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)