The Punjab and Haryana High Court has set aside an order of the Chief Commissioner of Income Tax (CCIT), Panchkula, which had rejected a cooperative housing society’s application seeking condonation of a 34-day delay in filing its income tax return for Assessment Year 2020-21.
The bench of Justice Deepak Sibal and Justice Sunish Bindlish has observed that the delay was attributable to circumstances beyond the society’s control, including the COVID-19 situation and delay in receiving the statutory audit report, and that the case fell within the scope of CBDT Circular No. 13/2023 dated July 26, 2023.
The petitioner, Alaknanda Coop. Group Housing Society Ltd., is a cooperative society registered under the Societies Registration Act, 1860. For AY 2020-21, the applicable deadline for filing the income tax return was extended to February 15, 2021, in view of the COVID-19 situation.
The society did not file its return by the extended deadline. On March 9, 2021, it approached the Income Tax authorities seeking condonation of the delay, explaining that the delay had resulted from the COVID-19 pandemic and late receipt of its audit report, which was required to be routed through the State department.
The Income Tax authorities subsequently informed the society that it could file a belated return under Section 139(4) of the Income-tax Act, 1961. Acting on that communication, the society filed its return on March 20, 2021, claiming deduction under Section 80P of the Act.
The society’s return was subsequently processed and an assessment order was passed on September 19, 2022, under Sections 143(3) read with 144B of the Income-tax Act.
The Assessing Officer denied the society’s claim for deduction under Section 80P, relying upon Section 80AC(ii) of the Act on the ground that the return had not been furnished within the prescribed time.
The society challenged the assessment order before the Commissioner of Income Tax (Appeals), but the appeal was dismissed on December 12, 2025.
Thereafter, on January 12, 2026, the society filed an application before the CCIT seeking condonation of the 34-day delay in filing its return. Its application principally relied upon CBDT Circular No. 13/2023 dated July 26, 2023, which specifically addresses condonation of delay in filing returns by cooperative societies claiming deduction under Section 80P.
During the pendency of the condonation application, the society also challenged the CIT(A)’s order before the Income Tax Appellate Tribunal, New Delhi.
The ITAT disposed of the appeal on March 19, 2026, upholding the CIT(A)’s order but granting liberty to the society to pursue its pending application before the CCIT seeking condonation of the delay on the basis of CBDT Circular No. 13/2023.
The society accordingly pursued the application. However, the CCIT rejected it through an order dated June 15, 2026. The CCIT relied, inter alia, upon CBDT Circular No. 09/2015 dated June 9, 2015, and observed that the society’s case did not fall within the eligible categories under that circular.
Aggrieved by the rejection, the society approached the Punjab and Haryana High Court.
Appearing for the society, Senior Advocate Radhika Suri argued that the delay was only 34 days and occurred during the COVID-19 period.
It was submitted that the pandemic had also contributed to the delayed receipt of the audit report, which was statutorily required to be routed through the State department. Since the society was seeking deduction under Section 80P and its application was specifically covered by CBDT Circular No. 13/2023, the CCIT ought to have considered the application under that circular.
The society further argued that the CCIT had failed to even refer to Circular No. 13/2023 in the impugned order and had instead relied upon Circular No. 09/2015, which was general in nature and concerned different categories of condonation applications.
The society also relied upon the decision of the Madras High Court in Vickrapandiyam Primary Agricultural Co-operative Credit Society Ltd. v. Chief Commissioner of Income-tax, reported in (2026) 187 taxmann.com 97.
The Income Tax Department defended the CCIT’s order.
The revenue pointed out that the society had received its audit report on February 22, 2021, but filed its income tax return only on March 20, 2021. According to the Department, the delay of 26 days after receipt of the audit report remained unexplained and, on that basis, the petition deserved dismissal.
