Extend Income Tax Audit & ITR Due dates for AY 2020-21

Bhayander CA Social Group has made a Humble prayer for extension of due date u/s 139(1), section 44AB and for uploading of various audit Reports from 31st December 20 and  31st January 2021 respectively to 31st March 2021 to Smt. Nirmla Sithraman Ji, Hon’ble Union Minister of Finance. Full text of their representation is as follows:-

Bhayander CA Social Group

BCASG/20-21/02

Dated: 22 December, 2020

To

Smt. Nirmla Sithraman Ji,
Hon’ble Union Minister of Finance,
Ministry of Finance,
Government of India,
North Block,
New Delhi-110001
e’mail: fmo@nic.in

Sub: Humble prayer for extension of due date u/s 139(1), section 44AB and for uploading of various audit Reports from 31^st December 20 and  31^st January 2021 respectively to 31^st March 2021.

Respected Madam,

1) The unique vast killing virus Covid-19 has infected the entire world and India is no exception to it. The GOL initiated timely measures to prevent its further spread in India, one of which was strict lockdown. This lockdown was imposed from about 22^nd March 2020 and was in operation for almost 7 months and thereafter partial lockdown which is still in operation in different forms in different cities.

2) This lockdown had a devastating effect on the lives and means of livelihood for every resident of the nation. The entire infrastructure had been brought down and all the points of supply of goods and services were closed down. A large part of the workforce sifted from one place to their native or other place. Under such circumstances the offices of the chartered accountants were also fully closed and their office staff also left for their place of choice.

3) Under the Income Tax Act 1961, many dues dates fell due from 31^st March 2020 till 31^st December 2020. The GOI took a very lenient view of the predicament faced by the assesses and by us and was kind enough to extend these due dates from time to time to different dates in the future. The first of such due date to fall due is on 31^st December 2020 on which date returns of all non-audit assesses have to be uploaded and the various audit reports like under section 44AB, tax Audit Report, audit report u/s 12A(b) for the trust etc. The consequences for not uploading these audit reports are levy of heavy penalty and, in case of trusts, denial of the total exemption available u/s 11.

4) All assesses, Tax professionals, Accounting professional, Audit professional, Tax payers and all other stockholders, have split and moved to difference places which seem safe for their existence. Such was the tension of the pandemic that the entire nation was divided into many hot spots and their inhabitants were cautioned not to move out of their houses.

5) Under such circumstances it was not at all possible to contact the assesses and ask them for audit of their accounts. Though many had started working from home but WFH itself has its own limitation. Therefore, there is status quo so far as the situation on account of Covid-19 is concerned.

6) Many parliamentarians got infected by this virus and some of the ministers expired due to Covid-19 and therefore the parliament, in its wisdom, called off the Winter Session.

7) However, the Government offices across the country are not functioning with their full capacities. It has been decided for maintaining social distancing. By this move the spread of Covid-19 has been contained in Government Offices but could not be avoided. It is not eradicated completely.

8) The entire judicial system including the Apex Court is functioning as virtual Courts only, thus obviating the personal attendance of the professionals and the judges too.

9) All the Professionals are facing a huge backlog of work to be done which may require a further period of about 4 months to complete. The professionals are an integral part of the entire system; therefore, they too require protection from the pandemic to complete their assignment within the allotted time.

10) Taking Cognizance for the prevailing pandemic The Hon’ble Supreme Court has passed a blanket order on 23.3.2020 extending all the due dates prescribed under various Acts and the same order is still in operation. The Hon’ble Supreme Court has reaffirmed its order as late as on 17^th December 2020 by observing as under:

The above order is still operative and by subsequent orders, the scope has been enlarged so that the said order applies in other proceedings also.

11) Now, as late as 21^st December 2020 a study in Europe found a new strain of covid-19 in UK which is supposed to be 70% more faster than the existing virus. It has already mutated and spread to south Africa and proceeding towards Asia at a rapid speed.

12) In order to cope with this new virus, the GOI has banned all in bound flights from Britain to India and the Government of Maharashtra has made it mandatory for all persons entering Maharashtra to be in compulsory quarantine for 14 days.

13) Due Date on adopting option for concessional rate of taxation u/s 115BBA etc.

The provision requiring submission of audit report 1 month prior to the date of filing of the ROI has also created many hurdles for the auditors. The ideal law about submission of audit reports would be that these audit reports are submitted within one month after the date of submission of the Return of Income u/s 139(1). In such cases the Revenue would rest assured that whatever information that has been submitted in the Return of Income is True & correct by ensuring that this information is audited by qualified C hartered Accountants and their report is submitted within one month after the date of submission of the Return of Income u/s 139(1).

The present provision is like an auditor is predicting a financial position for a date 1 month in future. The Finance Ministry has not offered any guidelines about the treatment of financial events occurring after the date of submission of audit report.

