DESIRABILITY TO ALLOW EXTENSION BY ASSESSING OFFICERS without loss to assessee and revenue both – combing back of old provision is need of hour in view of COVID19 and OMICRON related problems and similar other serious health conditions and other contingencies etc.

[DEV KUMAR KOTHARI]

DESIRABILITY TO ALLOW EXTENSION BY ASSESSING OFFICERS without loss to assessee and revenue both – combing back of old provision is need of hour in view of COVID19 and OMICRON related problems and similar other serious  health conditions and other contingencies etc.

Limitations for filing or Returns:

Last dates for filing of Returns are fixed under relevant enactments for example Income Tax Returns are to be filed within time prescribed under the Income Tax Act, 1961 vide section 139. These limitations are popularly called original due dates.

General extensions due to some reasons by CBDT us 119:

CBDT is empowered to extend due dates for specific area or specific type of cases in public interest after considering difficulties being faced by assesses in particular area or particular type of assesses. Sometimes extension is also allowed for entire country if the reasons causing difficulties are common.

Extension by CBDT  in specific case on application us 119:

Any particular assesse can also apply for extension of time by making application before the CBDT. However, it is not easy for general public and small assesses to make application, follow up and obtain extension. Furthermore this route is full of contingencies about whether extension will be allowed or not. Therefore, this route is applicable only in case of large cases of organized assesses. And is difficult to be followed by general public particularly small assesses.

Desirability of provisions for extension by AO

In view of uncertainties in life of any one many times it become difficult to comply with filing of returns within due dates. Delayed ROI can cause several consequences including penal provisions for interest and prosecution. Some benefits can be denied like some deductions and carry forward of losses etc.

Due to COVID and related lockdowns and restricted working conditions there are many more , unprecedented difficulties and uncertainties. Health conditions of assesse ,  family members ,his relatives and many times even of neighbors become relevant to require extra ordinary concerns and involvements.

Therefore, there must be provision of application by assesse and extension of time by AO to enable assesse to file Returns and Forms without adverse impact on his claims.

Extension with condition to pay interest as per law:

CBDT has also adopted practice to allow extensions in special circumstances subject to payment of interest for delayed payment of advance tax, self-assessment tax in varying conditions depending to prevailing circumstances and amounts involved.  So in case of extensions allowed by the AO also similar conditions can be imposed so that assesse refrain from seeking extensions  un-necessarily.

In case extension is allowed by the AO in view of application made by assesse, any deductions, rights of carry forward of deductions and losses , interest on tax refunds and other similar  claims  in favor of assesse should be allowed as if timely filing of Forms and returns  is complied with. So there should not be loss to assesse.

Likewise government should also not suffer loss of revenue and interest should be payable based on originally and statutorily fixed limitations.

Guidelines can be provided:

Guidelines can be provided by CBDT to include:

Reasons or illustrative reasons for which extension can be allowed these can include:

             Serious  sickness , accident, uncertainties in health and  working of assesse , his family members and concerned persons who are involved in filing of forms and returns.

               Within fifteen days before  due date  sudden  sickness , accident, uncertainties in health and  working of assesse , his family members and concerned persons who are involved in filing of forms and returns.

Serious financial difficulties causing administrative difficulties in case of assessee having business operation.

Form, manner and time limits for filing of application before AO and repetitive applications.

Extension periods- with upper limit. Different limits can be fixed for extension by AO and for more extension with prior approval of prescribed senior authority.

Concept of confide in assessee should be followed, and reasonable time sought should be allowed without any doubt, presumption and conjecture.

Generally first application should not be rejected. For second application it should be accompanied with evidences

Order on application should be passed and served within 30 days . If no order is passed it must be deemed to have been allowed.

There should be presumption of extension of 15 days from date of application and if application is rejected,  order of rejection should be served within ten days from date of application, so that assessee has at least five days time to make compliances.

Earlier provisions:

Author recall, earlier there was specific provision for making application before the AO for extension of time to file ROI. The prescribed from was simple ( then prevailing  Form 6). The AO took practical aspects into consideration including practical difficulties of assesse. The AO acted in local area and assesse usually had AO in his local area., appearance before the AO was also easy to follow up application. However now situation has changed.

Footnote 16 to S.139 , as appears on this website shows history about provision for extension of due date by AO. The said footnote is reproduced below within highlights added:

             16.  "or by the thirty-first day of July of the assessment year relevant to the previous year during which the loss was sustained" omitted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989. Prior to its omission, the said expression was substituted for "within such further time which, on an application made in the prescribed manner, the Income-tax Officer may, in his discretion allow" by the Taxation Laws (Amendment & Miscellaneous Provisions) Act, 1986, w.e.f. 1-4-1987. Original expression was inserted by the Taxation Laws (Amendment) Act, 1970, w.e.f. 1-4-1971.

Un quote:

Author also recall that it was also held  by Courts and Tribunals that if an assesse has made application and AO did not rejected the same then it will be assumed that time was extended. Therefore, in other words even on rejection time up to serving of order of rejection could be considered as extended if rejection order was not passed within reasonable time.

AO could have allowed shorter time and can consider repetitive applications also.

Variety of reasons causing difficulty in filing of ITR were considered.

Therefore, the procedure was simple and easy. Whereas filing an application before CBDT is not so easy.