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TMI Blog2025 (5) TMI 896X X X X Extracts X X X X X X X X Extracts X X X X ..... nged order dated 25/10/2023 passed by respondent no. 1 exercising the powers under Section 119 (2) (b) of the Income Tax Act, 1961 (fort short 'the Act') whereby the application of the petitioner to condone the delay in filing the return under Section 139 (1) of the Act for two days was rejected on the ground that the petitioner did not furnish the documentary evidence showing that the person who was handling the affairs was ill. 5. Brief facts of the case are as under: 5.1. The petitioner is a Consumer Credit Cooperative Society, registered under the Gujarat Co-operative Societies Act, 1961. It is the case of the petitioner that it is a small credit society of the missionary institutes around Nadiad and having no permanent staff. The affairs of the society are managed by honorary appointed personnel and there is no professional or skilled permanent staff who can look after the affairs of the society efficiently and diligently. It is also the case of the petitioner that the only activity of the society is to accept the deposits and provide credit facilities to to its members who are employees of the various missionary institutions working around the District Nadiad and therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etitioner society in filing the return of income late by two days and also the petitioner was called upon to provide computation of total income. In response to the aforesaid notice, the petitioner filed reply dated 09/05/2023 along with the computation of income and income tax return online. Thereafter the application of the petitioner was transferred to the office of respondent no. 1 as per the Circular No. 13 of 2023 dated 26/07/2023 by letter dated 25/07/2023. Respondent no. 1, Chief Commissioner, Surat issued show cause notice dated 15/09/2023 stating that the reasons stated for condonation of delay by the petitioner are general in nature and hence cannot be accepted as cause of genuine hardship. The petitioner filed a detailed reply dated 21/09/2023 to justify the cause to condone the delay reiterating the contents which were stated in the application filed by the petitioner on 19/07/2019. 5.6. Respondent no. 1, by impugned order dated 25/10/2023, rejected the application to condone the delay by passing an order under Section 119 (2) (b) of the Act on the ground that the petitioner failed to file income tax return within the time allowed under the Act without showing any gen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Act 32 of 2003, Section 33, for sub-Section (2) (w.e.f. 1.4.2004).] 10. It was therefore submitted that the petitioner society on coming to know about such provision, immediately approached the concerned authority to file the return and in the process the return was filed late by two days. It was submitted that the CBDT has issued Circular No. 13 of 2023 under Section 119 of the Act directing the Chief Commissioner of Income Tax that while deciding the applications to condone the delay in furnish the return of income has to satisfy that the case of the applicant is fit case to condone delay in the existing provisions of the Act. It was therefore submitted that such circular was issued in view of the amended provisions of Section 80P of the Act for Assessment Year 2022-2023. 11. It was submitted that the respondent no. 1 ought to have condone the delay of two days and the deduction under Section 80P (2) (a) (i) of the Act ought to have been granted to the petitioner. 12. On the other hand, learned advocate Mr. Nikunt Raval for the respondents submitted that the petitioner has failed to bring documentary evidence for delay of two days in filing the return to show the genuine har ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 018-19. 6. Primarily, applicant is seeking condonation on the grounds that its personnel handling accounts was not aware of the provisions for filing the return of income. The reasons stated by applicant does not fall within the ambit of grounds for genuine hardship. It is the responsibility and onus of the applicant to file Income tax return within due date and failure to do so due to the health problem of account staff cannot be construed as grounds of genuine hardship. Applicant has regularly filed return of income for many preceding years which shows that its members and administrators were well aware of the provisions regarding filing of return. Just because one of the personnel responsible for filing returns was indisposed due to health conditions does not mean that other members/administrators of the society would relinquish or ignore their duties with regard to running of the cooperative society and compliance to various statutes applicable to it. Also, it is pertinent to bring to the light the fact that applicant was claiming deduction under section 80P, a section applicable solely to cooperative societies which conclusively proves