Timely compliance is important. File Returns and forms timely to avoid definite losses and contingencies due to late filing. Condonation of delay , even if allowed by CBDT may not be final.

[DEV KUMAR KOTHARI]

Timely compliance is important.

File Returns and forms timely to avoid definite losses and contingencies due to late filing. Condonation of delay , even if allowed  by CBDT may  not be  final.

Need to think to revert back to old provisions and to empower Assessing Officers to condone delay / allow extension to file ITR and forms to save valuable time of CBDT and Courts.

Provision – Section 119 , 139 and similar provisions ( fixing time limits) of the Income Tax act, 1961

Article 136 , 226 and 227 of the Constitution of India.

The Supreme Court left question of law open /  unanswered

CENTRAL BOARD OF DIRECT TAXES & OTHERS VERSUS M/S. VASUDEVA ADIGAS FAST FOOD PVT. LTD. - 2021 (7) TMI 1372 - SC ORDER. Read with related judgments of High Court   CENTRAL BOARD OF DIRECT TAXES NEW DELHI, THE PRINCIPAL COMMISSIONER OF INCOME TAX -2 BENGALURU, THE INCOME TAX OFFICER WARD 7 (1) (3) , BENGALURU VERSUS M/S. VASUDEV ADIGAS FAST FOOD PVT. LTD.  - 2021 (7) TMI 525 - KARNATAKA HIGH COURT and  VASUDEV ADIGAS FAST FOODS PVT. LTD. VERSUS CENTRAL BOARD OF DIRECT TAXES, THE PRINCIPAL COMMISSIONER OF INCOME TAX-2, THE INCOME TAX OFFICER WARD 7 (1) (3) - 2020 (1) TMI 921 - KARNATAKA HIGH COURT

DEPUTY COMMISSIONER OF INCOME TAX & ANR. VERSUS SURENDRANAGAR DISTRICT CO-OPERATIVE BANK LTD. - 2019 (7) TMI 886 - SC ORDER

Read with related judgments of High Court - THE SURENDRANAGAR DISTRICT CO-OPERATIVE BANK LTD. VERSUS THE DEPUTY COMMISSIONER OF INCOME TAX - 2019 (4) TMI 1169 - GUJARAT HIGH COURT

From case of VASUDEVA ADIGAS (SC) paragraph 3

“...   However, at the same time, the question of law, “whether the CBDT, while exercising the powers under Section 119(2)(b) of the Income Tax Act, can direct to condone the delay in filing the return of income” is kept open to be considered in an appropriate case. It is further observed that the impugned judgment and order passed by the High Court be not treated as a precedent.

From case of SURENDRANAGAR (SC)  (supra)

Delay condoned.

The special leave petition is dismissed.

However, the question of law is left open.

Section 119 (2)  (b)

(2) Without prejudice to the generality of the foregoing power,-

(b) the Board may, if it considers it desirable or expedient so to do for avoiding genuine hardship in any case or class of cases, by general or special order, authorise any income-tax authority, not being a Joint Commissioner (Appeals) or a Commissioner (Appeals) to admit an application or claim for any exemption, deduction, refund or any other relief under this Act after the expiry of the period specified by or under this Act for making such application or claim and deal with the same on merits in accordance with law;

Application for Condonation of delays:

In above referred cases applications were made by assessee under S.119 (2) (b) of the Income Tax Act . The Board did not allow the same, however, the High Courts allowed the same by  directing the Revenue to accept the belated return of income by condoning the delay.

This means that factually delay has been condoned by High Court in exercise of its power under Article 226 and 227  of the Constitution of India and in view of facts honorable Supreme Court considered that it is not required to interfere in exercise of power under Article 136.

 Paragraph 3 and 4 from judgment in case of VASUDEVA ADIGAS FAST FOOD PVT. LTD(SC)  are reproduced below with highlights added by author:

3. Having heard Shri N. Venkatraman, learned ASG and having considered the facts and circumstances due to which the respondent-assessee, at the relevant time, could not file the return of income within the time prescribed, the order passed by the High Court directing the Revenue to condone the delay and accept the belated return of income and to consider the return of income in accordance with law on merits does not warrant any interference. The facts which led to the assessee in late filing of the return of income are glaring. Therefore, no interference of this Court is called for, in exercise of powers under Article 136 of the Constitution of India. However, at the same time, the question of law, “whether the CBDT, while exercising the powers under Section 119(2)(b) of the Income Tax Act, can direct to condone the delay in filing the return of income” is kept open to be considered in an appropriate case. It is further observed that the impugned judgment and order passed by the High Court be not treated as a precedent.

4. With the aforesaid observations, the present special leave petition stands dismissed. Pending application, if any, also stands disposed of.

 

From judgment VASUDEV ADIGAS FAST FOODS PVT. LTD. VERSUS CENTRAL BOARD OF DIRECT TAXES, THE PRINCIPAL COMMISSIONER OF INCOME TAX-2, THE INCOME TAX OFFICER WARD 7 (1) (3) - 2020 (1) TMI 921 - KARNATAKA HIGH COURT

              Para   3. In this petition under Article 226 and 227 of the Constitution of India, the petitioner inter alia seeks a writ of certiorari for quashment of order dated 16.01.2018 passed by the Central Board of Direct Taxes under Section 119(2)(b) of the Income Tax Act, 1961(hereinafter referred to as ‘the Act’, for short) and to allow the application submitted by the petitioner dated13.10.2016 for condonation of delay in filing the return of income for the assessment year 2014-15.

Para 12. In the considered opinion of this Court and in the fact situation of the case as well as bearing in mind the well settled legal proposition that the expression ‘genuine hardship’ should receive liberal consideration, the instant case was a fit case for condonation of delay. In view of the preceding analysis, the impugned order dated 16.01.2018 passed by the Central Government is hereby quashed and delay in filing the return of income for the assessment year 2014-15 is condoned.

In the result, the petition is allowed.

Unquote:

In view of above judgments and orders it seems that it is doubtful whether CBDT has power to condone delay in filing of Returns and forms or not. This is due to reason that there is no specific power but it is considered as derived from general powers.

Therefore, it is desirable that there should be made a specific provision authorizing proper authorities to condone delays.

Now the important aspects to be considered are:

Whether, power should be vested with CBDT  or Pr.CIT, CIT, CIT (A) or AO?

Ground reality is that the assessing officer is most suitable authority in case of any of his assessee because he has most of relevant  records of assesse including  for earlier years and subsequent years ( if any). AO is more conversant with the facts, circumstances of the assessee.

CBDT is highest authority, it is to guide, instruct tax authorities as per law and not to decide specific issue of any assessee.

Making and pursuing application before CBDT is not easy , affordable and suitable for general assesse.

Need to authorize the A.O. to extend dates:

Earlier there was provision and prescribed form (form no. 6) for making an application for extension of time to file return of income. However, this was discontinued. It is desirable to reintroduce the same and  the A.O. should have some discretion to extend time to file return of income , tax audit report and other reports if the assesse shows reasonable cause for  delay.

Suitable guidelines can be framed for allowing extensions or condoning delay about facts and circumstances, type of difficulties and hardships, number of times and period of delays which can be granted, time limit for making application and its disposal etc.

The article is specific to extension of filing of Returns, Forms , reports etc. however, it is also relevant in context of other provisions also to be considered specific provisions therein and other relevant factors.