-operative Bank would necessarily be deductable under Section 80P(1) of the Act. 8. The issue whether a Co-operative Bank is considered to be a Co- operative Society is no longer res integra. For the said issue has been decided by the ITAT itself in different cases. Moreover the word "Co- operative Society" are the words of a large extent, and denotes a genus, whereas the word "Co-operative Bank" is a word of limited extent, which merely demarcates and identifies a particular species of the genus Co- operative Societies. Co-Operative Society can be of different nature, and can be involved in different activities; the Co-operative Society Bank is merely a ....
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....three decisions of the honourable Karnataka High court considered the decision of Totgars, Co-operative Sale Society Ltd. vs. Income-tax Officer, Karnataka [2010] 188 Taxman 282 (SC)/ [2010] 322 ITR 283 (SC)/ [2010] 229 CTR 209 (SC) [08-02-2010]. All the above three decisions are on the issue of deduction u/s 80P of the Act in respect to interest income earned by the assessee from cooperative societies either u/s 80P(2)(a)(i) or 80P(2)(d) of The Act. Before us, the claim of the assessee is not u/s 80P(2)(d) of the Act but 80P(2)(a)(i) of the Act. In this case there are three decisions of the Honourable High court, which cannot stand together, present an issue before us and that in such circumstances the correct thing is to follow that judgment which appears t to state the law accurately or nearer to facts before us. 24. Accurately than the other conflicting judgment we find that the issue before us the facts of the case are more nearer to the decision of the Honourable Karnatak High court in case of Tumkur Merchants [supra] and Decision of Principal Commissioner of Income-tax, Hubli vs. Totagars Co-operative Sale Society [2017] 78 taxmann.com 169 (Karnataka)/[2017] 392 ITR 74 (K....