Tribunal remands matter to CIT(A) to allow assessee to seek delay condonation for Section 80P claim

Tribunal remands matter to CIT(A) to allow assessee to seek delay condonation for Section 80P claim

Issue

Whether the assessee, a co-operative agricultural society, is entitled to deduction u/s 80P(2)(a)(i) despite not filing the return of income within the due date specified u/s 139(1), as mandated by Section 80AC.

Facts

• Assessment Year: 2019-20.

• Original Filing: The assessee did not file a return of income u/s 139(1).

• Reopening: Assessment was reopened u/s 147 due to cash deposit information.

• Return Filed: In response to notice u/s 148, the assessee filed a return on 17-05-2022 claiming deduction u/s 80P(2)(a)(i) of Rs. 13,62,092/-.

• AO’s Action: The Assessing Officer (AO) accepted the returned income figure but denied the 80P deduction because Section 80AC requires the return to be filed by the due date u/s 139(1) to claim such deduction.

• CIT(A)’s Action: Upheld the AO’s order, citing strict interpretation of taxing statutes.

Decision

• Circular Reliance: The Tribunal relied on CBDT Circular No. 13 of 2023 (dated 26-07-2023). This circular authorizes Chief Commissioners (CCsIT) and Directors General (DGsIT) to condone delays in filing returns claiming 80P deduction for AYs 2018-19 to 2022-23, specifically where the delay was due to late audits under State Laws.

• Remand: The Tribunal restored the appeal to the file of the Ld. CIT(A).

• Direction: The purpose of the remand is to enable the assessee to file an application for condonation of delay with the appropriate authority (CCsIT/DGsIT) as per the circular. The CIT(A) must then adjudicate the appeal based on the outcome of that condonation application.

• Result: The appeal is Allowed for Statistical Purposes.

Key Takeaways

1. Section 80AC Rigidity: Section 80AC generally bars 80P deductions if the return is late. However, this statutory bar can be overcome if the delay is condoned by the CBDT or authorized officers u/s 119(2)(b).

2. Remedy for Late Filers: Co-operative societies that missed the 139(1) deadline due to audit delays under State Laws have a specific remedy via CBDT Circular No. 13 of 2023. They should apply to the CCsIT/DGsIT for condonation rather than fighting the 80AC disallowance solely on legal interpretation grounds.

3. Appellate Procedure: When such a condonation remedy exists, Tribunals prefer to remand the matter to the Lower Appellate Authority (CIT(A)) to await the administrative decision on condonation, rather than deciding the merit of the deduction immediately.