that cooperative society was well aware ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of filing Ack. No. Deduction claimed u/s 80P 139 (4) Belated Return 02.11.2018 3725635700212118 Rs. 6,09,940/- 139 (4) Belated Return 13.07.2019 601720030130719 Rs. 6,09,940/- 119 (2) (b) 13.07.2019 603089580130719 Rs. 6,09,940/- 10. Further, on verification of CPC 2.0 portal, it is found that the applicant filed rectification applications on two occasions, specifically on 17.06.2019 and 13.07.2019 for the ITR that was filed on 02.11.2018 which was processed u/s 143 (1) of the Act on 31.05.2019 with disallowance of deduction u/s 80P of the Act and resulting demand raised of Rs.2,30,240/-. Subsequently, CPC issued rectification orders on 28.06.2019 and 05.09.2019, respectively. These orders included comments stating that "Deductions under chapter-VIA will not be allowed unless respective schedules are filled properly". It is evident that the applicant had filed the rectification application and condonation application under section 119 (2) (b) on the same date, i.e., 13.07.2019. However, the applicant did not divulge this fact while filing petition u/s 119 (2) (b) that a rectification application was also been before CPC and these rectification applications were rej ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t by the petitioner and delay in claiming the relief was not satisfactorily explained, more particularly when the returns could not be filed in time due to the ill health of the officer who was looking after the taxation matters of the petitioner. In view of the provisions of Section 119 (2) (b), the phrase "genuine hardship" should have been construed liberally and as the petitioner has satisfied all the conditions mentioned in circular dated October 12, 1993, the claim for refund advanced by the petitioner ought to have been examined on the merits. We may state that learned counsel for the petitioner on instructions of the petitioner has stated at the bar that the petitioner would not claim interest on the refund amount payable to the petitioner. Having regard to the facts of the case, we are satisfied that the delay caused in filing the claim for refund was satisfactorily explained by the petitioner and, therefore, the claim for refund should not have been rejected by the Board on technical ground. Under the circumstances, the impugned order is liable to be set aside, but the direction sought against respondent No. 1 to give amount of refund as prayed for in para. 7(B) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t no assessment is framed and only an intimation under Section 143 (1) of the Act was issued. No scrutiny could be carried out by the respondent since the audit report under Section 10B was not on record. Learned advocate for the petitioner Mr. B.S. Soparkar fairly submitted that the issue of undefined benefit of exemption may be examined by issuance of notice u/s 143 (1)/143 (2) and the petitioner shall not object to the said proceedings by taking the ground of limitations." 25. Reliance was also placed on the decisions in case of Sarvoday Charitable Trust v. ITO reported in 125 Taxman.com 75 and Trust for Reaching the Unreached v. CIT reported in 126 Taxman.com 77, wherein this Court has held as under: "31. Having given our due consideration to all the relevant aspects of the matter, we are of the view that the approach in cases of the present type should be equitious, balancing and judicious. Technically, strictly and liberally speaking, the respondent No. 2 might be justified in denying exemption u/s 12 of the Act by rejecting such condonation application, but an assessee a public charitable trust passed 30 years who substantially satisfies the condition for availing such e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as procedural requirement though it is mandatory in nature but substantial compliance is required to be made. It was further observed that the approach of the authority in such type of case should be equitable and judicious. It is also not in dispute that the petitioner trust for past many years has substantially satisfied the conditions for claiming the exemption which should not be denied for non filing of Form 10B in time. The petitioner has explained the reason for delay in filing Form 10B due to illness of the Accountant who was on leave for a long time due to medical reasons." 14.3. In the case of Kanyakaparameshwari Co-operative Society Ltd. v. Chief Commissioner of Income Tax reported in [2024] 166 taxmann.com 195, it is observed as under:- "6. As rightly contended by learned counsel for the petitioner in M/s. Sullia Taluk Womens Multi Purpose Co-operative Society Limited vs. the Deputy Commissioner of Income Tax and others - W.P. No. 19531/2023 dated 21.09.2023, this Court held as under: "The petitioner, a co-operative society registered under the Karnataka Co-operative Societies Act, 1959 is aggrieved by the third respondent's order dated 23.05.2023 under Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income within the permissible time limits". 