Condonation of Delay Under Section 80P: Punjab & Haryana High Court Holds Specific CBDT Circular No.13/2023 Prevails Over General Circular No.09/2015
Introduction
The Punjab & Haryana High Court in CWP No.24673 of 2026 (O&M) examined the interplay between Section 80AC(ii) of the Income-tax Act, 1961 and CBDT circulars governing condonation of delay in filing returns by co-operative societies claiming deduction under Section 80P. The dispute concerned the assessment year 2020-21, where the petitioner co-operative society filed its ITR after the extended due date, delayed by 34 days, citing COVID-19 disruption and delayed audit report. Its Section 80P deduction was denied by the Assessment Order, and the appellate authorities upheld the denial, though the ITAT gave liberty to seek condonation. The CCIT rejected the condonation application relying on CBDT Circular No.09/2015 dated 09.06.2015. The High Court held that the specific CBDT Circular No.13/2023 dated 26.07.2023, which expressly covers condonation of delay for co-operative societies claiming Section 80P deduction for AY 2018-19 to 2022-23, governed the case. Consequently, the CCIT’s order was held unsustainable.
Facts
The petitioner is a co-operative society registered under the Societies Registration Act, 1860. For the assessment year 2020-21, the last date for filing income tax returns was 15.02.2021. The original due date of 31.07.2020 had been extended by the respondent-authorities on account of the spread of COVID-19. The petitioner received its audit reports on 22.02.2021. Such reports were statutorily required to be routed through the State department.
On 09.03.2021, the petitioner filed an application before the respondent-authorities seeking condonation of delay in filing its ITR. This was responded to by the Income Tax authorities through letter dated 17.03.2021 advising the petitioner to file its belated ITR under Section 139(4) of the Act. The petitioner did so on 20.03.2021, claiming deduction under Section 80P of the Act.
On 19.09.2022, an Assessment Order for AY 2020-21 was passed under Section 143(3) read with Section 144B of the Act, whereby the petitioner’s claim for deduction under Section 80P was disallowed by placing reliance on Section 80AC(ii) of the Act as there was delay in filing the return. The petitioner challenged the Assessment Order through an appeal under Section 246A of the Act, which was dismissed by the CIT(A) on 12.12.2025. The petitioner’s appeal before the ITAT was also dismissed on 19.03.2026, upholding the CIT(A)’s order. However, the ITAT granted liberty to the petitioner to pursue its condonation application before the CCIT.
On 12.01.2026, the petitioner had already filed an application before the CCIT seeking condonation of delay of 34 days in filing its ITR for AY 2020-21, relying on CBDT’s Circular No.13/2023 dated 26.07.2023. In terms of the liberty granted by the ITAT, the petitioner pursued this application, which was rejected by the CCIT through order dated 15.06.2026, relying on CBDT’s Circular No.09/2015 dated 09.06.2015. The High Court was then approached through the instant petition.
Reasoning
The High Court’s reasoning centred on the correct applicability of CBDT circulars issued under Section 119(2)(b) of the Income-tax Act, 1961. Section 80AC(ii) provides that deduction under Chapter VI-A, Part C—Deductions in respect of certain incomes—is not allowable unless the assessee furnishes the return of income on or before the due date specified under Section 139(1). The text of Section 80AC(ii) was reproduced by the Court, and it clearly states that no deduction shall be allowed unless the return is furnished on or before the due date under Section 139.
However, the case turned on the condonation mechanism. CBDT Circular No.13/2023 dated 26.07.2023 specifically authorises CCsIT/DGsIT to deal with applications for condonation of delay in filing returns of co-operative societies claiming deduction under Section 80P for AY 2018-19 to 2022-23. The circular requires examination of whether the delay was beyond the assessee’s control and/or caused by delay in getting accounts audited under State laws. The petitioner’s case fell squarely within this circular: it was a co-operative society, claimed Section 80P deduction for AY 2020-21, and explained the delay through COVID-19 disruption and delayed receipt of audit reports.
The High Court observed that the petitioner’s case “fits like a glove” onto Circular No.13/2023. The CCIT, however, did not even refer to Circular No.13/2023 and instead relied on Circular No.09/2015 dated 09.06.2015. That general circular deals with condonation of delay in filing returns claiming refund and carry forward of loss/set-off under Section 119(2)(b), and does not deal with Section 80P deduction cases. The High Court found that the general Circular No.09/2015 could not elbow out the specific Circular No.13/2023. The CCIT’s rejection of the condonation application was therefore erroneous and unsustainable.
The revenue contended that the petitioner received its audit report on 22.02.2021 but filed its ITR only on 20.03.2021, i.e., after 26 days, and that this delay remained unexplained. The petitioner rebutted this by pointing out that the delay was explained by the receipt of the audit report on 22.02.2021 and the application dated 09.03.2021 filed before the respondent-authorities seeking condonation. The authorities responded on 17.03.2021 advising the petitioner to file a belated ITR under Section 139(4), which the petitioner did on 20.03.2021. The petitioner also placed reliance on the Madras High Court judgment in T943 Vickrapandiyam Primary Agricultural Co-operative Credit Society Ltd. Vs. Chief Commissioner of Income-tax, (2026) 187 taxmann.com 97 (Madras).
The High Court’s reasoning reinforces a key principle: where a specific circular governs condonation of delay for a particular class of assessees and deductions, it must prevail over a general circular. The CCIT was required to examine the petitioner’s case under Circular No.13/2023, including whether the delay was beyond the assessee’s control or caused by delay in getting accounts audited under State laws. By failing to apply the correct circular, the CCIT’s order could not stand.
Conclusion
The Punjab & Haryana High Court held that the CCIT’s order dated 15.06.2026 was unsustainable. The specific CBDT Circular No.13/2023 dated 26.07.2023, which expressly covers condonation of delay for co-operative societies claiming Section 80P deduction for AY 2018-19 to 2022-23, governed the petitioner’s case. Circular No.09/2015 dated 09.06.2015, concerning refund and carry forward loss claims, was inapplicable. The decision clarifies that specialized circulars for Section 80P delay condonation prevail over general circulars. It also underscores the interaction between Section 80AC(ii), Section 139(1), and Section 119(2)(b) condonation powers. For co-operative societies, the ruling is a significant reminder that the correct circular must be invoked and examined by the CCIT before rejecting a condonation application.