CA Rekha Dhamankar
We all know that the CBDT unexpectedly changed the formats of the tax audit report U/S 44AB of Income-tax Act by its Notification No.33 dated 25/07/2014 and to everyone’s surprise these new formats were made applicable from Financial Year 2013-14, for which the date of filing tax audit reports is 30/09/2014. Few questions aroused due to this sudden changes, as follows-
1. Wheher it would be mandatory to the auditors of Banks, PSUs and Insurance companies to submit the report again in new format who have completed and submitted report in April 2014?
2. Whether the auditors who have uploaded the tax audit reports before 25/07/2014 have to do it again?
3. The circular does not give sufficient time to auditors to collect additional information.
4. No software was made available to convert the reports into .xml format (in which it is mandatory to upload the report) till 20/08/2014.
Getting offended by this “midyear” changes the ICAI and lot of Chartered Accountants filed the representations to CBDT and FM. The demands were-
1. To apply the changes from next financial year 2014-15.
2. If the reports are to be applied from Financial Year 2013-14-
a. It should not made mandatory for auditors who have filed and uploaded the reports before 25/07/2014.
b. The date of filing of tax audit report should be extended by at least 2 to 3 months.
As a result the CBDT issued an order on 20.08.2014 using the powers offered to them u/s 119 and extended the date of obtaining and furnishing the tax audit report U/S 44AB of Income-tax Act by its from 30/09/2014 to 30/11/2014. However it gave rise to few new questions as follows-
1. What is a meaning of the word “due date” used in the notification since section 44AB talks about “specified date” and no “due date”. This is perhaps mistake from the CBDT while issuing the circular.
2. The major confusion aroused is whether the date of filing of income tax returns u/s 139(1) of Income-tax Act is also automatically extended to 30/11/2014. The answer to this is clear no from my point of view on the following grounds-
a. Few people took a stand that as per explanation 2 (a)(ii) of section 139(1), once the date of filing of tax audit report is extended, the date of filing of return u/s 139(1) also gets extended. But this contention is wrong. Explanation 2 (a)(ii) of section 139(1) uses the words “…a person, whose accounts are required to be audited under this Act…”. It means it talks about the applicability of section 44AB only (we need to see whether the turnover is more than 1cr or 25 lakhs).
b. Even though to determine the “specified date” as per section 44AB, a reference of section 139(1) is given, both these tasks are separate requirements as per Income-tax Act and has to be done separately. The purpose of both the sections are different.
c. The words used in the CBDT order dated 20/08/2014 are “… for obtaining and furnishing report….” Also indicates that this extension is only for obtaining and furnishing tax audit reports.
d. If the CBDT intends to extend both the dates, it would have changed the date under section 139(1) so that it can be automatically applied to section 44AB. However it has specific mention of section 44AB. Reverse it not applicable here. We experiment it last year when the date was extended only for uploading tax audit reports electronically.
e. Irrespective of all the points specifically covered above, it will be wrong on our part to take it for granted that the date of filing of income tax returns also extended. If the CBDT intends to do it, it should publish separate notification / order in this regard.
3. Few explanatory points
a. The date of filing of income tax returns for the companies incorporated in India and the charitable trust would be 30/09/2014.
b. The date of filing report u/s 92E (in case of transfer pricing) would remain 30/11/2014 as per each year.
c. The people who have completed, submitted reports but not uploaded the same should have to upload them in new format.
d. The people who have uploaded the reports before 25/07/2014, need not upload them again.
e. For the people who have completed the audit and submitted the report before 24/07/2014, the date of audit to be mentioned in the ITR would be the date of original audit report.
4. It is also said that the CBDT does not have power to issue such order u/s 119 of the Act. However this contention is wrong since-
a. Section 44AB was amended by Finance Act 2012 and the words “..date as given in section 139(1)” are changed for the words “30 September”, but there is no corresponding amendments in section 119(2).
b. There is no other section which gives powers to CBDT to issue any notifications/circulars and orders.
c. Even though there are few sections mentioned in 119(2), it does not mean that this is restrictive in nature. Its just an explanatory in nature since the section starts with the words “…without prejudice to the generality of foregoing powers..”. it means this section cant override the powers given in section 119(1). We may find various notifications/ circulars and orders for sections which are not listed in the section 119(2) issued by the CBDT. If the above contention is taken as valid, all these notifications would be void ab initio.
d. Even though the words “.. to issue instructions/ directions to income tax authorities ..” are used in section 119(1), it does not again restrict the CBDT to issue any notifications or circular or orders.
e. There is only one section 119 in the Income-tax Act which gives rights to issue any notifications/ circulars or orders under this Act.
This I would like to reiterate that the date of filing of income tax return will not be extended unless CBDT issues separate notification about the same.
(Author is a Pune Based CA and is partner with Dhamankar and Khandewale, Chartered Accountants)
For filling of ITR the details of Expenses allowable and Disallowable etc. have to be given after which the actual Tax Liability of assessee will be known. But those details will be known only when the Tax Auditor furnish the report to assessee. So there is no meaning in extending due date of Tax Audit report without extending due date of ITR.
Very well said Rekha ji. I fully agree.. Lets wait for some sanity to prevail with CBDT and they just not harass the tax payers with such creative notifications, where precious time of professionals is spent on interpreting just the notifications.
