2014 (9) TMI 784 - HC - Income Tax

Non-extension of the period of filing of the ITR Extension of period beyond the period of 30th September, 2014 while exercising the powers conferred u/s 119 of the Act by the CBDT while extending such period for the purpose of furnishing the Tax Audit Report to be filed u/s 44AB of the Act to 30th November, 2014 Held that -The requirement of filing of documents, statements, receipts, certificates, reports of audit or any other documents, etc. by virtue of the powers given to the CBDT under section 139C & 139D have been done away with - though otherwise the requirement is of furnishing TAR either prior to the filing of ITR or when so done along with ITR have been provided by these provisions, later insertion of provision made the return annexure-less and the rule provides the same to be furnished electronically - There would be no requirement of furnishing these documents, particularly, TAR with ITR - with the details required in the computation of income and other details and complex working are for all practical purposes, if filled-in, in absence of the availability of TAR, the possibility would be manifold where this non-extension may give rise to multiplicity of proceedings - On making available the TAR subsequent to the filing of ITR, more and more revised returns, if are filed even though it is provided statutorily, this rise in the proceedings on account of non-extension of the due date cannot be left sight of. The impact of any extension of the due date, if at this stage, requires serious consideration as well - the entire situation is arising not on account of any contribution on the part of either the professionals or the assesses leading to such a situation - with the advancement of the technology, it is always commendable that the department takes recourse to the technology more and more - With the possible defects having been found in utility software in use in the previous year, the required changes in the clarification or the new format of such utility, if brought to the fore, the same would be desirable - At the same time, the complete black out for nearly a month s time would not allow accessibility to such utility software to the assessees, which has put them to a great jeopardy. In absence of any remedy available, much less effective to the stakeholders against the non-use of beneficial powers by the Board for the larger cause of justice, exercise of writ jurisdiction to meet the requirements of circumstances has become inevitable - The Board is directed to modify the notification dated 20th August, 2014 issued in exercise of powers u/s 119 of the Act by extending the due date for furnishing the return of income to 30th November, 2014 Decided in favour of assessee. Scope and effect of insertion of section 44AB Held that - Section 44AB of the Act provides for getting the accounts of an assessee of the previous year audited by an accountant before the specified date and to furnish report of such audit by that date in the prescribed form, setting forth such particulars as may be prescribed - As to what is the specified date is provided under clause (ii) of the Explanation to section 44AB which postulates that specified date in relation to the accounts of an assessee of the previous year relevant to an assessment year, means the due date for furnishing the return of income under sub-section (1) of section 139 - the expressions specified date in section 44AB and due date in section 139 of the Act are inextricably linked together - The legislative intent is clear - the due date for filing return of income and the specified date for furnishing tax audit report u/s 44AB of the Act should be the same. The Board in exercise of powers u/s 119 of the Act, it cannot issue any circular or notification which is contrary to the legislative intent and the scheme of the enactment which envisages that the specified date and due date should be the same - The inevitable conclusion, therefore, is that the Board could not have extended the due date of filing tax audit report alone without extending the due date for filing return of income as that would amount to overriding the provisions of the Act. Moreover, the very fact that section 119 of the Act does not empower the Board to relax the provisions of section 44AB of the Act, clearly reflects the legislative intent not to permit relaxation of the specified date without relaxing the due date . Had the legislature intended to permit relaxation of the specified date for furnishing tax audit report alone, it would have included section 44AB in section 119 of the Act. The Board has no power to relax the provisions of section 44AB of the Act, it would be in the fitness of things if with a view to bring the notification dated 20th August, 2014 within the ambit of its jurisdiction, the Board relaxes the provisions of section 139(1) of the Act by extending the due date for filing the return of income till 30th November, 2014 as a direct consequence whereof, the specified date for obtaining and furnishing the report of audit under section 44AB of the Act would get automatically extended decided in favour of assessee. The respondent Board is directed to modify the notification dated 20th August, 2014 issued in exercise of powers under section 119 of the Act by extending the due date for furnishing the return of income to 30th November, 2014. It would, however, be open for the Board to qualify such relaxation by extending the due date for all purposes, except for the purpose of Explanation 1 to section 234A of the Act. decided in favour of assessee.

Summary

Issues Involved:
1. Non-extension of the due date for filing Income Tax Returns (ITR) despite extending the due date for filing Tax Audit Reports (TAR).
2. Hardship caused to taxpayers and professionals due to the non-extension of ITR filing dates.
3. Legal validity of the CBDT's notification under section 119 of the Income Tax Act.
4. Impact on self-assessment tax collection due to non-extension of ITR filing dates.

Detailed Analysis:

1. Non-extension of the due date for filing Income Tax Returns (ITR):
The primary issue revolves around the CBDT extending the due date for filing TAR to 30th November 2014, while the due date for filing ITR remained 30th September 2014. This discrepancy created a situation where taxpayers could not benefit from the extension of TAR due date, as the ITR filing date was not correspondingly extended. The court noted that the specified date for TAR under section 44AB is the same as the due date for ITR under section 139(1). Hence, the legislative intent was to keep both dates aligned.

2. Hardship caused to taxpayers and professionals:
The court acknowledged the significant hardship faced by taxpayers and professionals due to this non-extension. The petitioners argued that without the TAR, it is challenging to ensure the correct income is reflected in the ITR. The court also recognized that filing ITR without TAR could lead to errors, multiplicity of proceedings, and potential penalties under section 271B. The court emphasized that the delay in providing the new utility software for e-filing TAR further exacerbated this hardship.

3. Legal validity of the CBDT's notification under section 119:
The court scrutinized the legal validity of the CBDT's notification extending the TAR due date under section 119. It was observed that section 119 does not empower the CBDT to relax the provisions of section 44AB, which mandates the same date for TAR and ITR. The court concluded that the notification extending only the TAR due date was beyond the CBDT's authority, as section 119 does not include section 44AB in the list of provisions that can be relaxed.

4. Impact on self-assessment tax collection:
The respondents argued that extending the ITR due date would delay the collection of self-assessment tax, potentially causing a loss of interest revenue. The court found this argument unconvincing, noting that the potential loss was minimal compared to the overall tax receipts and could be mitigated by charging interest under section 234A for late filing of returns.

Conclusion:
The court directed the CBDT to extend the due date for filing ITR to 30th November 2014, aligning it with the extended due date for TAR. This extension was granted with the condition that interest under section 234A could still be levied for late filing. The court emphasized that the CBDT's failure to extend the ITR due date was unjustified and caused undue hardship to taxpayers and professionals. The judgment highlighted the importance of aligning due dates for TAR and ITR to ensure accurate and fair tax administration.