2015 (10) TMI 25 - HC - Income Tax

Electronically filing of income tax returns relevant for assessment year 2013-14 and onwards - non-extension of the date for filing the income tax returns - stand of the Board is that the period of seven weeks which is available to the petitioner and other assessees for filing online income tax returns, is sufficient and therefore, there is no reason for extending the due date for filing the income tax returns - Held that - Clause (f) prescribes Form No. ITR-6 in the case of a company not being a company to which clause (g) applies and clause (g) prescribes Form No.ITR-7 in the case of a person including a company whether or not registered under section 25 of the Companies Act, 1956 which is required file return under the relevant sub-sections of section 139 of the Act mentioned thereunder. Not all the aforesaid classes of assessees are required to be audited under section 44AB of the Act. Therefore, it is not just assessees who are subject to tax audit under section 44AB of the Act who are affected by the non-extension of due date but assessees belonging to all the above categories who may not be subject to tax audit under section 44AB. The number of tax audits conducted by a Chartered Accountant may be limited to 60, but the total number of assessees that he deals with is not limited to 60, as a large number of assessees may belong to the categories which are not subject to tax audit under section 44AB of the Act. The Board while not extending the due date for filing return was also of the view that due date should not be extended just for the benefit of those who have remained lax till now for no valid reason in discharging their legal obligations. It may be noted that despite the fact that ordinarily the ITR Forms which should be prescribed and made available before the 1st of April of the assessment year, have in fact, been made available only on 7th August, 2015 and the assessees are given only seven weeks to file their tax returns. Therefore, laxity, if any, evidently is on the part of the authority which is responsible for the delay in making the utility for E-Filing the return being made available to the assessees. When the default lies at the end of the respondents, some grace could have been shown by the Board instead of taking a stand that such a trend may not be encouraged. Had it not been for the laxity on the part of the respondents in providing the utilities, there would not have been any cause for the petitioners to seek extension of the due date for filing tax returns. It may be noted that despite the fervent hope expressed by the court that the respondents in future may plan any change well in advance, a similar situation has prevailed in the present year also and the utilities for e-filing of income tax returns have been made available as late as on 7th August, 2015, leaving the petitioners and other assessees with less than one third of the time that is otherwise available under the statute. While it is true that the powers under section 119 of the Act are discretionary in nature and it is for the Board to exercise such powers as and when it deems fit. However, it is equally true that merely because such powers are discretionary, the Board cannot decline to exercise such powers even when the conditions for exercise of such powers are shown to exist. In the light of the above discussion, the petition partly succeeds and is accordingly allowed to the following extent. The respondent Board is hereby directed to forthwith issue requisite notification under section 119 of the Act extending the due date for e-filing of the income tax returns in relation to the assessees who are required to file return of income by 30th September, 2015 to 31st October, 2015. The respondents shall henceforth, endeavour to ensure that the forms and utilities for e-filing of income tax returns are ordinarily made available on the 1st day of April of the assessment year

Issues Involved:
1. Mandatory e-filing of income tax returns.
2. Delay in providing utility/software for e-filing returns.
3. Extension of due date for filing income tax returns.
4. Hardship to assessees due to delayed utility availability.
5. Board's discretion under Section 119 of the Income Tax Act.
6. Judicial review of policy decisions.

Detailed Analysis:

1. Mandatory E-filing of Income Tax Returns:
The petitioners, a Trust and its President, challenged the mandatory requirement for assessees to electronically file income tax returns from assessment year 2013-14 onwards. This requirement was enforced through a notification dated 01.05.2013.

2. Delay in Providing Utility/Software for E-filing Returns:
For assessment year 2015-16, the utility software for filing income tax returns (Forms ITR-3, ITR-4, ITR-5, ITR-6, and ITR-7) was made available only on 07.08.2015. This delay caused significant confusion and hardship among Chartered Accountants and assessees, as they were unable to file returns from 1st April to 7th August 2015.

3. Extension of Due Date for Filing Income Tax Returns:
The petitioners sought an extension of the due date for filing income tax returns from 30.09.2015 to 30.11.2015 due to the delayed availability of the e-filing utility. They argued that the delay curtailed the statutory period of 180 days available for filing returns, causing immense prejudice to assessees.

4. Hardship to Assessees Due to Delayed Utility Availability:
The petitioners contended that the delay in providing the utility was not the fault of the assessees. They highlighted that the assessees were unaware of the changes in the forms until they were notified, making it impossible to file returns earlier. They emphasized that the Board had previously extended the due date for filing tax audit reports but not for income tax returns, causing undue hardship.

5. Board's Discretion Under Section 119 of the Income Tax Act:
The petitioners argued that the Central Board of Direct Taxes (CBDT) has discretionary powers under Section 119 of the Income Tax Act to extend the due date for filing returns to alleviate genuine hardship. They cited a previous judgment where the court directed the CBDT to extend the due date for filing returns due to similar circumstances.

6. Judicial Review of Policy Decisions:
The respondents contended that the petition was more in the nature of a public interest litigation and that no cause of action for infringement of any constitutional article was shown. They argued that the Board's decision not to extend the due date was a policy decision and should not be interfered with by the court. They also cited decisions from other High Courts (Delhi, Karnataka, Rajasthan) that had not granted relief in similar petitions.

Judgment:
The court held that the Board's discretionary powers under Section 119 are beneficial and should be exercised to alleviate undue hardship to assessees. The court observed that the delay in providing the utility curtailed the statutory period for filing returns, causing hardship to assessees. The court directed the Board to extend the due date for e-filing income tax returns from 30.09.2015 to 31.10.2015. The court also emphasized that the Board should ensure that forms and utilities for e-filing returns are made available on 1st April of the assessment year to avoid such situations in the future. The petition was partly allowed, and the rule was made absolute to the extent of extending the due date for e-filing returns.

← Previous Next →