In response, the society contended that the period after February 22, 2021, was also explained by the circumstances. It pointed out that an application seeking condonation had already been filed on March 9, 2021, and that the Income Tax authorities themselves had responded on March 17, 2021, advising the society to file a belated return under Section 139(4). The return was filed only three days after that communication, on March 20, 2021.
The High Court examined Section 80AC(ii) of the Income-tax Act, which provides that where a deduction is admissible under the relevant provisions relating to deductions in respect of certain incomes, such deduction is not to be allowed unless the assessee furnishes the return of income on or before the due date specified under Section 139(1).
The Court also examined CBDT Circular No. 09/2015 dated June 9, 2015, concerning condonation of delay in specified refund and loss-related claims, as well as the later Circular No. 13/2023 dated July 26, 2023, which specifically addressed condonation of delay in filing returns claiming deduction under Section 80P.
The Court noted that Circular No. 13/2023 was issued after the CBDT received applications from cooperative societies seeking deduction under Section 80P for various assessment years and requesting condonation of delay in filing returns.
The circular covers assessment years 2018-19 to 2022-23 and provides for consideration of applications where the delay in filing the return was caused by circumstances beyond the assessee’s control, supported by appropriate documentary evidence.
It also specifically directs the competent authorities to examine whether the delay resulted from the time taken for statutory audit under the applicable State law.
Further, the circular requires the authorities to examine whether any issue concerning tax avoidance or tax evasion emerges during verification.
The High Court also took note of the operative directions contained in Circular No. 13/2023.
Under the circular, Chief Commissioners and Directors General of Income Tax were authorised to deal with applications for condonation of delay in filing returns claiming deduction under Section 80P for the specified assessment years, where the concerned cooperative society was required to have its accounts audited under the respective State law.
The circular requires authorities to examine whether the delay was caused by circumstances beyond the control of the assessee and whether the delay was attributable to the statutory audit process.
It further states that an order rejecting an application under Section 119(2)(b) should not be passed without providing the applicant an opportunity of being heard.
The High Court found a significant distinction between the two CBDT circulars.
According to the Court, Circular No. 09/2015 deals with applications for condonation of delay concerning returns claiming refunds and returns claiming carry forward and set-off of losses. By contrast, Circular No. 13/2023 specifically addresses applications by cooperative societies seeking condonation of delay in filing income tax returns for claiming deduction under Section 80P.
The Court therefore held that Circular No. 13/2023 specifically governed the society’s case and displaced the applicability of Circular No. 09/2015 in the circumstances before it.
The Court further observed that the CCIT’s order dated June 15, 2026, did not refer to Circular No. 13/2023 even though the society’s January 12, 2026 application was based specifically on that circular.
The Court found that the CCIT had rejected the society’s application by relying upon Circular No. 09/2015, despite the specific circular applicable to cooperative societies seeking condonation for delayed Section 80P returns.
The judgment also notes that the earlier appellate proceedings before the CIT(A) and ITAT could not form the basis for rejecting the separate condonation application, particularly when the ITAT had expressly granted liberty to the society to pursue the application before the CCIT.
On the substantive question of condonation, the High Court took note of the circumstances prevailing in February and March 2021.
The Court recorded that COVID-19 had resulted in restrictions on public gatherings and periodic lockdowns during the relevant period. It also noted that the delay in receiving the audit report was attributable to the pandemic and that the report was statutorily required to be routed through the State Audit Department.
The Court concluded that the circumstances resulting in the 34-day delay were beyond the society’s control and brought the case within Clauses 6(i) and 6(ii) of CBDT Circular No. 13/2023.
The Court further observed that the circumstances constituted a case of “genuine hardship” and held that the CCIT had adopted a hyper-technical approach while considering the condonation application.
Allowing the petition, the Division Bench set aside the CCIT’s order dated June 15, 2026.
The Court expressly ordered that the 34-day delay in filing the income tax return for AY 2020-21 be condoned.
As a consequence, the respondents were directed to consider the society’s claim for deduction under Section 80P of the Income-tax Act for AY 2020-21 in accordance with law.
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