CA. Pankaj G. Shah

Condition requiring manual filing of audit report by 30.09.2013 in notification dated 26.09.2013 is ultra vires and Void

Notification issued on 26.09.2013 has mandated that the Audit report must be furnished manually to the jurisdictional Assessing Officer by 30.09.2013. However the condition in notification is contrary to the Rules which have not been consequently modified.

Rule 12(2) of Income tax Rules provides that the return of income required to be furnished in Form SAHAJ (ITR-1) or Form No. ITR-2 or Form No. ITR-3 or Form SUGAM (ITR-4S) or Form No. ITR-4 or Form No. ITR-5 or Form No. ITR-6 14a[or Form No. ITR-7, shall not be accompanied by form or report of audit required to be attached with the return of income under any of the provisions of the Act

Further proviso to Rule 12(2) of Income tax Rules inter alia provides that where an assessee is required to furnish a report of audit specified under section 44AB, he shall furnish the same electronically.

As can be seen from above that the Provisions under Rules and under Notification are contrary to each other. In this regard attention is invited to the decision in case of V.K. Ashokan v. Asstt. Excise Commnr. and Ors.[2009 (4) SCALE 225] it was held that that rules framed or other terms and conditions imposed under an Act should not be contrary to the other provisions of the Act and must not be framed in contravention to the constitutional or statutory scheme.  Accordingly the Notification mandating additional condition of manual filing without modifying the existing Rules is Ultra-vires, Void and invaild.

Further the Notification requiring altogether new requirement of manual filing by 30.09.2013 has been introduced on 26.09.2013 which is very short and unreasonable period and is against the principles of natural justice. In State of Orissa v. Dr. (Miss) Binapani Dei and Ors, it was held that when by reason of an action on the part of a statutory authority, civil or evil consequences ensue, principles of natural justice are required to be followed. In case of denial of principles of natural justice in a particular statute, the same may also be held ultra vires to Article 14 of the Constitution.

What for all this? There is no loss to the revenue on extending the uploading date. The requirement of manual filing with the jurisdictional A.O. has caused undue hardship, double jeopardy.

Double Standards of the Department is more noticeable from the fact that this notification will hit small and medium enterprises and common man assessee and not Larger Assessee’s as in case of Bigger Assessee’s where Domestic and International Transfer Pricing is applicable an extra two months period is granted to file Income Tax Return and Audit Reports.

(The author can be reached at pankajgshah@gmail.com or on +91 96918 93040 for any queries)

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0 responses to “Condition requiring manual filing of audit report by 30.09.2013 is ultra vires and Void”

  1. prabhat says:

    the department should have to notify that manual filing of tax audit report to those ca, who is incapable to upload electronically. If a person file manually they cannot be required to file the same thing electronically.
    But as regards current notification the word used may also never be treated mandatory and the well settled law that lesislature create any if and but, the benifit goes to the assessee not to the departent

  2. chanakya maurya says:

    The rampant ad-hoc-ism and frequent changes &/or introduction of new forms,etc. from the boss is very confusing even to the professionals. However, the boss is always right. So follow the boss however tough it may be. Without bothering for ultra virus or fultra vires or null full void.

  3. chanakya maurya says:

    The rampant ad-hoc-ism and revisions of various forms and procedures confuse even the professionals. However, the boss is always right !!! Follow the boss.

  4. Jayant L Aasher says:

    I am surprised that Ms Rekha Shukla , Commissioner of Income Tax and official spokesperson states that an assessee is REQUIRED to manually file the Tax Audit Report , when the Notification itself states “may also”. The Notification uses the words “should however” in case of electronically filing. The person of such a respectable designation is requested to look into the wordings again.