Let us consider some examples of this contradiction

(a) Reporting in Form 3CB/3CD

Since the assessee has to file his return of income by 31^st January 2021 he may not have finally closed his accounts as at 31^st December 2020. Under such circumstances no auditor would like to audit such accounts which have not been closed and give the required opinion in Form 3CA/3CB like: –

“In our opinion and to the best of our information and according to examination of books of account including other relevant documents and explanations given to us, the particulars given in the said Form No. 3 CD are true and correct subject to the following observations/qualifications, if any:”

Is it possible to do so if the accounts were still open and not closed as on 31st December 2020?

(b) Clause (8a) seeks answer on the question if the assessee has opted for taxation under section 115BA/ 115BAA/ 115BAB?

Under Section 115BA/115BAA/115BAB the option can be exercised by the assessee in the prescribed manner on or before the due date specified under section 139(1). That means an assessee willing to exercise the option can do so up to 31^st January 2021, then how can an auditor answer the question in clause 8a latest by 31^st December 2020, when the said option becomes time barred only on 31^st January 2021.

(c) Clause 18 seeks answer on the WDV of the assets if the assessee has adopted option of lower rate of taxation u/s 115BAA like:

(ca)	Adjustment made to the written down value u/s115BAA	Rs…..
(cb)	Adjusted written down value	Rs…..
(c)	Depreciation allowable	Rs…..
(d)	Written down value at the end of the year	Rs…..

The figures would vary depending upon whether the option u/s 115BAA has been exercised or not and for which the last date is again 31^st January 2021.

The value of Adjustment to be made to the written down value u/s 115BAA as stated in clause (ca) is equal to the amount of unabsorbed additional depreciation as at 1st April 2019 which is required to be carried forward to the AY 2020-21. The other figures in the remaining clauses would depend upon the amount of adjustment in clause (ca).

(d) Clause 20 (b) : Details of contributions received from employees for various funds as referred to in section 36(1)(va):

Under this clause compliance with respect to the Due date of Payment is required to be ensured. Whether this due date is the date as per the Provident Fund Act or as per the date u/s 43B i.e. the contribution of the employees will be allowed as expenses if paid up to the due date as per section 43B. There are contradictory judgements of various State High Courts as under. Allowed means allowed u/s 43B even if paid by the due date u/s 139(1) and Disallowed means not allowed if not paid by 15^th day of the month next to the month of receipt.

1	Gujarat High Court	Not Allowed
2	Karnataka High Court	Allowed
3	Calcutta High Court	Allowed
4	Bombay High Court	Allowed
5	Madras High court	Allowed & Disallowed both
6	Delhi High Court	Allowed
7	Rajasthan High Court	Allowed
8	Kerala high Court	Not Allowed
9	Punjab & Har High Court	Allowed
10	Madhya Pradesh High Court	No Clarity
11	Patna High Court	Allowed
12	Allahabad High Court	Allowed
13	Gauhati High Court	Allowed

The Hon’ble Supreme Court has so far not answered the above question of law on merit of any case.

So, whether the deduction will be allowed or disallowed can be answered only after knowing the High Court in whose jurisdiction the assessee has the place of business. Moreover, the following orders were passed subject to the final order of the Supreme Court on these questions.

So, while submitting form 3CD by 31^st December 20 the Tax Auditor will not be able to give correct answer because the assessee has got time up to 31^st January 2021 to make payment of the same and claimed it as deduction u/s 43B.

(e) Clause 21(b)(i)(B) : Details of payment on which tax has been deducted but has not been paid on or before the due date specified in sub-section (1) of section 139.

The tax auditor just can’t straight way answer this question and disallow 30% of the expenditure when the time for payment of TDS is still available up to 31^st January 2021.

(f) Clause 26(B): Payment under Section 43B

Under section 43B certain payments are allowed on cash basis if they are made before the date of filing of the ROI u/s 139(1). Therefore, a tax auditor just can’t answer this question particularly when the time for payment of the above sums is still available up to 31^st December.

(g) Clause 32(a): Details of brought forward loss or depreciation allowance, in the following manner, to the extent available: (Also refer clause 4 above)

Sl. No.	Assess-ment year	Nature   of loss/ Allowance	Amount as returned	All losses/ allowa-nces not allowed under section 115BAA	Amount as adjusted by withdrawal of additional depreciation on account   of opting    for taxation under section 115BAA	Amounts as assessed	Remarks
(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)

The answer to the question in column (5) & (6) will depend upon whether the assessee has exercised the option of being assessed under the concessional rate of taxation as provided in section 115BAA. However, the last date for exercising this option is 31^st January 2021. If the assessee does not exercise the option then the amount to be reported in column (5) & (6) will be NIL and if exercised then the amount will have to be calculated in the manner as given in section 115BAA. Therefore, it will be very difficult for the tax auditor to provide the accurate answer one month in advance of a date in future.

