EXTENDED DUE DATE SHOULD BE FOR ALL PURPOSES INCLUDING FOR INTERST U.S. 234A, 244A

[DEV KUMAR KOTHARI]

Relevant provisions of Income-tax Act, 1961 with brief observations:

Section 119 – instructions by CBDT includes extension of due dates for various purposes. The order should not be prejudicial to interest of assesse.

Section 139.1 due dates for filing of ROI- it get extended when an order is passed u.s.139 extending the due date.

Section 234A – for levy of interest for ROI filed after due date. due date should be as per order for  extending due date and not as mentioned in S.139.1 originally.

Section 244A, for grant of interest on refunds – due date should be so extended.

CBDT Order under Section 119 of the Income-tax Act 1961 extending due date from 30.09.2019 to 31.10.2019 vide F. No. 225/157/2019/ ITA.ll the 27^th September, 2019

Reasons for extension of date for filing ROI u.s. 139.1 and discussion about reasonable time:

Many times due date prescribed u.s. 139.1 is extended. Such extensions are required because:

1. Many times due to difficulties in different part of our country (sometimes abroad also) due date is extended. Such extension may be different for different parts of country or different type of assesses due to special circumstances applicable in different manner. 
2. In view of author, as per the due date fixed, time allowed at present, as per S.139.1 is not adequate. A period of four months (general cases) or six months (audit cases) from closing of previous year as on 31^st March of any financial year is not adequate.
   
   As was allowed many years ago, the period of at least five month (up to 31^st August) should be allowed generally, and period of seven month (up to 31^st October) should be allowed in case of assesse who are having income from business and profession and capital gains and period of nine months (up to 31^st December) in audit cases should be allowed.

Compliance and early filing is in interest of assesse:

Timely compliance is now very much essential. For many matters, up to date ROI are desirable e.g. for bank loans. Therefore, an assessed who can file ROI before due date will  in his own interest,  file earlier so that his work is completed, ROI is processed quickly and he gets refund quickly.

Significance of order of extension by CBDT:

When by an order of appropriate authority (e.g. CBDT under IT Act)  is passed for extending the date for filing of ROI the assesse is allowed to file ROI within such extended time and that ROI will be treated as filed within time allowed u.s. 139.1. The effect of order extending the due date is to replace the due date mentioned in S.139.1 for particular assessment year and particular class or classes of assesses for whom such order for extension is made by appropriate authority (CBDT for Income-tax).

Example of order extending due date (with highlights added) :

Order-Instruction - Income Tax

F. No. 225/157/2019/ITA.ll

Government of India

Ministry of Finance

Department of Revenue

Central Board of Direct Taxes

North-Block, ITA-II Division

New Delhi, the 27^th September, 2019

Order under Section 119 of the Income-tax Act 1961

The 'due-date' for filing income-tax returns for Assessment-year 2019-20 is 30.09.2019 for assessees covered under clause(a) of Explanation 2 to sub-section(1) of section 139 of the Income-tax Act,1961('Act'). It has been represented that some of the taxpayers are facing difficulties in filing their reports of audit and income- tax returns due to various reasons including availability of limited time with tax professionals for completion of audits, floods in certain parts of the country etc.

2. On due consideration of representations from various stakeholders for extending the due date, being 30^th September,2019 , for filing of income-tax returns and various reports of audit pertaining to assessment year 2019-20 for assessees' covered under clause (a) of Explanation 2 to section 139(1) of the Act read with relevant provisions of the Act and Income-tax Rules, the Central Board of Direct Taxes, in exercise of its powers conferred under section 119 of the Act, hereby extends the 'due-date', for filing income-tax returns as well as all reports of audit (which are required to be filed by the said specified due date), from 30th September, 2019 to 31st October 2019 . However, there shall be no extension of the due date for purpose of Explanation 1 to section 234A (interest for defaults in furnishing return) of the Act and the assessee shall remain liable for payment of interest as per provisions of section 234A of the Act.

(Rajarajeswari R.)

Under Secretary to the Government of India

Discussion on the order u.s. 119:

The Order is issued by CBDT u.s. 119. Particularly the provisions of clause (a) of  sub-section 2 is relevant  however, the entire section may  be considered to find out scope, limitations and  implications of such orders.

This clause covers inter alia others,  S.139 and  234A which have been referred to in the order. The section does not find a reference to S.244A.

In the per provisions  language used also contain that order should be  ‘…… setting forth directions or instructions (not being prejudicial to assesses).

Therefore, as per author the effect of the order extending the due date is that the due date as mentioned in S.139.1 is revised, in relation to assesses to whom the order relates.

Interest u.s. 244A:

Therefore, in cases covered by above order the due date was revised to 31^st October, 2019. Therefore, if an assesse to whom the order apply  has filed ROI on or before 31^st October 2019 for AY 2019-20 should be entitled to interest on refund on the basis of due date being 31^st October, 2019 and not 30^th September, 2019.

Therefore, in case ROI was filed on or before 31^st October, 2019 the assesse is entitled to interest u.s. 244A from 1^st April, 2019 if it is out of TDS, TCS, Advance Tax etc. which are covered by S.244A(1) (a).

Recent refunds:

It is observed that while granting interest u.s.244A(1)(a) (i) due date has been considered as 30^th September, 2019 therefore ROI is considered belated one and interest has not been allowed from 1^st April,2019.  Interest has been allowed as per S.244A (1)(a) (ii) from the date of furnishing of ROI to the date of granting of refund.

For example, as per one of intimation u.s. 143.1   ROI was filed on 31^st October, 2019, that is within extended due date u.s. 139 (1). Intimation is dt. 09042020 is issued, thus interest is granted on this date.

Therefore, grant of interest is covered by provisions of  S. 244A (1) (a) (i). As per this provision interest should be allowed for months beginning April 2019 to April 2020 because interest is to be allowed @ one-half per cent for every month or part of month. Therefore, interest should be granted for 13 months equal to 6.5% of amount of refund which is out of TDS. However interest has actually been allowed to the extent of 3.5 % that is only for 7 months.    

This is not at all justified for the following reasons:

Entire amount of tax was paid within the PYE 31032019 and in fact major part was paid in initial part of previous year. Interest has been denied for period from April to September 2019 by treating ROI as belated one, although it was filed within extended date.

There is no such direction or order in the order u.s.119, denying interest for the period from April to September 2019. Even if such order is made it will not be valid because an order cannot be to the prejudice to interest of assesse.

If the amount involved will be small ( suppose refund is of Rs. one lakh 3 % will be ₹ 3000) in most of the cases it is not likely that assesses will indulge into litigation, but the order denying interest for the period from April to September 2019 is totally unjust, unfair and seems illegal.

Order about interest u.s. 234A seems to be invalid:

When due date is extended u.s. 139 vide an order u.s. 119 the extended due date is due date for compliance and for all purposes of the Act. A major part of tax is paid by way of TDS, TCS, advance tax. Etc. Balance if any is paid as self-assessment tax, which is ascertained on finalisation of ROI. Therefore, once due date is extended to 31^st October, 2019 the same date should be for purpose of interest u.s.234A. Therefore, the order about charging interest u.s.234A for the month of October, is not justified. This being prejudicial to interest of assesse seems contrary to the provisions of S.119 and beyond power of relaxations available u.s. 119. The Board cannot increase rigours of provisions so as to cause prejudice to assessee.

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