  5. Jayant L Aasher says:

    Mr. B. KIRAN KUMAR Thanks for just copying on 27th Sept evening the view given by me in the morning of the same day. :))

  6. ASHOK KUMAR KHANNA ADVOCATE says:

    THE GOVERNMENT IS NOT EXTENDING THE DATE AS THEY WANT THAT TAX BE DEPOSITED BEFORE 30/09/2013 IT WILL BE BETTER IF THE GOVERNMENT EXTEND THE DATE WITH THE CONDITION THAT INTERST WILL BE CHARGED FOR THE TAX REMAIN PENDING ON 30/09/2013 TILL THE FILING OF RETURN AND AUDIT REPORT

  7. Manoj Sharma, Advocate says:

    This bungling was primarily due to wrongful representation by professional bodies led by ICAI which only harped on frequent changes in e-filing utility & forgot to highlight the fact that earlier, when the Act envisaged ‘furnishing’ of the Tax Audit Report before the AO, the due date had always been 31st October. It wasonly after the word ‘furnish’ was replaced by ‘obtain’ that the date was preponed to September. We should have highlighted this point coupled with the other website related issues that everyone faced…..we must take this issue at the time of presenting pre-budget memorandum to the FM so that annual clamouring of date extension is dealt with once and for all…

  8. vsnmurty says:

    Respected Professionals,
    I have been in this profession for more than 3 decades,
    It has been my experience that almost every year we agitate for extention of time for filing returns. We know the due dates for filing various returns very much in advance and still we clamour for extention of time.By this are we not exposing our inefficiency?If we are not equipped to handle the work we cannot claim to be elite professionals.Let us not be seen as too lethargicand chewing more than we can eat.

  9. B.KIRAN KUMAR says:

    The Notification uses the words “may also’ in respect of manual filing of tax audit report. It does not say “should also” or “shall be” . Why should we worry then about manual filing ? The word “may” means it is optional – this interpretation we all should take and not worry of manual filing. I humbly opine this.

  10. CA Lalit Munoyat says:

    Government of India
    Ministry of Finance
    Department of Revenue
    Central Board of Direct Taxes

    PRESS RELEASE

    26th September, 2013

    It has come to the notice of the Central Board of Direct Taxes (CBDT) that many assesses who are required to file their income tax returns by September 30, 2013 are finding it difficult to upload the report of Audit electronically as prescribed under the proviso to sub-rule (2) of Rule 12 of the IT Rules for the Assessment Year 2013-14. Therefore, the CBDT has
    decided to extend the time for furnishing the report of Audit electronically till October 31,2013. However, the assessees are required to file the report of Audit manually with the jurisdictional Assessing Officer by the prescribed due date, i.e. September 30, 2013. The assessees are also required to file their returns of income electronically by the prescribed
    due date, i.e. September 30, 2013.

    (Rekha Shukla)
    Commissioner of Income Tax
    (Media & Technical Policy Co-ordination)
    Official Spokesperson, CBDT

  11. CA Lalit Munoyat says:

    Dear Sarfaraz: The same day in the evening, by a press release by the CBDT, the matter has been clarified that there is no extension of the date. If you are not able to upload tax audit report, then file the same manually by 30-09-13 and file the return electronically by the same date. Later on when you are able to upload the Tax Audit, you upload the same not later by 31-12-13. Electronic filing of the Tax audit is compulsory by 31-10-13

  12. sarfraz says:

    i dont agree read the notification, it is an option for those asessee who is not able file his return electronically,

  13. AMITABH AGARWAAL, Advocate says:

    Jayant L Aasher says:

    September 27, 2013 at 10:07 AM

    The Notification uses the words “may also’ in respect of manual filing of tax audit report. It does not say “should also” or “shall be” . Why should we worry then about manual filing ? The word “may” means it is optional – this interpretation we all should take and not worry of manual filing. I humbly opine this.

    I am Completely Agreed with the Shri Jayant Ji.
    When there is “may also”, then it is Sure that Manual Filing is Not Compulsory.

  14. CA. M. Lakshmanan says:

    People at the helm of affairs do not understand the difficulties faced by the assessees and the CAs in getting digital signatures, preparing the returns and reports and e-filing the same wherein the new set of procedures are introduced very recently, which are changing now and then and more so we have to depend on various outside factors such as ‘income tax software provider’, income tax website, bank’s website(for payment of taxes), internet etc.,The date can be extended with the condition that the interest on belated filing may be insisted upon and thereby relieving the assessees from the stringent penal provisions.In such a situation there may not be any financial loss to the exchequer.

