ITAT Bangalore Refuses to Condon Delay of 840 Days in Section 80P Deduction

The “SMC” Bench of the Income Tax Appellate Tribunal, Bangalore, delivered its order on 24 February 2026 in the case of Sri Sai Souhardha Credit Co-operative Society Ltd. for Assessment Year 2020–21. The appeal arose from dismissal by the National Faceless Appeal Centre on the ground of inordinate delay in fi ling the fi rst appeal against assessment disallowing deductions under Section 80P of the Income-tax Act.

Disallowance of Section 80P Deduction on Other Income and Bank Interest

The assessee, a credit co-operative society registered under the Karnataka Souhardha Act, had claimed full deduction under Section 80P on its income. The Assessing Officer found that certain receipts such as processing fees, share entry fees, e-stamping service charges, and miscellaneous collections amounting to ₹7.17 lakh were not part of the core activity of providing credit facilities to members and therefore not eligible for deduction. Further, interest income of ₹27.96 lakh earned from deposits with national and private banks was treated as “income from other sources” and not attributable to the society’s business of lending to members. The AO accordingly denied deduction on these amounts and assessed taxable income at ₹35.14 lakh instead of nil.

Tribunal Upholds Dismissal for Inordinate Delay

The assessee’s appeal before the CIT(A) was fi led after a delay of 840 days, which was sought to be explained on the ground that the Chartered Accountant handling tax matters had not informed the society about the assessment order and demand. The CIT(A) rejected this explanation and dismissed the appeal in limine. The ITAT agreed with this approach, observing that all notices and orders were available on the income-tax portal and that the assessee failed to show diligence in tracking its case. Merely shifting blame to the tax professional was held insufficient to constitute “sufficient cause” for condonation.

Emphasising that limitation laws protect legal certainty and discourage negligence, the Tribunal refused to condone the delay and dismissed the appeal.