Thanks for your comments and appreciating my views. Here are few answers to the questions raised –
1. ITR need not be revised after filing of TAR
2. CBDT has wide powers to alter any date, If you see the past notifications / circulars / orders issued by CBDT, you will find the answer.Subject to this i agree with the views expressed by Vikram Mathur ji.
3. For the time being the date of audit report would be “date on the audit report”. However no answer to “date of furnishing the audit report”. Even the ITR is uploaded with any date, they cannot make the returns defective on technical grounds for which you are not responsible.
4.i dont think the ITR with future date will get uploaded even though validated. please try and if it happens, let me know.But this is not the right solution.
5. the consequnces of non filing of ITR before 30 September are interest for late filing of return, non carry forward of loss, belated cannot be revised, and so on. you can refer to the relevant sections.
6. i agree with the views of Madeep Singh and Ashok Nahar ji.
Thanks all for appreciating my views. I would like to clarify few things-
1. We need to strongly represent the matter. i am also protesting and representing it. If you wish to join please sent me mails on rekha.dhamankar@gmail.com with a subject “protest”. I will mail you the representation copy.
2. Regarding the mandatory field of date of audit report to be filled in the ITR, CBDT can very choose to amend the schema and remove that requirement instead of extending the date.
3. Do not rely on any communications unless you have authentic source for the information.
4. CBDT can very well extend only one date and has powers to do so. It will be wrong to say that order extending only the date of TAR is invalid.
I Thank CA Rekha Dhamdar for the very valuable Article and all those who shared their opinions.
But what i think is the date of ITR should be extended because in ITR we need to give the date of furnishing Audit report which cannot be a due date even if the Java Utility validates.
So CBDT has to extend the due date of ITR or should made Tax Audit applicability from A.Y 2015-16 also which will avoid complete confusion.
More than a month has passed after notification dt.25/07/2014. No clarification has received from CBDT. Many chartered accountants must have completed tax audit report in new form for there many cliets. Now defering the same for next year will further complicate the matters for those. We have to commence and complete the reports on or before 30th Sept. 2014 and should not wait further.
I AM OF DEFINITE OPINION THE EXTENSION OF AUDIT REPORT DOES NOT AUTOMATICALLY MEAN EXTENSION OF FILING OF RETURN IN THE PAST SUCH QUESTION AROSE AND CBDT GAVE SEPERATE NOTIFICATION IN THIS RESPECT.
Sir, why you are fighting for Reports. I think it is a right time to separate them from filling with ITRs. on the other hand it is right time to omit these reports for Non-Corporate assessees. As per various information collected from income tax departments in india, these reports not beneficial for department as well as for assessees. These reports till today present in income tax without evaluating its output since 1984.
I HOPE THERE WILL BE NO STATUTORY REPORTS IN FUTURE. SO FOR PLEASE DON’T CRY UPON THE MATTER.
CBDT MEANS CONFUSION BOARD OF DIRECT TAXES NOT CENTRAL BOARD OF DIRECT TAXES KEEP IT UP CBDT
In my opinion the extension of due date for filling tax audit report without extending the due date for filling return of income u/s 139(1) will not be valid as it would amount to changing the relevant section of the Act. This power vests with the parliament and not the CBDT.
Dear all
What are the consequences, if the Income Tax Return (ITR) of 44AB cases, filed after 30th September 2014?
please advise.
why the department or concern authority will give the clear cut picture, about this issue.
last date of “obtaining & furnishing” audit report extended…..?????
The “jar” file given by IT Dept validates the xml with “future date” for Audit report and submission of audit report.
Hence withe these two dates given as 30/11/2014 there will be no problem in generating a “validated” xml file.
We have to upload and see whether it gets rejected and if not rejected then it is okay even if the date for efiling is not extended.
CA V.Sivaraman
very nice compilation of all relevant sections.. hope CBDT issue separate notification or any clarification..
Is it therefore necessary that the ITR be filed on due date and once again the revised Tax Audit Report be uploaded at a later date -that is for each client time would have to be spent twice for filing. A further clarification would be appreciated.
My kind request to the Author to consider the use of the term “Aroused” and use appropriate words like Arose, Resulted, Follow, Ensue etc.
Thanks for this very informative article. Kind Regards..
Amidst all the concerns of whether date of filing tax returns has been extended or not, there is one question which requires to be answered if in case the date of filing tax returns is presumed to be not extended:
“Which date should be written in the fields “Date of Audit Report” and “Date of furnishing of Audit Reports”. Further, if there is no report obtained from the Chartered Accountant how can one furnish the returns without the information
It is a nice article by Rekha. However, i beg to slightly differe from her views. If the CBDT modifies the specified date of section 44AB which is linked with section 139(1) then it amounts to alteration in legislation. I believe only parliament has this power. It is true that CBDT have power of relaxing the provisions for betterment of tax payers but whay they have done in present situation is not relaxation simplicitor but alteration in legislation. The purpose could have been properly served by issuing nnotification u/s 119 in relation to section 139(1) instead of relaxing the specified dates through plain words.
Dear CA Rekha Dhamankar,
I absolutely agree with every word that you have said. In addition, I believe that the CBDT should issue circulars that have been vetted from all possible repurcussions by it’s own appointed committee prior to being released for general dissemination.
CA Vikram S Mathur
i fully agree with the view express by C A REKHA DHAMDAR, i think that our institute should come forward, and take the matter with appropriate authority
C A K C AGARWAL.ALLAHABAD
I endorse the view that the due date for filing of the ITRs is not extended.