Extend due date of Tax Audit, ITR Filing & Relevant compliances

In the backdrop of constant threat of COVID-19 Pandemic ‘Pune Chartered Accountants Society’ has Requested for extension of time for submission of tax audit reports  U/S 44AB of the Income Tax Act, 1961 for the A.Y. 2020-21 and for extension of time for submission of income tax returns u/s 139(1) for A.Y.2020-21 and other consequential Income Tax compliances. Text of the Representation is as follows:-

Date: 20^th October 2020

To,
Smt. Nirmala Sitharaman
Hon’ble Minister of Finance
Government of India
15, Safdarjung Road
New Delhi – 110001

Respected Madam,

Subject: – In the backdrop of constant threat of COVID-19 Pandemic :-

1. Request for extension of time for submission of tax audit reports  U/S 44AB of the Income Tax Act, 1961 for the A.Y.2020-21.

2. Request for extension of time for submission of income tax returns u/s 139(1) of the Income Tax Act, 1961 for A.Y.2020-21 and other consequential compliances under the Income Tax Act,1961.

A] ABOUT THE SOCIETY :-

1. We are a society of the chartered accountants and tax practitioners  in  and around Pune, Maharashtra . The society is registered under the Societies Registration Act, 1860 and the Bombay Public Charitable Trust Act, 1950 in the year 1992 . The society is constantly working for the professional knowledge advancement of chartered accountants members.

2. We have received several representations from our member chartered accountants in respect of problems being faced by them in conducting tax audits for the F.Y.2019-20 due to various constraints caused by the COVID-2019 pandemic. Considering the same , we are making this representation to Your Honour on behalf of about 8000 chartered accountants in Pune , out of which approximately 50% are in practice with remaining serving in industries.

B] BACKGROUND FOR THIS REQUEST LETTER:-

i) COVID-2019 EPIDEMIC SITUATION :-

1. Madam, Maharashhtra state is the most affected state amongst all states in our Country,with about  16,00,000 confirmed COVID cases out of which about 1,84,000 cases are still active .  The death toll is more than 42,000  persons. It constitutes about 21% confirmed cases ,24 % of the active cases  and about 36% of the death cases across  our country.

Whereas in Pune district, the toll crossed to about 3,25,000 confirmed cases , about 40,000 active cases and about 6500 death cases . Daily more than 12,000 cases in Maharashtra and more than 1500 cases In Pune are getting traced . Average death count due in Pune due to COVID-2019 is about 30-40 cases.

Thus, Pune is still under severe threat of COVID ,2019 epidemic.

2. Though the Government of Maharashtra, is lifting lock down, it is doing it in phased manner considering the deadly spread of CORONA and highest death count in Maharashtra . The Government is not ready to take any type of risk in this respect. Further , the World Health Organisation,  Honourable Health Minister , Central Government and the, Indian Medical  Council , Indian Medical Association etc are continuously warning about rise in COVID spread during winter season in India .

3. Still private offices in Maharashtra are allowed to operate with 30% of the staff strength. The Government is alarming people to stay at home and to come out of homes only for urgent and avoidable work . As a result , majority of  offices  of chartered accountants are suffering from staff scarcity . Most of the employees in CA firms  are generally from out of Pune and have gone to their native places at the beginning of the COVID-2019 epidemic . Because of constant rising threat of COVID, they have not come back to Pune , the  public transport was also not available until last month. Restaurants and messes were allowed to open from 5th October with restrictions of 50% capacity utilisation and of operating time.

4. A large number of the chartered accountants in Pune and their assistants are still  suffering  from CORONA as like other citizens . So also a large number of assessees and their staff members are also suffering  from CORONA . Though many have re-started their offices / businesses, they are still under the fear of CORONA.

5. Unlike I.T. industry , audit work cannot be done online as all the assesseess as well as tax practitioners across state are still not well prepared for the same . There are still limitations on physical verification of documents as required for conducting audit.The chartered accountants firms are afraid of sending staff to outstation clients offices and factories for conducting audit,rather staff members are reluctant to go out of offices due to threat of CORONA.

