ORDER UNDER SECTION 119 OF INCOME TAX ACT, 1961 - Income Tax - F.NO. 370153/39/2020-TPL

F.NO. 370153/39/2020-TPL GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF REVENUE (CENTRAL BOARD OF DIRECT TAXES) (TAX POLICY AND LEGISLATION DIVISION) *********** New Delhi, 11th January, 2021 ORDER UNDER SECTION 119 OF INCOME TAX ACT, 1961 The Hon'ble Gujarat High Court vide judgement dated 8 th January, 2021 in the case of The All India Gujarat Federation of Tax Consultants Vs. Union of India, SCA 13653 of 2020, has directed the Ministry of Finance to look into the issue of extension of due dates for filing of Audit Report under section 44AB of the Income tax Act more particularly the representation dated 12.10.2020 and take an appropriate decision in accordance with law. 2. In the wake of the global pandemic due to COVID-19 the due dates for filing of income tax returns for A.Y. 2020-21 was extended vide the Taxation and Other laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (which was enacted on 29th September, 2020) to 30th November, 2020. Subsequently, vide notification S.O. 3906(E) dated 29th October, 2020 the due dates for filing of returns were further extended to 31st January, 2021 for cases in which tax audit report under section 44AB of the Income tax Act ( the Act ) is required to be filed and 31st December, 2020 for all other cases. Further vide notification S.O. 4805 (E) dated 31st December, 2020 the above due dates were further extended to 15th February, 2021 and 10th January, 2021 respectively. 3. As per the Provisions of the Act the due date for filing of the audit report under section 44AB is one month prior to the due date of filing of income tax return. Therefore, the said due date was extended to 31st October, 2020 vide the Taxation and Other laws (Relaxation and Amendment of Certain Provisions) Act, 2020, 31st December, 2020 vide notification S.O. 3906(E) dated 29th October, 2020 and further to 15th January, 2020 vide notification S.O. 4805 (E) dated 31st December, 2020. 4. The due dates for payment of self-assessment tax, for taxpayers whose amount due does not exceed rupees one lakh, also coincide with the due dates for filing of income tax returns. The table below summarises the various due date extensions given: - Sl. No. Action Original due date 1st Extension vide TOLA, 2020 2nd Extension vide Notification S. O 3906(E), dated 29-10-2020 3rd Extension vide Notification S. O. 4805(E), dated 31-12-2020 1. Return for Non-Audit cases 31-7-2020 30-11-2020 31-12-2020 10-01-2021 2. Tax audit 30-09-2020 31-10-2020 31-12-2020 15-01-2021 3. Return for tax audit cases 31-10-2020 30-11-2020 31-01-2021 15-02-2021 5. Thus, it is apparent that the Government has not only considered representations of various stakeholders but also has been proactive in providing relaxation to the taxpayers by extending due dates regularly. The table below gives the statistical data comparing the return filing statistics of A.Y. 2019-20 and A.Y. 2020-21 Date this year Assessment year 2021 ITRs filed Daily figures Date-last year Assessment year 19-20 ITRs filed Daily figures 05-Jan-21 5,08,48,022 7,26,177 26-Aug-19 4,14,13,558 13,65,348 06-Jan-21 5,16,71,398 8,23,376 27-Aug-19 4,30,99,600 16,86,042 07-Jan-21 5,27,14,751 10,43,353 28-Aug-19 4,51,44,749 20,45,149 08-Jan-21 5,41,54,435 14,39,684 29-Aug-19 4,77,39,460 25,94,711 09-Jan-21 5,64,10,561 22,56,126 30-Aug-19 5,12,55,607 35,16,147 10-Jan-21 5,95,15,322 31,04,761 31-Aug-19 5,61,79,905 49,24,298 From the above table, it is apparent that the number of returns filed this year has already exceeded the number of returns filed last year up to 31st August which was the last day of filing of the all the returns other than the company/tax audit returns, by about 6%. The table below gives the statistical data comparing the filing statistics of tax audit report for A.Y. 2019-20 and A.Y. 2020-21- Date Form 3CA Form 3CB Date Form 3CA Form 3CB 20-Oct-19 2,741 29,760 04-Jan-21 3,079 27,492 21-Oct-19 5,598 51,069 05-Jan-21 3,238 28,875 22-Oct-19 7,626 62,938 06-Jan-21 3,190 30,582 23-Oct-19 9,125 75,031 07-Jan-21 3,323 31,035 24-Oct-19 10,977 87,350 08-Jan-21 3,316 29,924 25-Oct-19 11,841 93,575 09-Jan-21 2,824 26,097 26-Oct-19 10,366 91,397 10-Jan-21 1,416 16,370 27-Oct-19 2,309 30,861 11-Jan-21 28-Oct-19 6,138 59,785 12-Jan-21 29-Oct-19 10,119 1,00,569 13-Jan-21 30.-Oct-19 23,125 1,87,444 14-Jan-21 31-Oct-19 42,280 3,15,190 15-Jan-21 Grand total cumulative 2,88,236 25,37,444 Grand total cumulative 2,14,804 18,49,461 6. The above table also show that majority of the audit reports under section 44AB of the Act as well as income tax returns are filed within the last few days of the dates only. For A.Y. 2019-20 it is seen that 24% of total audit reports were filed in last 3 days before the due date. Therefore, lesser filing compliances having been made much before the due date cannot be said to be an anomalous situation. 7. A look at the relaxation of similar nature provided by other economies globally makes it clear that the Government of India has been very empathetic to the needs of the taxpayers as compared various other countries. It is apparent from the table no other country has extended the due dates as much as India. Even countries which are comparatively worse hit by COVID-19, like the USA, UK etc., have provided no or lesser extensions in due dates. The table below lists such extensions given by a few countries: - Country Financial period Individual Corporate Due date Extended due date Due date Extended due date USA 2019 15th April, 2020 15th October, 2020 15th April, 2020 15th October, 2020 UK 2019-2020 31 January 2021 No extension 31st December, 2020 No extension Australia 2018-2019 5th May, 2020 5th June, 2020 15th May, 2020 5th June, 2020 South Africa 2019 16th November, 2020 No extension 31st December, 2020 No extension Netherlands 