The Central Board of Direct Taxes (CBDT) vide its detailed order under Section 119 of the Income Tax Act, 1961 dated 11.01.2021, while rejecting all the representations made for further extension of due date has stated that no further extension in due date of filing of Tax Audit Report will be granted.
The Gujarat High Court in the case of The All India Gujarat Federation of Tax Consultants Vs. Union of India, 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 and take an appropriate decision in accordance with law.
In the wake of the global pandemic due to COVID-19 the due dates for filing of income tax returns for Assessment Year 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 31 January, 2021 for cases in which tax audit report under section 44AB of the Income tax Act is required to be filed and 31 December, 2020 for all other cases. Further vide notification S.O. 4805 (E) dated 31 December, 2020 the above due dates were further extended to 15th February, 2021 and 10th January, 2021 respectively.
The CBDT while stating that extension has been provided thrice and also comparing the statistical data of AY 2019-20 and AY 2020-21 whereby it has stated that the returns filed this year has already exceeded the number of returns filed last year upto 31st August, has mentioned 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 CBDT in the order has stated that the 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 the 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,” the CBDT, while refusing to further extend the Tax Audit Reports due dates said.
The CBDT urged 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, CBDT said in the Order.
Our Comments:
The above stance of the Government seems to be quite harsh specially in such testing Covid times.
However with issuance of above order refusing for due date extension, all eyes would be now on Gujarat High Court in the matter of The All India Gujarat Federation of Tax Consultants Vs. Union of India whose hearing will be held on 13.01.2021.
It may be noted here that Gujarat High Court in above case has issued notice to Government stating that if time period for Tax Officials has been extended upto 31.3.2021 then why same cannot be extended for Taxpayers.
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