High Court Grants Section 80P Exemption despite Belated ITR Filing

The Madras High Court grants relief to Irukkandurai Primary Agriculture Cooperative Credit Society, holding that cooperative societies generally face difficulty in filing returns timely because of the belated approval of statutory audits and the absence of an adequate mechanism.

The tax authorities had rejected the society’s tax exemption claim, made under Section 80P of the Income Tax Act, 1961, because it had not furnished its ITR within the statutory time limit prescribed under Section 80-AC.

During the personal hearing before the High Court, the petitioner claimed that the delay was not intentional, and additionally, it was also willing to file an application seeking condonation of the delay under Section 119(2)(b) of the Act. However, the tax authorities claimed that the society had neither filed an application for condonation of delay nor furnished any appeal challenging the denial of its Section 80P exemption claim.

When the court analysed the case, it noted that cooperative societies often face practical difficulties like belated approval of statutory audits and the absence of an adequate mechanism, which ultimately leads to delays in filing their returns. The court highlighted that such delays are not always due to the intention of tax evasion but sometimes due to procedural challenges.

Considering all the challenges faced by society, the court decided to grant it another chance of relief. The society has been directed to file an application seeking condonation of delay within two weeks with the Chief Commissioner, explaining the detailed reasons behind the delay. Thereafter, the Chief Commissioner must decide on the application within three months. Thereafter, the society is directed to file an appeal before the ITAT along with the condonation of the delay application. The Tribunal has been asked to consider the Chief Commissioner’s decision while deciding the appeal.