(h) Clause 33 Section-wise details of deductions, if any, admissible under Chapter VIA or Chapter III (Section 10A, Section 10AA):

Section under which deduction is claimed

Amounts admissible as per the provision of the Income-tax Act, 1961 and fulfils the conditions, if any, specified under the relevant provisions of Income-tax Act, 1961 or Income-tax Rules,1962 or any other guidelines, circular, etc., issued in this behalf

The answer to these questions will again depend whether the assessee has exercised the option of being assessed under the concessional rate of taxation as provided in section 115BAA. However, the last date for exercising this option is 31^st January 2021. If the assessee does not exercise the option then the amount to be reported will be the actual amount eligible for deduction and if exercised then the amount to be reported will be NIL. Therefore, it will again be very difficult for the tax auditor to provide the accurate answer one month in advance of a date in future.

(i) For availing this concessional rate the assessee will be required to forego some deductions which are otherwise allowable to it under various sections like 10AA, 32(1)(iia), 32AD, 33AB, 33ABA,35, 35AD, 35CCC 35CCD. If the assessee adopts the option of lower rate of taxation then no deduction under any provisions of Chapter VI­A other than the provisions of section 80JJAA or section 80M.

14) Under the above circumstances it is literally impossible to do the audit of the accounts of the assessee and upload the audit report up to 31^st December 2020 and therefore, the GOI is very respectfully and humbly requested that all actions of compliances falling during the period from 15^th March 2020 to 30^th March 2021 to 31^st March 2021 relating to –

a. Furnishing of Returns for AY 2020-21

b. Furnishing of Audit Report u/s 44AB for business, profession and the Trusts.

c. Any other Return or audit report falling due before 31^st March 2021

With Warm Regards

For, Bhayander CA Social Group

CA Sandip Jain
Prime Mover

CA Lalit Munoyat
Direct Tax Advisor

CC to:

1. Shri Anurag Thakur, Union Minister of State, Ministry of Finance; and Ministry of Corporate Affairs- e’mail: mosfinance@nic.in

2. Shri Ajay Bhushan Panday Ji, Revenue Secretary of Finance e’mail: rsecy@nic.in

3. Shri Pramod Chandra Mody Ji, Chairman, Central Board of Direct Taxes e’mail:  hairmancbdt@nic.in

Download Representation in PDF Format

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14	19 Dec 2020	Chartered Accountants Association, Jalandhar	Extend Due Dates for Tax Audit and Income Tax Return Filing
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23	15 Dec 2020	Direct Taxes Professionals’ Association	Extend due date of AGM to 31st March 2021
24	15 Dec 2020	Association of Tax payers & Professional, Agra	Extend due of GSTR-9, GSTR-9A & GSTR-9C
25	08 Dec 2020	Tax Bar Association (Regd), Allahabad	Extend due date of ITR/Tax Audit/GSTR-9/GSTR-9C
26	08 Dec 2020	Tax Consultant & Practitioners Association of Kerala	Extend due of ITR, GSTR 9, 9A & 9C for FY 2018-19 & 2019-20
27	21 Dec 2020	Tax Bar Association, Guwahati	Extend CFSS 2020 & LLP Settlement Scheme 2020 to 31.03.2021
28	22 Dec 2020	Income Tax Bar Association, Lucknow	Extend Time for filing ITR & Audit Report for A.Y 2020-21
28	22 Dec 2020	53 GST and Trade Associations	53 Associations requests Extension for GSTR 9, 9A & 9C
29	16 Dec 2020	Chandigarh Chartered Accountants Taxation Association	Extend Income Tax & GST Return & Audit due dates
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31	22 Dec 2020	Luminaires Accessories Components Manufacturers Association	Extend due dates for Tax Audit & Income Tax Return filing for AY 2020-21
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33	22 Dec 2020	Punjab Accountants Association	Extend due date for filing ITR & Tax Audit Report- AY 2020-21
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35	23 Dec 2020	The Tax Bar Association, Odisha	Extend due dates of Audit Reports, ITRs, GST Returns, VSV Scheme
36	21 Dec 2020	Sales Tax Bar Association, Delhi	Extend Tax/TP Audit & ITR Due dates for AY 2020-21
37	23 Dec 2020	Direct Taxes Professionals’ Association	Extend Income Tax, Companies & CGST Act compliance due dates
38	24 Dec 2020	ICSI	Extend due dates of CFSS, LLPSS, Charge Forms, Meetings
39	24 Dec 2020	All Odisha Tax Advocates Association	Extend due date for filing TAR/ITR/GSTR9/9A/9C
40	25 Dec 2020	BJP Economic Cell, Rajasthan	Extend Income Tax, GST, LLP, Company Law due dates
41	23 Dec 2020	Hyderabad Chartered Accountants’ Society	Extend Due date under GST and Income Tax
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43	03 Jan 2021	National Company Law Tribunal Bar Association	Representation for further extension of CFSS 2020
44	25 Nov 2020	Merchants Chamber of Uttar Pradesh	Request for extension of Company Fresh Start Scheme 2020
45	04 Jan 2021	Adv. Anuj Bhatt	Request to President to take Suo-Moto cognizance of GST Issues
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