The Gujarat High Court on Wednesday declined to interfere with the decision of the Central Board of Direct Taxes (CBDT), to not grant any further extension for filing of Audit Reports and Income Tax Returns for the Assessment Year 2020-21.
"We believe that such decision must have been taken after due deliberations, and in taking such decision, many financial experts must have applied their minds," observed a Division Bench of Justice JB Pardiwala and Justice Ilesh J. Vora while upholding the executive Body's decision.
The last dates for filing (i) Returns (for non-audit cases) is January 10, 2021; (ii) Tax Audit is January 15, 2021; and (iii) Returns (for tax audit cases) is February 15, 2021.
Last week, the Gujarat High Court had directed the Board to take a decision on representations seeking extension of due dates.
Vide order dated January 11, the Board rejected all such representations while stating that 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.
The Board was of the view that sufficient time has already been given to taxpayers to file their tax returns and any further extension will 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.
After considering this order on Wednesday, the High Court observed,
"It is true that the Board is vested with the power under Section 119 of the Act to extend the due date and the powers are discretionary in nature and that is the reason why we thought fit to ask the CBDT to look into the matter and take an appropriate decision in accordance with law. If the CBDT has looked into the matter closely and has arrived at the conclusion that the extension of time limit would not be in the interest of the Revenue, then it cannot be said that the CBDT has failed to exercise its discretionary powers vested in it under Section 119 of the Act.
When there is a power coupled with duty, there is an obligation on the Board to exercise the same if the facts so warrant. Upon due consideration of all the relevant aspects of the matter, if the Board has taken the final decision not to extend the time limit any further, then it is difficult for this Court to issue a writ of mandamus to the Board to extend the time limit on the assumption that undue hardship would be caused to the taxpayers and the tax professionals, more particularly, in view of the latest data put forward before us by the Revenue."
Disputing the CBDT's order dated January 11, the Petitioners had submitted that the order is nothing, but an eyewash as the Body had failed to address the core issue arising in this litigation.
The primary grievance of the Petitioners was that the CBDT had not addressed the issue that utilities for filing the Tax Audit Report and the Income Returns were released at a belated stage.
It was alleged that the utilities were released almost after a period of more than five months despite there being a mandate from that the utilities should be released not later than 1st April of the financial year. [All Gujarat Federation of Tax Consultants vs. Central Board of Direct Taxes  50 taxmann.com 115 (Gujarat)]
It was pointed out that even if the two subsequent extensions granted by the CBDT are taken into consideration, then the total time available is only 85 days instead of 183 days.
The Petitioners submitted that the Board had failed to appreciate that by inordinate delay in releasing the utilities, the time available with the tax practitioners is considerably curtailed and they are finding it very difficult to prepare the Returns of Income and Tax Audit Reports before the due date.
The Board on the other hand claimed that the principal argument canvassed on behalf of the writ applicants as regards the delay in releasing the utilities for filing the Tax Audit Reports and Income Tax Returns has been "blown out of proportion".
It argued that the updates brought about in the ITR do not amount to adding or extending the fields. It submitted that certain "minuscule" changes were made so as to enable the taxpayers to report correctly.
"Tax Audit work undertaken by the writ applicants is in no manner affected by such amendment minuscule changes or updates which are provided in the existing fields. No prejudice could be said to have been caused warranting any interference at the end of this Court in exercise of writ jurisdiction under Article 226 of the Constitution of India," the Body submitted.
It was further submitted that the Tax Audit Report Utility was made available from 1st April of the relevant year and thus, reliance placed on the 2014 decisions of the High Court is completely misplaced.
Inter alia, the Board submitted that after deliberations at the highest level in the Ministry of Finance, it was decided that the time limit for filing of the Audit Reports should not be extended any further for the following reasons:
- Due dates for filing of return/tax audit have already been extended on 3 occasions
- Compliance in filing the Tax Audit Reports is rapidly increasing each day
- 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
- Tax Audit Report utility was available from the beginning of the year, and therefore, there is no justification in seeking an extension for filing the tax audit report;
- Submission that certain ITR Forms were released in June 2020, July 2020, August 2020 and September 2020 respectively and therefore filing of the ITRs should be extended is misplaced since the preparation of the Final Accounts, which is done on the basis of the Income Tax Act and the Rules therein is nowhere dependent on the date of release of the ITR utility and is an independent exercise;
- Assessees would have at least 148 days to upload their returns from 22/09/2020 the date when the ITR-6 was made available till 15.02.2021 which is the date when the return for the Audit Cases is to be filed;
- Fixing due dates is exclusive domain of the executive and the Supreme Court has consistently held that in financial matters judicial deference may be shown to the executive pragmatism, especially in fixing cut-off dates.
- In 2015, a Coordinate Bench of the High Court directed the CBDT to extend the due date for filing the Income Tax Returns under Section 139 by one month, so as to alleviate to a certain extent, the hardships caused to the assesses on account of delay in providing the utilities. However, that was done in an extraordinary situation when for the first time, CBDT made it mandatory for the assessees to electronically file the ITRs.
In view of the above submissions, the High Court observed that interference with the CBDT's decision at this point of time, in the matters relating to the Revenue may have far reaching implications.
"This Court may find it very easy to issue a writ of mandamus, as prayed for, saying that if the time limit has been extended in the past on three occasions, then why not for one last time upto 31st March 2021. However, such a line of reasoning or approach may upset the entire functioning of the Government and may lead to undesirable results," the Bench opined.
Case Title: All Gujarat Federation of Tax Consultants v. Union of India