2018 (3) TMI 965 - HC - Income Tax

Extension of time for filing of the income tax return rejected u/s 119 - delay in filing of the return was on account of illness of the Chartered Accountant, i.e., the statutory auditor and consequently the return due on 31st October, 2006 was filed on 30th March, 2007 - reasonable ground for extension of time - Statutory time limits fixed have to be adhered to as it ensures timely completion of assessments. Discipline on time limits regarding filing of returns have to be complied and respected, unless compelling and good reasons are shown and established for grant of extension of time. Extension of time cannot be claimed as a vested right on mere asking and on the basis of vague assertions without proof. Statutory audits it is a common knowledge are not undertaken by one person but by a team consisting of auditor(s), article clerks and others. In the present case, we do not know the nature of illness or medical emergency suffered by the auditor and how long the auditor was incapacitated and could not work. The assertions made to justify extension of time have to be proved and established. Any indulgence on the pretext that the petitioner has been denied benefit under Section 80IB, which on merits would have been allowed, would be contrary to law, if it is held that there was no reasonable ground or reason for extension of time in filing of the return. - Decided against assessee

Issues Involved:
1. Extension of time for filing income tax return under Section 119(2)(b) of the Income Tax Act, 1961.
2. Denial of deduction under Section 80IB due to delayed filing of return.
3. Justification for delay due to the illness of the auditor.
4. Finality of the Tribunal's order.
5. Procedural and factual examination by the CBDT.

Detailed Analysis:

1. Extension of Time for Filing Income Tax Return under Section 119(2)(b):
The petitioner, an association of persons, filed a writ petition challenging the CBDT's order dated 8th February 2017, which dismissed their application for an extension of time to file the income tax return for the Assessment Year 2006-07. The return was due on 31st October 2006 but was filed on 30th March 2007. The application for extension was made on 11th May 2011, more than four years after the return was filed.

2. Denial of Deduction under Section 80IB Due to Delayed Filing of Return:
The Assessing Officer disallowed the deduction under Section 80IB because the return was not filed within the time limit specified under Section 139(1), as mandated by Section 80AC. This disallowance was upheld by the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal. The petitioner did not appeal against the Tribunal's order, which thus attained finality.

3. Justification for Delay Due to the Illness of the Auditor:
The petitioner claimed that the delay in filing the return was due to the illness of their Chartered Accountant. However, the auditor did not provide specific details or evidence of the illness. The CBDT conducted a thorough examination, querying the auditor, who admitted to the delay but failed to provide substantial proof or detailed information about the illness. The auditor also acknowledged that other audits were completed on time, indicating that this particular delay was not justified by a significant medical emergency.

4. Finality of the Tribunal's Order:
The Tribunal's order dated 31st October 2012, which upheld the disallowance of the deduction under Section 80IB, was not appealed by the petitioner and thus attained finality. The High Court noted that they were not examining the merits of this order but focusing on the CBDT's rejection of the extension application.

5. Procedural and Factual Examination by the CBDT:
The CBDT's order was detailed and factual. It concluded that the delay in filing the return was substantial (five months) and that the petitioner had not demonstrated a reasonable cause for the delay. The assertions of medical emergency were vague and unsupported by evidence. The CBDT emphasized that statutory time limits must be adhered to ensure timely completion of assessments and that extensions cannot be granted based on unsubstantiated claims.

Conclusion:
The High Court upheld the CBDT's decision, stating that the findings were factual, lucid, and cogent. The petitioner failed to provide compelling reasons or adequate proof for the delay. The Court emphasized the importance of adhering to statutory time limits and dismissed the writ petition without any order as to costs.

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