  15. CA. BIKRAM JALAN says:

    I AGREE WITH MR. PANKAJ IN HIS EVERY POINTS WHAT HE SAID IN HIS ARTICLE IT IS REALLY A GOOD JOKE FROM CBDT, CBDT EXTEND THE DUE DATE OF E-FILLING AUDIT REPORT BUT ALSO SAYS THAT WE SHOULD FILE HARD COPY OF SUCH REPORT BEFORE AO ON BEFORE 30.09.2013,ALSO THE INCOME TAX RETURN SHOULD BE FILED BEFORE THE DUE DATE i.e. 30.09.2013. IT MEANS THAT ” CHEET BHI MERA PAT BHI MERA BAKI BACHA WO TERA” ITS NOT RIGHT.

    I HUMBLY REQUEST OUR INSTITUTE TO TAKE THIS MATTER AND RESOLVE THE ISSUES AS SOON AS POSSIBLE TO SAVE US.

  16. Balwant Jain says:

    Dear Jayant
    In legal parlance the word may be deemed to mean shall and vice versa. This has been judicially held in many cases. Please do not take chance with legal wording unless you are willing to fight a long legal battle.

  17. CA Jayesh Thakkar says:

    Very much thankful to CA Pankaj Shah and fully subscribe to the views expressed.

    Time and again revenue authorities show their draconian and assessee-hostile power-ways. Pankaj rightly says what meaningful purpose is going to be served by insisting manual report? Do the AOs intend to act immediately on them no sooner they are received? I fully agree to insist on the manual-report is a clear-cut violation of provisions.

    Section 119 can and should be used only to bestow benevolence and for removal of hardships, and not to impose additional illegal burden on the assessees.

    CA Jayesh Thakkar (M.No 32318)

  18. CA Lalit Munoyat says:

    The circular has been clarified as follows: “Further to the Order dated 26.09.2013 issued u/s 119(2)(a) of the Act extending the due date for the electronic filing of the Tax Audit Report to 31.10.2013, the CBDT has issued a Press Release dated 26.09.2013 clarifying that the print copy of the Tax Audit Report as well as the Return of Income has to be filed by the prescribed due date of 30.09.2013 and that there is no extension of that time limit. ” A comedy better than “Comedy Nights with Kapil”

  19. ASHOK KUMAR KHANNA ADVOCATE says:

    date of filing income-tax return due on 30/09/2013 should be extended

  20. SVN says:

    I agree, it is not right to bring out such an amendment at the Nth Hour. What about those who have already filed their Tax Audit Report electronically???

  21. CA Lalit Munoyat says:

    The circular has been clarified as follows “Further to the Order dated 26.09.2013 issued u/s 119(2)(a) of the Act extending the due date for the electronic filing of the Tax Audit Report to 31.10.2013, the CBDT has issued a Press Release dated 26.09.2013 clarifying that the print copy of the Tax Audit Report as well as the Return of Income has to be filed by the prescribed due date of 30.09.2013 and that there is no extension of that time limit.” An act much better that “Comedy Nights with Kapil”

  22. SHIRISH VINCHURKAR says:

    You are very correct sir. Now department is directing to submit manual report at Juridictional Income tax office. Though Manual Report is submitted, uploading of return is must though before 31/10/2013. It means manual submission has not importance in the eye of the department as far as tax matters are concerned. For ensuring that tax audit report is obtained before 30/09/2013, this condition is imposed. Then my question is why report should be submitted with jurisditional Income tax office. I can submit this report to any Income Tax office. Becase for e.g. My Juridictional Income office is 100 km from my place. and another I t office is just 50 km from my place. Then it is more conveneint to me go 50 km than 100 km. Then why such harrassement to small assessees, and auditros ?

  23. Jayant L Aasher says:

    The Notification uses the words “may also’ in respect of manual filing of tax audit report. It does not say “should also” or “shall be” . Why should we worry then about manual filing ? The word “may” means it is optional – this interpretation we all should take and not worry of manual filing. I humbly opine this.

  24. AMIT BAJAJ ADVOCATE says:

    Good article. But I think CBDT has power u/s 119 to do so.

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