2021 (1) TMI 338 - HC - Income Tax

Extend the due date for filing the Income Tax Returns (ITR) and Tax Audit Reports (TAR) for AY 2020-21 to 31.01.2021 - covid-19 pandemic situation - seeking not to make any alternations in Forms and Utilities or changes in tax compliance requirements, after the beginning of the Assessment year in which the same are made applicable; providing the tax payers and the tax practitioners a clear period of 183 and 214 days to prepare and submit the due reports and forms respectively. HELD THAT - We are of the view that the respondent No.1 Union of India, Ministry of Finance should immediately look into the issue, more particularly, the representation dated 12th October 2020 at Annexure I of the paper book (page 108) and take an appropriate decision at the earliest in accordance with law. We, accordingly, direct the respondent No.1 to do so. While taking an appropriate decision, the Union shall bear in mind the observations made by this High Court in the All Gujarat Federation of Tax Consultants 2014 (9) TMI 784 - GUJARAT HIGH COURT AND 2015 (10) TMI 25 - GUJARAT HIGH COURT more particularly, the observations of Vaghjibhai S. Bishnoi 2013 (8) TMI 370 - GUJARAT HIGH COURT that the powers given to the CBDT are beneficial in nature to be exercised for proper administration of fiscal law so that undue hardship may not be caused to the taxpayers. The purpose is of just, proper and efficient management of the work of assessment and the public interest. One additional aspect needs to be kept in mind before taking any appropriate decision that the time period for the officials of the tax department has been extended upto 31st March 2021 having regard to the current covid19 pandemic situation. If that be so, then some extension deserves to be considered in accordance with law. Let an appropriate decision be taken by 12th January 2021. Post this matter on 13th January 2021 on top of the Board.

Issues Involved:
1. Extension of due date for filing Income Tax Returns (ITR) and Tax Audit Reports (TAR) due to COVID-19 pandemic.
2. Frequent changes in forms and utilities by the tax authorities.
3. Hardship caused to tax practitioners and assessees due to delayed release of e-filing utilities.
4. Non-response to representation by the Union Finance Ministry.
5. Legal precedents regarding extension of due dates for tax filings.

Detailed Analysis:

1. Extension of Due Date for Filing ITR and TAR:
The petitioners, a trust and a practicing Chartered Accountant, sought a writ of mandamus directing the respondents to extend the due date for filing ITR and TAR for AY 2020-21 to 31st January 2021, citing the COVID-19 pandemic and related work constraints. They argued that the current extension to 31st October 2020 was insufficient given the ongoing pandemic and the government directives on workplace safety and reduced workforce. The petitioners highlighted the severe hardship faced by tax practitioners in completing audit work within the extended due date, exacerbated by the pandemic.

2. Frequent Changes in Forms and Utilities:
The petitioners contended that the respondents frequently made last-minute changes to forms and utilities, which caused significant delays and reduced the effective time available for filing returns. They provided a detailed chart showing the delays in the release of e-filing utilities for various ITR forms, arguing that such delays curtailed the time available for filing returns to a great extent. The petitioners emphasized that such frequent changes and delays were arbitrary and unreasonable, violating Articles 14 and 19(1)(g) of the Constitution of India.

3. Hardship Caused to Tax Practitioners and Assessees:
The petitioners argued that the delayed release of e-filing utilities caused severe hardship to tax practitioners and assessees. They pointed out that tax audits are detailed and time-consuming exercises, and the delayed issuance of forms and utilities left insufficient time for practitioners to complete their work. The petitioners also highlighted that more than 50% of ITRs and TARs were filed using private software, which required time to update in response to changes in schema and utilities.

4. Non-response to Representation by the Union Finance Ministry:
The petitioners submitted that they had made a detailed representation to the Union Finance Minister on 12th October 2020, seeking an extension of the due date for filing ITR and TAR. However, there had been no response from the respondents, prompting the petitioners to seek judicial intervention.

5. Legal Precedents Regarding Extension of Due Dates:
The petitioners relied on two previous judgments by the Gujarat High Court, where the court had criticized the respondents' tendency to make last-minute changes and had directed the extension of due dates for filing returns. The court in those cases had emphasized the duty of the respondents to ensure that necessary utilities for e-filing returns were made available at the beginning of the assessment year. The petitioners argued that the current situation was similar and warranted a similar extension of the due date.

Court's Interim Order:
After hearing the arguments, the court decided to keep the writ application pending and pass an interim order in the larger interest of justice. The court directed the Union of India, Ministry of Finance, to immediately look into the issue, particularly the representation dated 12th October 2020, and take an appropriate decision by 12th January 2021. The court emphasized that the powers given to the CBDT are beneficial in nature and should be exercised to avoid undue hardship to taxpayers. The court also noted that the time period for the officials of the tax department had been extended to 31st March 2021 due to the pandemic, suggesting that a similar extension for taxpayers should be considered.

The matter was posted for further hearing on 13th January 2021, with the respondents directed to apprise the court of any decision or development in the matter by the next hearing date.

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