4. This Court has granted interim order on 07.09.2023. Sri. Shreehari Kutsa, the learned counsel for the petitioner, and Sri. K. V. Aravind, the learned standing NC: 2024:KHC:33550 counsel for the contesting respondents, are heard for final disposal of the writ petition. Sri K.V. Aravind submits that the condonation of delay would enable the petitioner to avail the benefit under Section 80P of the IT Act notwithstanding the provisions of Section 80AC (ii) of the IT Act inasmuch as these provisions stipulate that no deduction admissible under the heading "C -Deductions in respect of certain incomes" unless ITR for the relevant assessment year is filed on or before the due date specified in Section 139 (1) of the IT Act. Sri K.V. Aravind also submits that if there is condonation of the delay, the provisions of Section 143 (2) of the IT Act would be relied upon to state that there cannot be any assessment beyond three months from the end of the subject financial year. 5. On the merits of the reasons assigned, Sri K.V. Aravind submits that admittedly audit of the books of accounts, as required under the relevant statute, is contemplated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d or such other reasonable time as may be observed by this Court. This Court must observe that even otherwise, this aspect will be considered by the Courts depending on the circumstances of each case, when a case for condonation of the delay is established. As such, this Court is not persuaded to opine that the petitioner must be refused indulgence as against the third respondent's impugned order on the grounds urged on behalf of the respondents if this Court is of the opinion that both sufficient reasons and hardship are established for condonation of the delay. 9. The petitioner had to file ITR on or before 31.10.2018 in terms of Section 139 (1) of the IT Act, and because of the provisions of Section 139 (1) of the IT Act, the ITR could have been filed until 31.12.2018. The petitioner has filed the ITR on 31.12.2018. There is no dispute that the elections to the Managing Committee is held on 27.01.2019. This Court must observe that elaborate electoral processes such as finalization of voters list are contemplated under the provisions of the Karnataka Co-operative Societies Act/Rules, and these processes which will have to be commenced within certain timeline will have to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 2023 issued by the CBDT for condonation of delay under clause (b) of Sub-Section 2 of Section 119 of the Income Tax Act, 1961 for returns of income claiming deduction under Section 80P for various Assessment Years from Assessment Year 2018-2019 to Assessment Year 2022-2023 reads as under: "Section 80P of the Income-tax Act, 1961 (hereafter referred to as 'Act') provides for deduction in respect of income of co-operative societies under Chapter VIA-Part-C ("Deductions in respect of certain incomes") of the Act. 2. In so far as section 80P of the Act is concerned, Finance Act, 2018 substituted section 80AC of the Act w.e.f. 01 .04.2018 which provides as under-Deduction not to be allowed unless return furnished. 80AC. Where in computing the total income of an assessee of any previous year relevant to the assessment year commencing on or after - (i) the 1st day of April, 2006 but before the 1st day of April, 2018, any deduction is admissible under section 80-IA or section 80-1AB or section 80-IB or section 80-IC or section 80-ID or section 80-IE; (ii) the 1st day of April, 2018, any deduction is admissible under any provision of this Chapter under the heading "C.- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accounts audited by statutory auditors appointed under the respective State Law under which such person is required to get his accounts audited, the date of completion of audit vis-a-vis the due date of furnishing the return of income under sub-section (1) of section 139 of the Act; and (iii) any other issue indicating towards tax avoidance or tax evasion specific to the case, which comes into the light in the course of verification and having bearing either in the relevant assessment year or establishing connection of relevant assessment year with other assessment year/s. 6.1 The cases falling under para 6(iii) above, would require further necessary action as per law. 7. The CCsIT/DGsIT shall preferably dispose the application within three months from the end of the month in which such application is received from the applicant or transferred by the Board. No order rejecting the application under section 119 (2) (b) of the Act shall be passed without providing the applicant an opportunity of being heard." 16. In view of the above conspectus of law and the facts emerging from the record and in view of the circular issued by the CBDT, respondent no. 2 could not have rejected ..... X X X X Extracts X X X X X X X X Extracts X X X X
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