Rejection Of Condonation For Delayed Section 80P Return By Co-Operative Society Set Aside Liberal Approach Required

By | July 25, 2026
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Rejection Of Condonation For Delayed Section 80P Return By Co-Operative Society Set Aside Liberal Approach Required

Rejection Of Condonation For Delayed Section 80P Return By Co-Operative Society Set Aside Liberal Approach Required

Issue

  • Condonation of Delay under Section 119(2)(b) for Section 80P Deduction: Whether a co-operative society’s application seeking condonation of delay under Section 119(2)(b) to claim deduction under Section 80P should be treated with a liberal approach, especially considering CBDT Circular No. 13/2023 and the genuine difficulties faced by small co-operative societies run by untrained staff.

Facts

  • Background & Reassessment Notice: The petitioner, a co-operative society, received a notice under Section 148 for AY 2019–20 calling upon it to furnish its return of income.

  • Filing & Delay Condonation Application: The petitioner filed its return for the first time for AY 2019–20 on 23.08.2023, along with an application under Section 119(2)(b) seeking condonation of delay and claiming deduction under Section 80P.

  • Bona Fide Belief & Statutory Mandate: The petitioner cited a bona fide belief that its activities were exempt, relied on CBDT Circular No. 13/2023, and noted that following the amendment to Section 80AC (effective 01.04.2018), returns must be filed within statutory timelines to claim Section 80P deductions.

  • Rejection by Revenue: The first respondent rejected the condonation application, stating that the petitioner failed to show sufficient cause or circumstances beyond its control and failed to furnish supporting documentary evidence.

  • Assessee’s Stand: The society contended that its staff were minimal and not fully trained in complex tax compliance, leading to genuine administrative difficulty.

Decision

  • Liberal Approach Mandatory (In favor of Assessee): Held YES. Authorities must adopt a liberal approach when considering delay condonation applications filed under Section 119(2)(b) by co-operative societies, particularly in light of CBDT Circular No. 13/2023. [Para 10]

  • Lack of Awareness Constitutes Genuine Difficulty (In favor of Assessee): Held YES. Co-operative societies run by minimal and untrained staff are often unaware of strict statutory amendments; this lack of procedural awareness constitutes a genuine difficulty under Section 119(2)(b). [Para 10]

  • Condonation Granted (In favor of Assessee): Held YES. The impugned rejection order was set aside, and the respondents were directed to treat the petitioner’s return as filed within the prescribed time for the purpose of claiming Section 80P deduction. [Para 11]

Key Takeaways

  • CBDT Circular No. 13/2023 Guidance: Income tax authorities must liberally apply CBDT Circular No. 13/2023 to protect legitimate statutory deductions like Section 80P for co-operative societies.

  • Staff Constraints As Genuine Difficulty: Lack of professional tax expertise or reliance on untrained minimal staff in rural or small co-operative societies qualifies as a valid administrative difficulty for condoning delays under Section 119(2)(b).

