Brief of the case:
By this petition under article 226 of Constitution of India petitioners sought relief by way of writ and prayed before court that due date of filing ITR should be extended upto 30.11.2015. Following relief were sought in this instant writ petition:
A) All alteration/ changes made in the necessary form to file ITR should be applicable in the AY in which they are made and not in the current AY.
B) To quash the announcement dated 09/09/2015 being illegal as it promotes the filing of ITR without the mandatorily required TAR.
C) To give appropriate direction to the respondents to extend the due date for filing the ITR and TAR to 30/11/2015.
Hon’ble HC after considering the facts and circumstances and decision rendered by other high courts on the same subject directed respondents to extend the due date of fling ITRs and TAR to 31.10.2015.
Facts of the case:
- The first petitioner is a Trust registered under the provisions of the Bombay Public Trusts Act, 1950 and has over 1000 members who are various professionals, being Advocates, Chartered Accountants and Tax Practitioners engaged in the field of taxation. The second petitioner is the President of the first petitioner Federation and is also assessee who is directly interested in the subject matter of the petition.
- By a notification dated 01.05.2013 the first respondent made it mandatory for the assessees, to electronically file the income tax returns relevant for assessment year 2013-14 and onwards.
- In relation to assessment year 2014-15, the respondents failed to make the utility software for filing TAR until 21st August, 2014. Representations were made to the Central Board of Direct Taxes, which in exercise of powers under section 119 of the Act extended the due date for filing the Tax Audit Report (TAR) under section 44AB to 30.11.2014, however due for filing ITR was not extended.
- In relation to the AY 2015-16, the Department delayed notifying the ITR forms being ITR-1, ITR-2, ITR-2A, ITR-4S but extended the due date for filing the income tax returns to 31.07.2015 in the case of such assesseeson which TAR is not applicable.
- The on-line forms in relation to assessees subject to tax audit and other assessees, viz., Forms ITR-3, ITR- 4, ITR-5, ITR-6 and ITR-7 in relation to assessment year 2015- 16 came to be notified on 29.7.2015 and the forms were e-enabled and were available on the e-filing website of the Department only from 7th August, 2015.
- Since the income tax returns in case of such assessees were to be filed on or before 30.09.2015, according to the petitioners the delay in making the form available caused utter confusion and chaos amongst the Chartered Accountants and the assessees.
- Several stake holders have made several representations to the CBDT and the Central Government to extend the due date for filing the income tax returns from 30.09.2015 to 30.11.2015 but no result came out as no due date was extended.
- On the contrary by an announcement dated 9th September, 2015 the Government of India Ministry of Finance, it was stated that a decision had been taken that the last date of filing of returns due by 30th September, 2015 will not be extended.
- The petitioners, therefore, made representations to the CBDT for extending the due date of filing return to 30th November, 2015, but to no avail. Hence petitioners filed instant writ petition.
Contention of the revenue:
- The instant petition is more in the nature of a public interest litigation and therefore, should have been filed by way of a public interest litigation.
- No cause of action of infringement of any Article of the Constitution has been brought to the notice of the court. It was submitted that the first petitioner which is a federation of professionals cannot, in any manner, be said to be prejudiced by the non-extension of the date for filing the income tax returns.
- There is nothing in the petition to show that the fundamental rights of a citizen has been infringed.
- While the utility was made available on 7th August, 2015, the only changes are with regard to giving details of foreign assets and bank accounts and that 98% of the data could have been compiled in advance and kept ready. It was submitted that the major part of the computation has to be done before filing the tax returns.
- The President gave his assent to the Finance Bill on 14.05.2015 and the utility has been made available on 07.08.2015 and hence, it cannot be said that there is an inordinate delay in providing the same. It was submitted that once everything that was required to be done on the part of the assessee was ready, mere punching of data would not entitle the federation to move a petition seeking extension of time.
- Once everything that was required to be done on the part of the assessee was ready, mere punching of data would not entitle the federation to move a petition seeking extension of time.
- It is true that the petitioners had made representations, however, it is not as if such representations have not been considered. It was pointed out that the first respondent Board has replied to the said representations by virtue of the announcement dated 9th September, 2015.