2019 1st May, 2020 No extension 1st June, 2020 No extension Ireland 2019 12th November, 2020 10th December, 2020 12th November, 2020 10th December, 2020 Singapore 2019 18th April, 2020 31st May, 2020 15th December, 2020 15th January, 2021 Canada 2019 30th April, 2020 30th September 2020 May August, 2020 30th September 2020 Brazil 2019 30th April, 2020 30th June, 2020 31st July, 2020 30th September, 2020 8. From the above it may be seen that Government has been proactive in analyzing the situation and providing relief to assessee. However, it should also be appreciated that filing of tax returns/audit reports are essential part of the obligations of assessee and cannot be delayed indefinitely. Many functions of the Income-tax Department start only after the filing of the returns by the assessee. Filing of tax returns by assessee also results in collections of taxes either through payment of self-assessment tax by the assessee or by the subsequent collection by the department post processing or assessment of the tax returns. The tax collections assume increased significance in these difficult times and Government of India needs revenue to carry out relief work for poor and other responsibilities. Any delay in filing returns affects collection of taxes and other welfare functions of the state for the vulnerable and weaker sections of society which is funded through the revenue collected. Sufficient time has already been given to taxpayers to file their tax returns and a large number of taxpayers have already filed their returns of income. 9. From the above discussion, it is apparent that,- The due dates for filing of return/tax audit have already been extended on 3 occasions. Internationally, the extension provided by India is more generous as compared to other countries. The return filing statistics of the current year indicates that returns filed in this financial year already far exceeds the returns filed which were due on the last date of filing of returns. Any further extension would adversely affect the return filing discipline and shall also cause injustice to those who have taken pains to file the return before the due date. It would also postpone the collection of revenue thereby hampering the efforts of the Government to provide relief to the poor during these COVID times. 10. In this regard, the decisions of the Hon'ble Supreme Court have also been considered. The Hon'ble Supreme Court in the case of Govt. of A.P. v. N. Subbarayudu, (2008) 14 see 702 at page 703: 5. In a catena of decisions of this Court it has been held that the cut-off date is fixed by the executive authority keeping in view the economic conditions, financial constraints and many other administrative and other attending circumstances. This Court is also of the view that fixing cut-off dates is within the domain of the executive authority and the court should not normally interfere with the fixation of cut-off date by the executive authority unless such order appears to be on the face of it blatantly discriminatory and arbitrary. (See State of Punjab v. Amar Nath Goyal [(2005) 6 SCC 754 : 2005 SCC (L S) 910]. *** 7. There may be various considerations In the mind of the executive authorities due to which a particular cut-off date has been fixed. These considerations can be financial, administrative or other considerations. The court must exercise judicial restraint and must ordinarily leave it to the executive authorities to fix the cut-off date. The Government must be left with some leeway and free play at the joints in this connection. 8. In fact several decisions of this Court have gone to the extent of saying that the choice of a cut-off date cannot be dubbed as arbitrary even if no particular reason is given for the same in the counter-affidavit filed by the Government (unless it is shown to be totally capricious or whimsical), vide State of Bihar v. Ramjee Prasad [(1990) 3 SCC 368 : 1991 SCC (L S) 51] , Union of India v. Sudhir Kumar Jaiswal [(1994) 4 SCC 212: 1994 SCC (L S) 925: (1994) 27 ATC 561] (vide SCC para 5), Ramrao v. All India Backward Class Bank Employees Welfare Assn. [(2004) 2 SCC 76 : 2004 SCC (L S) 337] (vide SCC para 31), University Grants Commission v. Sadhana Chaudhary [(1996) 10 SCC 536 : 1996 SCC (L S) 1431] , etc. It follows, therefore, that even if no reason has been given in the counter-affidavit of the Government or the executive authority as to why a particular cut-off date has been chosen, the court must still not declare that date to be arbitrary and violative of Article 14 unless the said cut-off date leads to some blatantly capricious or outrageous result. 11. In fact several decisions of the Hon'ble Supreme Court have gone to the extent of saying that the choice of a cut off date cannot be dubbed as arbitrary even if no particular reason is given for the same in the counter affidavit filed by the Government, (unless it is shown to be totally capricious or whimsical). [State of Bihar vs. Ramjee Prasad 1990(3) SCC 368, Union of Indian Anr. vs. Sudhir Kumar Jaiswal 1994(4) SCC 212 (vide para 5), Ramrao Ors. vs. All India Backward Class Bank Employees Welfare Association Ors. 2004 (2) SCC 76 (vide para 31), University Grants Commission vs. Sadhana Chaudhary Ors. 1996(10) SCC 536, etc .] When it is seen that a line or a point there must be and there is no mathematical or logical way of fixing it precisely, the decision of the legislature or its delegated must be accepted unless it can be said that it is very wide off the reasonable mark. (See Union of India Anr. v. Mis Parameshwaran match works Ltd., 1975 (2) SCR 573, at p. 579; and Dr. (Mrs.) Sushma Sharma etc. etc. v. State of Rajasthan Ors. 1985 (3) SCR 243, at p. 269) 12. In view of the above reasons, all the representations for further extension of the due date are hereby rejected. (Shefali Singh) Under Secretary (TPL-IV)