Anomalies in Income Tax Law and Practice – CASS Representation

Introduction:

The Chartered Accountants Association of Surat has taken a bold step, voicing concerns over significant anomalies in the country’s Income Tax law and practice. Addressing the Finance Minister, they’ve referenced historical lapses and current inefficiencies that are affecting taxpayers adversely.

Historical Concerns Highlighted:

In December 2021, the association had raised concerns about the ‘erratic and irresponsible’ approach of the Finance Ministry towards IT Infrastructure. Despite assurances from the Central Board of Direct Taxes (CBDT) in the form of an affidavit to the Gujarat High Court, the ground reality reflects a different scenario.

Major Issues in the Spotlight:

1. Delayed Release of Return Filing Utilities:
   • The primary concern revolves around the habitual delays in the release of software utilities for tax return filing. Such delays hamper taxpayers as they reduce the available window for completing filings.
   • A meticulous table has been provided which illustrates the delayed release dates for various Income Tax Return (ITR) forms and utilities, showcasing the reduced time available to taxpayers due to these delays.
2. Website and Infrastructure Challenges:
   • Apart from the delays, frequent website downtimes, not due to external threats but due to internal inefficiencies, are troubling taxpayers.
   • Utilities for return filing, which should ideally help taxpayers, are ironically contributing to the chaos.
3. EVC Verification Timeline:
   • The existing timeline for EVC verification poses challenges, especially when there are issues with receiving OTPs. The stringent window of 30 days is pushing many to the edge.

The Association’s Reasonable Demands:

Recognizing the issues, the association has put forth certain demands which, if addressed, can greatly improve the current system:

1. Timely Release of Utilities: The association advocates for the timely release of ITRs and Audit Reports for each Assessment Year, prior to the start of the Assessment Year itself.
2. Waiver of Interests and Fees: Given the challenges faced by taxpayers, the association demands that no interest or late fees be charged for the current year.
3. Extended EVC Verification Time: Understanding the challenges with OTPs and EVC verification, the association demands an extension of the verification time to at least 60 days.

Conclusion:

The Chartered Accountants Association of Surat, while respectful in their approach, have made it clear that the current system’s challenges need urgent attention. Their concerns, backed by solid data, are a call to action for the authorities. Addressing these concerns will not only benefit taxpayers but will also streamline the taxation process, making it more efficient and user-friendly. The ball is now in the court of the government, and it remains to be seen how they respond to these valid concerns.

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 Chartered Accountants Association, Surat

Ref: CAAS/Representations/2023-24/01 Date: 22-08-2023

To,
The Finance Minister,
134, North Block,
New Delhi – 110011

Sub: Anomalies in Income Tax Law and Practice

Respected Madam,

Kindly refer to our representation letter No. CAAS/Representations/2021-22/07 dt. 19-12-2021 w.r.t. Erratic and Irresponsible approach of Finance Ministry towards IT Infrastructure. The Writ No.SCA/272/2022 to the said effect had also been filed with Hon’ble Gujarat High Court, wherein the CBDT had filed affidavit stating “All is Well” and returns are being filed smoothly. Despite glitches in the newly implemented system, interest u/s 234A was charged from the honest tax payers who had no option but to pay interest. A similar representation has also been sent by Gujarat Chamber of Commerce and Industries (GCCI) dt.01-08-2023 on various similar topics.

Our Representation

1. Late release of essential return filing utilities:

While the hearing for the said writ is going on, we would like to draw attention to similar issue which has arisen in the current year. Delays in release of utilities (softwares) by the department has become a regular feature and this year due to faulty utilities a substantial time of tax payers was wasted as can be seen from the table below:

Days available in filing ITRs for AY 2023-24
due to late release and faulty ITR Utilities
Form Type	Date of First Release	Schema materially modified on**	Statutorily should be available on	Due date of ITR	Standard No. of Days That should be available	Actual No of Days available	Actual No of days available considering to faulty utilities
Common Offline Utility (ITR 1-4)	09-Jun-23	20-Jun-23	01-04-2023	31-07-2023	121	52	41
ITR-1	25-Apr-23	20-Jun-23	01-04-2023	31-07-2023	121	97	41
ITR-2	11-May-23	20-Jun-23	01-04-2023	31-07-2023	121	81	41
ITR-3	25-May-23	20-Jun-23	01-04-2023	31-07-2023	121	67	41
ITR-4	25-Apr-23	20-Jun-23	01-04-2023	31-07-2023	121	97	41
ITR-5	09-Jun-23	14-Jun-23	01-04-2023	31-07-2023	121	52	47
ITR-6	13-Jul-23	13-Jul-23	01-04-2023	31-07-2023	213	110	110
ITR-7	30-Jun-23	30-Jun-23	01-04-2023	31-07-2023	213	123	123
10B	Unreleased *	Unreleased *	01-04-2023	31-07-2023	213	NA*	NA*
10BB	Unreleased *	Unreleased *	01-04-2023	31-07-2023	213	NA*	NA*

*Not released till the date of this communication

** These dates represent release of Schema where Schema for relevant ITR was materially changed. However, the actual number of versions are higher and are still being issued till date, hampering the return filing process.

It is pertinent to note that when any person or organisation is prevented from discharging their statutory liability, the said person cannot be held responsible for any legal and financial consequences entailing therefrom. However, the CBDT time and again has been illegally levying interest u/s 234A and late fees u/s 234F which is linked with filing of returns, and the filing facilities are non-existent till the last moment on the Income Tax Website. Frequently the website is down due to denial of service not on account of external factors like hacking but due to inefficiencies and piling of work by users resulting from late release of utilities by the CBDT itself.

2. Insufficient time available for EVC Verification:

It may also be noted that the EVC verification of IT Return requires OTP which at times are not delivered due to server load. In such cases pushing the assesses to verify the same within 30 days is a bit harsh, which should be increased to atleast 60 days.

Our Demands:

1. Utilities for ITRs and Audit Reports for each Assessment Year should be released well before the start of the Assessment Year.

2. While the Utilities are not released this year, interest u/s 234A and Late Fees u/s 234F should not be charged irrespective of the quantum of taxes payable upto 31^st December 2023, considering the loss of time of assessees statutorily available to the assessees under the law.

3. Time for verification of ITR through EVC should be increased to atleast 60 days in the light of the technological glitches of receiving OTP on time.

We hope that our above demands are reasonable and shall be met soon in the interest of the stakeholders and the nation.

Thanks & Regards,

For Chartered Accountants Association, Surat.

President | Secretary

Copy to: –

(1) Prime Minister,
152, South Block, Raisina Hills, New Delhi – 110011 – for information and appropriate action

(2) Central Board of Direct Taxes,
North Block, New Delhi – 110011 – for information and appropriate action