A departmental bank of the Gujarat Supreme Court, consisting of Justice JB Pardiwala and Justice Ilesh J. Vora, on Friday instructed the Central Board of Direct Taxation (CBDT) to make a decision to extend income tax filing (ITR ) to make tax audit reports (TAR) for the 2020-21 financial year. The High Court held that the powers exercised by the CBDT are inherently beneficial and should therefore use them for the proper administration of tax law so as not to cause undue difficulty for taxpayers. The decision was made after the government extended the deadline for filing ITR and tax audit reports after considering the pandemic situation.
OBSERVATION OF THE COURT
The bank relied heavily on Vaghjibhai S. Bishnoi v Income Tax Officer & Anr in analyzing the problem. (2013), in which the Gujarat Supreme Court ruled that the powers conferred on the CBDT are beneficial and must be exercised in order to properly administer tax law so that taxpayers do not experience undue difficulty.
The Court therefore ordered respondents to reconsider the matter and made a decision to do so by January 12, 2021.
“The purpose is fair, orderly and efficient management of the valuation work and the public interest. Another aspect to consider before making an appropriate decision is that the period of the Tax Department officials has been extended to March 30, 2021 under Consider the current situation of the Covid-19 pandemic. If so, an extension should be considered in accordance with the law. Allow an appropriate decision to be made by January 12, 2021. “The order stated.
On December 30th, the CBDT further extended the deadlines for various filing of tax returns under the Income Tax Act. The deadline for single registrations has been extended to January 10th.
BACKGROUND OF THE FALL
The petitioner, the All Gujarat Federation of Tax Consultants, went to the High Court and asked the Central Board of Direct Taxation (CBDT) for instructions on the date of filing income tax returns (ITR) and tax audit reports (TAR) for the year extend 2020-21 until 31.01.2021 after the Covid-19 pandemic.
According to the petitioner, after analyzing the pandemic situation last year, the CBDT extended the due date for filing the tax audit report from September 30, 2020 to October 31, 2020 for those auditors who had to have their books checked. Therefore, the prayer asks the Union of India Treasury Department for an instruction to CBDT to extend the due date of Income Tax Returns (ITR) and Tax Audit Reports (TAR) filings from October 31, 2020 to January 31, 2021 by exercising the powers under Sec. 119 of the Income Tax Act of 1961.
The reason given by the petitioner when requesting relief is that the pandemic condition and home work guidelines have made it impossible for tax practitioners to complete the examination papers for the stated period for the issue of the Section 6 Certificate. 44AB of the Act within October 30, 2020.
The following are the petitioner’s complaints:
- The fact that the one-month minimum extension of the submission of ITR under Item 139 of the Act is “poor” and therefore violates Art. 14 and Art. 19 (1) (g) as being obviously arbitrary, discriminatory and unreasonable.
- The Ministry of Finance is obliged to ensure that at the beginning of the tax year different categories of taxation are provided with the necessary benefits for the ITR’s e-fling so that tax matters can be planned.
STATUS OF THE ANSWERS
According to respondents, the deadline for preparing tax audit reports has been extended to January 15, 2021, while it has been extended to February 15, 2021 for filing the ITR due to the Covid pandemic. This was done in three ways:
- The due date for filing income tax returns for 2020-21 has been extended from 2020 to November 30, 2020, in accordance with the Tax and Other Laws Act (relaxation and amendment of certain provisions), which was subsequently extended to January 31, 2021 for cases in for which tax reports were required and for all other cases the same was December 31, 2020.
- As the tax audit report filing date was one month prior to the return due date, the tax audit report filing date has also been extended to 10/31/2020 and then to 12/31/2020.
- The due dates have been extended to February 15, 2021 for cases where tax audit reports should be submitted and to January 10, 2021 for other cases.
It was then claimed that the Indian government had proactively analyzed the pandemic situation. However, since the ITR and tax audit reports are considered an integral part of the obligation to assess, this cannot be delayed indefinitely. According to respondents, many Income Tax Department functions do not begin until after tax returns are filed.
It has also been argued that from these tax collections, especially during times of pandemic, the government could provide relief efforts to poor and other health care facilities, and any delay in the process would affect the collection of taxes and revenue collection for the government.
Case Name: All Gujarat Federation of Tax Consultants v Union of India
Order date: 08.0.2021
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