HIGH COURT OF ANDHRA PRADESH
Bharat Electronics MC Unit Employees Co-op. Credit SOC Ltd.
v.
Chief Commissioner of Income-tax
Ninala Jayasurya and T.C.D. Sekhar, JJ.
WRIT PETITION No.19243 OF 2025
JULY  2, 2026
C. Sanjeeva Rao for the Petitioner. Pasala Ponna Rao, DEPUTY SOLICITOR GENERAL and Y.N. Vivekananda for the Respondent.
ORDER
T.C.D. Sekhar, J.- The petitioner is a society registered under Andhra Pradesh Co-operative Societies Act, 1964, engaged in the activity of lending credit facilities to its members who are the employees of Bharat Electronics Limited, Machilipatnam, an organization under the Ministry of Defense, Government of India.
2. The respondent authorities issued notice under Section 148 of the Income Tax Act, 1961 calling upon the petitioner to furnish its tax return as per Section 139 (1) of the Act. Thereafter, the petitioner filed its return for the Assessment year 2019-2020 on 23.08.2023 along with an application seeking to condone the delay under Section 119(2)(b) of the Act, in furnishing the return by claiming deduction under Section 80P of the Act. It was inter alia contended that the petitioner was under bonafide belief that the activities of the society are exempted from the provisions of Income Tax Act, and therefore it could not furnish return. It was further averred that after receiving the notice under Section 148, and after consulting the tax consultant, the petitioner filed its return as aforesaid with an application seeking to condone the delay by placing the reliance on the circular issued by CBDT vide Circular No.13/2023, dt.26.07.2023.
3. The 1st respondent after considering the matter by impugned order dt.12.02.2025 rejected the delay application filed by the petitioner by observing that the petitioner has failed to meet the statutory and procedural requirements for condonation of delay, including establishing sufficient cause or demonstrating circumstances beyond its control. Aggrieved by the same, the present writ petition is filed.
4. The respondent Nos.1 & 2 filed counter affidavit reiterating what has been stated in the impugned order. It was further stated that in the absence of documentary evidence in support of the delay caused in the matter, the petitioner is not entitled to get the benefit under Circular No.13/2023, dt.26.07.2023.
5. Heard, Sri C.Sanjeeva Rao, learned counsel for the petitioner and the learned Senior Standing Counsel Sri Y.N.Vivekananda for CBDT.
6. Perused the material available on record.
7. It is not in dispute that the petitioner has filed its income tax returns on 23.08.2023 for the Assessment year 20192020. It is pertinent to note that the Co-operative Societies had earlier were exempted from filing of its Income Tax returns by virtue of Section 80AC of the Act. This provision was amended with effect from 01.04.2018 by the Finance Act, 2018. By virtue of this amendment, the Co-operative Societies were required to file returns within the stipulated date. Further, as per Section 80P of the Act, an exemption is granted to the Co-operative Societies by allowing certain deductions from the income. The said deduction under Section 80P would be allowed upon furnishing returns within the time stipulated under the Act. In the case on hand, admittedly the petitioner filed its return on 23.08.2023.
8. The 1st respondent while rejecting the application made by the petitioner observed that the petitioner did not show any reason to condone the delay so as to enable it to take benefit under Circular No.13/2023, dt.26.07.2023. Be that as it may, a perusal of the said circular would show that the same was issued upon receipt of applications by Central Board of Direct Taxes from the Co-operative Societies claiming deduction under Section 80P of the Act for various assessment years from AY 2018-2019 to AY 2022-2023, regarding condonation of delay in furnishing return of income to treat such returns as returns furnished within the due date under Sub Section (1) of Section 139 of the Act. Under this circular, certain guidelines were fixed so as to satisfy/ accept the belated returns filed by the Co-operative Societies. The petitioner filed its return on 23.08.2023 after receipt of the notice under Section 148. Further, it is pertinent to note by virtue of Amendment made to the Income Tax Act, 1961 with effect from 01.04.2018, the Co-operative Societies were made to file Income Tax returns as per Section 139(1). In the case on hand, the petitioner is filing return for the first time for the Assessment year 2019-2020. If the application filed by the petitioner is not allowed, it will be put to serious hardship inasmuch as the deductions that are lawfully entitled by the petitioner would be denied. In such a situation, the very object of issuing circular No.13/2023, dt.26.07.2023 would be defeated.
9. Further, on a perusal of the order under challenge it is clear that the same was dismissed on the ground that the petitioner has not offered any plausible explanation for the delay caused in filing the returns. In this connection, it is to be noted that, whenever substantial justice and technicalities are pitted against each other, the Constitutional Courts have time and again held that substantial justice would prevail over the technicalities. As already observed supra, there is no dispute insofar as the fact that the petitioner is entitled to certain deductions under Section 80P of the Act, if the petitioner is allowed to file its returns.
10. Further, the authorities manning the Act have to take liberal approach towards the Co-operative Societies, especially in the teeth of Circular No.13/2023, while dealing with applications filed seeking to condone the delay under Section 119(2)(b) of the Act. Further, it is also not out of place to mention that the Cooperative Societies like that of the petitioner were not fully aware of the provisions of the Act and its applicability, inasmuch as, it is being run with a minimal staff who were not fully trained. This aspect of the matter has to be treated as a genuine difficulty faced by the petitioner society.
11. For the foregoing reasons, the impugned order dt.12.02.2025 passed by the 1st respondent is set aside and the respondents are directed to treat the returns filed by the petitioner is within time.
12. Accordingly, the writ petition is allowed. There shall be no order as to costs.
As a sequel, pending applications, if any shall stand closed.