2018 (12) TMI 1526 - HC - Income Tax

Extending the due date for filing returns u/s 139(1) - seeking extension of time in Kerala also since the time limit for filing returns in terms of Section 139(1) for larger periods in the State of Jammu & Kashmir was extended - Held that - In the event of an application being preferred by the petitioners, giving details of the difficulties faced by them in making a claim for the benefit of deduction, exemption or refund within time, we have no reason to think that the CBDT would not consider their applications in accordance with law and taking note of the peculiar difficulties faced by them on account of the devastating flood that affected the State of Kerala in August 2018. As regards those assessee who have filed their returns within the extended time granted under Section 139(1) of the Act namely 31.10.2018, any interest that might have accrued on delayed payment of taxes under the Act can be condoned by the CBDT on an application preferred by the assessee under Section 119(2)(a) of the Act. As mentioned in the case of the applications preferred under Section 119(2)(b), we have no reason to believe that, if an application seeking waiver of interest is preferred by the assessee citing the difficulties faced by them, which led to the delayed payment of taxes, the CBDT will not consider the same in accordance with law and taking note of the flood that affected Kerala. While the specific grievances of the assessee in individual cases can be dealt with by the CBDT through a consideration of the applications filed by the assessee concerned in terms of Section 119(2)(a)/119(2)(b) a general direction for extending the due date for filing returns u/s 139(1) cannot be issued to the Income Tax Department by entertaining these Public Interest Litigations. To issue such directions would be contrary to the scheme of the Act. For the same reason, and in the absence of any material to indicate the nature of applications that were considered by the CBDT, we are not persuaded to think that there has been any discrimination meted out to the assessees in Kerala merely on account of the fact that in Jammu & Kashmir, there was an exercise of power by the CBDT, which led to the extension of last date for filing returns for a longer duration.

Summary

Issues:
Extension of deadline for filing tax returns in flood-affected Kerala for assessees requiring statutory audit under Section 44AB of the Income Tax Act, challenge to the order refusing extension, power of the Central Board of Direct Taxes (CBDT) under Section 119 of the Act to address hardships, discrimination in treatment of assessees in Kerala compared to Jammu & Kashmir.

Extension of Deadline for Filing Tax Returns:
The petitioners challenged the Income Tax Department's announcement setting the deadline for filing returns for Kerala-based assessees requiring statutory audit under Section 44AB of the Income Tax Act as 31.10.2018, despite the original due date being 30.9.2018. They argued that the extension was insufficient, requesting an extension until 31.12.2018 due to difficulties in finalizing audits and incorporating them into the returns. The petitioners also contested the order dated 26.10.2018 by the Government of India, Ministry of Finance, which denied the extension request made by the All Kerala Chartered Accountants Association, Thrissur. The petitioners claimed that similar extensions were granted in Jammu & Kashmir, highlighting a lack of justification for differential treatment.

Power of CBDT under Section 119 of the Act:
The court examined Section 119 of the Income Tax Act, which empowers the CBDT to issue orders for the proper administration of the Act. Specifically, Section 119(2)(b) allows the CBDT to authorize income-tax authorities to admit applications for exemptions, deductions, refunds, or other reliefs after the specified period to avoid genuine hardships. The court suggested that assessees facing difficulties due to the Kerala floods could approach the CBDT under Section 119(2)(b) to seek relief by explaining the circumstances causing delays in filing returns and claiming benefits. The court emphasized that individual applications could be considered by the CBDT to address specific grievances and hardships faced by assessees.

Discrimination in Treatment:
The court dismissed claims of discrimination against Kerala assessees compared to Jammu & Kashmir, where a longer extension was granted for filing returns. It held that a blanket extension of the due date for filing returns under Section 139(1) of the Act could not be directed to the Income Tax Department through Public Interest Litigations. The court noted that the CBDT could consider applications under Section 119(2)(a) and (b) on a case-by-case basis to address hardships faced by assessees, such as waiving interest on delayed tax payments. The judgment emphasized that individual applications should be made within specified timelines to seek relief, and the CBDT should consider them in light of the flood situation in Kerala.

Judgment and Directions:
The court directed that assessees facing difficulties in claiming deductions, exemptions, or refunds due to the flood impact could apply to the CBDT under Section 119(2)(b) within two weeks for an extension. The CBDT was instructed to consider these applications within two months, taking into account the flood situation in Kerala. Assessees aggrieved by interest accrued on delayed tax payments could apply under Section 119(2)(a) within two weeks for waiver consideration. The CBDT was mandated to process these applications within two months after hearing the assessees. Additionally, the CBDT was encouraged to hold a camp sitting in Kerala to address applications from residents in the state efficiently.