- The petition is vague and no data is forthcoming as regards how many returns could not be uploaded. Therefore, on a presumption, there is no warrant for exercise of powers under Article 226 of the Constitution of India.
- No facts have been stated as regards in case of how many assessees, it is not possible to file the income tax returns within the prescribed period. Reliance was placed upon the decision of the Delhi High Court in the case of Avinash Gupta v. Union of India rendered on 21.09.2015 in W.P.(C) No.9032 of 2015 wherein, the court had dismissed a similar petition seeking extension of due date for filing the income tax returns.
- The writ petition has been filed without disclosing any cause of action or infringement of fundamental rights.
- There is no right conferred by the statute granting 180 days for filing income tax returns, therefore, the contention that the assessees have 180 days for filing tax returns is without any basis.
- Delhi High Court was alive to the situation prevailing and has not thought it fit to grant any relief. Reliance was placed upon a decision of this court in the case of CIT v. Deepak Family Trust (No.1), (1995) 211 ITR 575, wherein the court had placed reliance upon the decision of the Bombay High Court in Maneklal Chunilal and Sons Ltd. v. CIT, (1953) 24 ITR 375, wherein it was observed that
“in conformity with the uniform policy which we have laid down in income tax matters, whatever our own view may be, we must accept the view taken by another High Court on interpretation of the section of a statute which is an all-India statute”
- On the basis of decision cited above it was submitted that once the Delhi High Court has taken a view, it is not permissible for this court to take a different view.
- Board being an expert body, is alive to the difficulties of the tax payers and has stood up when such difficulties had arisen. Moreover, in the absence of any data as regards the actual hardship, grant of the reliefs prayed for would be detrimental to the policy decision of the Board.
- Any change in due date by way of extension has to be given effect by change in return preparation software to handle modification in interest under section 234A/234B of the Act. Similar changes have to be made in processing software to calculate the refund accurately which requires substantial changes to be made in business rules and which in turn also delays the process of handling and processing of returns and its consequential actions.
- Writ petitions filed by various stake holders on this issue in their respective jurisdictional High Courts like, Delhi, Karnataka and Rajasthan High Courts have not granted any relief to the petitioners and therefore, in case, this court decides to allow the petition pertaining to its jurisdiction, thus deviating from the stand of the CBDT and decisions of other High Courts, it may create anomalous situation in administering the Income Tax Act which is a Central Act.
- Reliance was placed on the decision rendered in writ petition by the Karnataka High Court in Karnataka State Chartered Accountants Association v. Union of India, rendered on 28.09.2015 in Writ Petitions No.41109 and 41110 of 2015 and decision of the Rajasthan High Court in The Rajasthan Tax Consultants Association v. Union of India rendered on 28th September, 2015 in D. B. Civil Writ (PIL) Petition No.11034 of 2015 wherein courts have accepted the reason given by govt. in announcement dated 09.09.2015.
- A Chartered Accountant has seven weeks to deal with 60 tax audits and a corresponding number of income tax returns, which cannot be said to be not sufficient for the purpose of uploading the income tax returns. It was submitted that two other High Courts have rejected such petitions and the third High Court has not entertained the petition.
- Many case laws were cited and relied upon on the subject that unless the policy or action is inconsistent with the Constitution and the laws or arbitrary or irrational or abuse of power, the court will not interfere with such matters.
- There are no pleadings of hardships, nor is it the case of the petitioners that the decision of the respondents of 9th September, 2015 is mala fide or capricious.
- The submission regarding 180 days being available to the assessees is not backed by any statutory provision.
- The Income Tax Act being an all-India statute, an anomalous situation would be created if a view different from other High Courts is taken by this court.
- Unless apparent hardship or arbitrariness is pointed out, this court would not interfere.
- As regards to the extension of due date in other category of assessees on which no tax audit is applicable it was submitted that in case of all other assessees, only details are required to be punched in the prescribed forms and therefore, no case of hardship has been made out.