In today’s speech, our  Honourable Prime Minister has also warned that though unlock down has been started, there is continuous and rising threat of CORONA-2019, in some of the European countries second wave of COVID,2019 has began, France has already declared night curfew. On this background, people are still worrying about the infection due to CORONA virus.

ii) Heavy rain and floods in Maharashtra and Pune District as well :-

6. Recent heavy rain and flood in Maharashtra has ruined everything. Still it is raining heavily and the Government has issued yellow / orange alerts at various places in Maharashtra , including Pune . Many roads are still under water. As a result it is becoming difficult to undertake and complete audits of assessees situated out of Pune . This situation has also crippled the activities and regular course of business .

iii) Extensions granted under other statutes :

7. Due date for Company statutory audit under the Companies Act,2013 :-

The Ministry of Corporate Affairs has extended the time period for conducting Annual General Meeting (“AGM”) for the FY 2019-20 from 30th September 2020 to further 3 months, i.e.31st December 2020.

In case Government do not provide consequential extensions in the matter of filing Tax audit reports and filing of return of income for AY 2020-21, it would cause undue hardship and thereby it would be hard & challenging for companies to finalise their accounts and get them audited before 30th October 2020 in order to file tax audit reports and file return of income before 30^th November 2020. Thereby, the non extension of due date in Income Tax would only prove that the extension provided by MCA is futile and of no relevance to companies.

8. Due dates for audit under the Maharashtra Cooperative Societies Act, 1960:-

The  Maharashtra Government has declared its decision granting extension  to all types of cooperative societies , including urban cooperative banks for completing statutory audit under the said act from 31th August  to 31st December ,2020. The time limit for holding annual general body meetings has  also been extended from 30th September ,2020 to 31st March, 2021.

9. Due date for submission of audit report and audited financial statements under the Banking Regulations Act,1949.

Recently the Reserve Bank of India has issued a circular extending time for completing statutory audits of banks and for submission of audited financial statements with Reserve Bank of India from 30th September to 31st December,2020.

10. Clashes with other compliance dates:

It is brought to your kind notice that CBDT had extended the due date for filing time barring / revised returns for the AY 2019-2020 also to 30th November 2020 which actually clashes with the current due date of 30th November 2020 for filing income tax returns by all taxpayers for AY 20-21.

Further, the due date for filing of Annual Return GSTR-9 and Reconciliation Statement GSTR-9C for the FY 2018-2019, has  also been extended to 31st October 2020 which also clashes with the present due date of 31st October 2020 for filing of tax audit reports. These date clashes would actually add further pressure on the CA practitioners in timely completion of work.

11. Problems faced by Small and mid-sized CA firms :-

It is a fact that substantial numbers of CA practitioners in India and also in Maharashtra are small/mid-sized practitioners. In this segment of CA firms, even a single Covid-19 infected case would warrant closing down of the entire office and sending the entire staff for getting quarantined and self-isolation. Same is the case with small and medium sized business houses. Already,these firms and business houses are suffering from staff shortage due to the reasons mentioned herein above, further no one can afford to take this risk of probable infection and consequential hospitalisation and associated risks.

All this has lead of impossibility of performance of audit functions in the present scenario which your good selves would also appreciate.

C] Our request to Your Honour :-

Considering all the above difficulties, which are beyond the control of anybody it is requested  that the due dates as prescribed u/s 44AB and 139(1) of the Income Tax may please be extended as follows :-

The extension ,if granted as requested , will benefit a large number of tax practitioners and business houses .It will avoid unnecessary pressure on them . It will be on humanity grounds. It will also avoid legal fiction and clashes with the orders of extension already issued by other Government Department , making them redundant , null and void in real sense.

Further , if it is decided to grant extension as requested above, it is prayed that the said orders for extension of due dates as mentioned above be issued  as early as possible so that the tax practitioners and the business houses may get some relief  and will be able to avoid unwarranted work pressure  in this panic situation of COVID-2019 epidemic.

Hope that our representation will be taken positively by understanding the practical difficulties  being faced by the tax practitioners and  business house .

Thanking You .

Yours sincerely,

For Pune Chartered Accountants Society

(CA. Dinesh B.Gandhi)
President

(CA. Shirish Kulkarni)
Secretary

Copy to :-

Shri P.C. Modi,

Chairman, Central Board of Direct Taxes

New Delhi

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