T943 Vickrapandiyam Primary Agricultural Cooperative Credit Society LTD vs. The Chief Commissioner Of Income Tax

Facts

Numerous Cooperative Societies filed writ petitions challenging orders from the Chief Commissioner of Income Tax rejecting their applications for condonation of delay in filing annual income tax returns. The petitioners, registered under the Tamil Nadu Cooperative Societies Act, 1983, are primarily agricultural credit societies whose turnover is exempt from total income under Section 80P of the Income Tax Act, 1961. However, Section 80AC, introduced from 01.04.2018, mandates return filing for such exemptions. The societies faced delays due to non-completion of statutory audits and lack of expertise. The Central Board of Direct Taxes (CBDT) issued Circular No. 13/2023, empowering Commissioners to condone delays for societies prejudiced by audit delays. Despite this, applications were rejected, leading to these petitions.

Held

The Court allowed all the writ petitions. It held that the impugned orders of the Chief Commissioner of Income Tax rejecting the applications for condonation of delay under CBDT Circular No. 13/2023, read with Circular No. 14/2024, were set aside. Consequently, the applications for condonation of delay filed by the petitioner Cooperative Societies were allowed. The Court directed that where assessment proceedings are pending, the assessment authorities should consider the returns filed by the societies and pass final orders. For cases where assessment orders have been passed and appeals are pending, the appellate authority shall treat the delay in filing returns as condoned and remand the matter to the original authority for completion of assessment. If assessment orders have been passed without appeals, societies can file appeals with condonation of delay, which shall be granted, and the matter remanded for assessment. The undertaking by the Registrar of Cooperative Societies to ensure timely filing of returns and provide professional assistance was recorded.

Key Issues

1. Whether the orders passed by the Chief Commissioner of Income Tax rejecting the applications for condonation of delay in filing Income Tax returns are sustainable in light of CBDT Circular No. 13/2023 and the genuine hardship faced by the Cooperative Societies? Arguments for Petitioners: The petitioners argued that the CBDT circular was issued to alleviate the genuine hardship of Cooperative Societies, citing a Division Bench judgment of the Madras High Court in W.A. (MD) No. 2334 of 2025 which condoned similar delays. They contended that the difficulties were primarily for the assessment years 2018-2019 and 2019-2020 due to the introduction of new provisions and the COVID-19 pandemic, and that for current years, returns are being filed timely. They also relied on a Bombay High Court decision in Sitaldas K. Motwani vs. Director General of Income Tax and Others, referencing a Supreme Court decision in B.M. Malani vs. CIT, to interpret 'genuine hardship'. Arguments for Revenue: The Revenue contended that the Cooperative Societies had not furnished complete particulars as required by the impugned orders, specifically regarding the date of filing returns, completion of statutory audit, and detailed reasons for the delay in applying for condonation after the circular's issuance. They emphasized that the larger public interest in completing statutory tax assessment proceedings should not be delayed.