Contention of the petitioners:
- The tax audit returns can only be filed electronically which requires an appropriate “utility/software” to be made available by the respondents to the assessees. However, the respondents failed to make available the utilities for assessment year 2015 -16 until 07.08.2015, thereby creating a blackout of a period of more than four months making it impossible for assessees to file their return of incomes till 7th August, 2015 when the relevant forms were e-enabled.
- Under the statutory provisions, the income tax returns can be filed in time from 1st April till the due date for filing the income tax returns, in the absence of the utility for filing such returns online, the returns could not be filed earlier.
- In respect of such delay the assessees are not at fault and that till the online forms are prescribed, the assessees do not know the nature of the changes made and till such forms are notified, they cannot file the returns.
- The attention of the court was invited to the judgment and order dated 22nd September, 2014 passed by this court in the petitioner’s own case in Special Civil Application No.12656 of 2014 and allied matter, to point out that the court had observed that any introduction or new utility/software with additional requirement in the middle of the year ordinarily is not desirable. Any change unless inevitable can be planned well in advance.
- Period of 180 days provided for filing the tax returns i.e. from 1st of April to 30th September, stands curtailed on account of non-providing of the utility for filing tax returns, thereby causing immense prejudice to the assessees.
- Respondent Board, under section 119 of the Act, has the administrative powers to excuse the assessees from the rigours created on account of non-notification of the utilities which failed to do so.
- Again attention was drawn to the announcement dated 09.09.2015 against which it was argued that when the law provides for a period of 180 days to assessees who are subject to tax audit, to say that they have lost 129 days and yet, the assessees must now file the returns of income within the prescribed period, is arbitrary.
- In the case of assessees who are required to file returns of income in forms ITR-1, ITR-2, ITR- 2A, ITR-4S, the due date for filing return came to be extended till 31st August, 2015 and there is no reason as to why such benefit cannot be extended to the assessees who are required to file returns on income in Forms ITR-3, ITR-4, ITR-5, ITR-6 and ITR-7.
- In rejoinder it was submitted that each member of the federation is directly affected by the non-extension of the date for filing the income tax returns as they have to work overnight for filing of tax returns before the due date and in many cases they are also assessees.
- The second petitioner is himself an assessee who is subject to audit and hence, is directly affected by the non-extension of the due date for filing the returns and hence, the question of filing public interest litigation does not arise.
- It was submitted that filing of return does not mean only punching of data, details have to be collected which could not have been done till 7th August, 2015 when the online details were available.
- As regards the contention that the changes in the online forms are minor innature, it was submitted that unless the assessees know about the nature of the changes made, it is immaterial as to whether the changes are minor or major.
- In response to the argument of no statutory provision of 180 days by the revenue it was argued that the income tax return is required to be filed after 31st March till 30th September in case of the assessees who are subject to audit and hence, the assesses have 180 days available for filing the returns.
- As regards the contention that the President has given the assent only in May, 2015, it was submitted that the Finance Act, 2015 deals with returns to be filed in the subsequent year and not in the current year and hence, the Act which was given assent would be applicable to the subsequent assessment year and not this assessment year and hence, the contention that there was delay in prescribing the online utility on account of the delay on the part of the President in granting assent, is thoroughly misconceived.
- It is the respondents who would know as to how many persons have filed returns.
- The Board which is the authority which is vested with the powers under section 119 of the Act to extend the due date, has not exercised such powers, and therefore, occasion has arisen for the petitioners to approach the court. It was submitted that the law expects the respondents to be reasonable and that non-extension of the due date for filing the income tax returns cannot in any manner be said to be reasonable.
- As regards the contention that it is not permissible for the court to take a different view from that adopted by the Delhi, it was submitted that the question involved in the petition does not involve interpretation of a statutory provision. Reliance was placed on the decision of this court in the case of N. R. Paper Board Limited v. DCIT (1998) 234 ITR 733, wherein the court after considering the decision of the Bombay High Court in the case of ManeklalChunilal and Sons Ltd. v. CIT (supra), observed that the High Court has nowhere laid down any absolute proposition in that decision that it lacked the power to take a different view in cases where some contrary view was expressed.
