‘Act of God’ Beats ‘Act of Law’: ITAT Cites Kerala Floods as Valid Reason for Belated ITR, Kozhikode Co-op Society Wins 80P Deduction [Read Order]

In a ruling that prioritizes empathy over rigid procedural compliance, the Income Tax Appellate Tribunal ( ITAT ), Cochin Bench has allowed a co-operative society to claim an important tax deduction after accepting that the devastating Kerala floods of 2018 were a valid cause for its late income tax filing.

Nellikkaparamba Agricultural and Workers Welfare Co-operative Society Ltd. from Kozhikode, filed its income return on September 24, 2018, declaring nil income after claiming a deduction of Rs. 7,22,972 under Section 80P of the Income Tax Act for the assessment year 2018-19.

The Central Processing Centre (CPC) later processed this return and issued an intimation denying the entire deduction. The sole reason for this disallowance was that the society had filed its return after the due date of July 31, 2018. The society’s subsequent rectification plea was also rejected, a decision that was later upheld by the Commissioner of Income Tax (Appeals).

The centre of the society’s argument rested on a crucial instruction issued by the Central Board of Direct Taxes (CBDT). Following the catastrophic floods that crippled Kerala in August 2018, the CBDT used its powers to provide relief to taxpayers in the state.

It was issued an instruction that explicitly deemed all income returns and audit reports filed up to August 2, 2019, as having been submitted on time by the original due date of October 31, 2018. The society’s counsel argued that its return, filed well within this extended deadline, was therefore valid and the deduction should be permitted.

During the hearing, the senior departmental representative for the income tax department did not raise any objection to this factual submission. Acknowledging the extraordinary circumstances, the tribunal found merit in the society’s position. The ITAT set aside the orders from the lower authorities and remitted the matter back to the CPC.

The bench directed the processing centre to amend its earlier rectification order and allow the Section 80P deduction, taking into account the CBDT’s instruction that granted an automatic extension due to the natural disaster.

The order provides a clear victory for the co-operative society and affirms that legal deadlines can be rightly superseded by humanitarian considerations in the face of natural calamities.

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