- Neither the Rajasthan High Court nor the Karnataka High Court has considered the interpretation of section 119 of the Act. It was submitted that when the hardship caused to the petitioners and other assessees is on account of the default on the part of the respondents, there is equally a duty on their part to act fairly.
- Petitioners reiterated the proposition of law laid down by the Supreme Court in the case of L. HirdayNarain v. Income Tax Officer, Bareilly (1970) 78 ITR 26, to submit that when there is a power coupled with duty, there is an obligation on the respondents to exercise the same if the facts so warrant.
Held by the court:
- The powers under section 119 of the Act are discretionary in nature and it is for the Board to exercise such powers as and when it deems fit. However, it is equally true that merely because such powers are discretionary, the Board cannot decline to exercise such powers even when the conditions for exercise of such powers are shown to exist. At this juncture reference may be made to the decision of the Supreme Court in the case of UCO Bank v. CIT, (1999) 4 SCC 599ó (1999) 237 ITR 889, wherein the court had interpreted the section 119 of the Act and it was held “The power is given for the purpose of just, proper and efficient management of the work of assessment and in public interest. It is a beneficial power given to the Board for proper administration of fiscal law so that undue hardship may not be caused to the assessee and the fiscal laws may be correctly applied.”
- When no prejudice is caused to the revenue and the assessees are put to great hardship on account of the short period within which the income tax returns are to be filed, it was expected of the Board to exercise the discretionary powers vested in it under section 119 of the Act to ameliorate the difficulties faced by the assessees on account of no default on their part, at least to a certain extent, by extending the due date for filing the income tax returns for a reasonable time.
- The Board should not create a situation whereby the assessees are required to knock the doors of the court year after year, more so, when on account of the delay on the part of the respondents, it is the assessees who would have to face the consequences of not filing the returns in time.
- The Board has declined to exercise the discretion vested in it under section 119 of the Act to come to the rescue of the assessees and grant them some relief, leaving the court with no option but to direct the Board to extend the due date for filing the income tax returns under section 139 of the Act from 30th September, 2015 to 31st October, 2015 so as to alleviate to a certain extent, the hardships caused to the assessees on account of delay in providing the utilities.
- The number of tax audits conducted by a Chartered Accountant may be limited to 60, but the total number of assessees that he deals with is not limited to 60, as a large number of assessees may belong to the categories which are not subject to tax audit under section 44AB of the Act.
- The Delhi High Court has not taken into consideration the factor that unless the utility is made available, the assessees would not be aware of the details which they are required to furnish, inasmuch as, the delay in providing the utilities is on account of the changes made in the corresponding forms. Delhi HC have admitted some merit, if not legal otherwise, in the grievance of the petitioners.
- The court further observed that there is sufficient time available to the Government, after the Finance Act of the financial year, to finalise the forms and if no change is intended therein, to notify the same immediately.
- As regards the decision of the Karnataka High Court, the court has merely relegated the petitioners therein to the CBDT for the consideration of their representation and does not lay down any proposition of law. The Rajasthan High Court has expressed the view that the decision contained in the announcement dated 9th September, 2015 being a policydecision, the court should not interfere. The court, therefore, has not considered the non-exercise of discretionary powers under section 119 of the Act on the part of the Board despite the fact that the circumstances so warrant exercise of discretion in favour of the assessee.
- The contention that once the Delhi High Court has taken a particular view, in relation to an all India statute, it is not permissible for this court to take a different view, does not merit acceptance in the light of the view taken by this court in N R Paper Board Limited v. DCIT ((1998) 234 ITR 733) where in court have held that observed that the High Court has nowhere laid down any absolute proposition in that decision that it lacked the power to take a different view in cases where some contrary view was expressed.
- The Punjab and Haryana High Court in the case of Vishal Garg v. Union of India (supra) has, having regard to the totality of facts and circumstances of the case, considered it appropriate to extend the due date for e-filing of returns upto 31st October, 2015. Therefore, instead of extending the due date to 30th November as prayed for in the petition, with a view to maintain consistency in the due date for e-filing of returns, this court is of the view that, the same date is required to be adopted.
- CBDT to ensure that the forms and utilities for e-filing of income tax returns are ordinarily made available on the 1st day of April of the assessment year.
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