CA Sharad Jain
In the cases of certain categories of Income Tax Assessees / Payers, audit report is required to be furnished up to 30th September e.g., for the Assessment Year 2015-16 up to 30th September, 2015.
Almost every year circumstances arises that due to one or more reasons (e.g., natural calamities, festival season, substantial changes in law / procedures, delayed issuance of forms / utilities etc. and / or other technical / procedural difficulties) it becomes difficult to properly and efficiently complete the above task within available time limit. Therefore, extension of above time limit is sought by the Tax Payers / Assesses, Tax Consultants, Chartered Accountants etc.
On other hand, the CBDT feels it difficult to extend the above time limit, as for that purpose the due date of filing of Income Tax Returns is required to be extended (as date for furnishing of audit report is dependent on due date for furnishing of Income Tax Returns) which, in turn, leads to delayed collection of self assessment tax and / or loss of interest chargeable U/s. 234A of the Income Tax Act.
Here it is emphasized that on the above issue, the concerns / interest of the Revenue and that of the Tax Assessees / Payers etc. are completely different. The Revenue is mainly concerned with the timely collection of taxes and interest on delayed payment thereof, whereas the Tax Assesses / Payers etc. are mainly concerned with availability of sufficient time for completion of audit work in proper and efficient manner. Despite that almost every year, clashes arises on the issue of extension of above time limit.
CAUSES BEHIND HARDSHIP / PROBLEM:
It is felt that most probably the biggest hurdle in extension of the due date, without loss of revenue, is the scheme contained in the Income Tax Act itself, wherein the payment of self assessment tax and charging of interest U/s.234A have been made totally and unnecessarily dependent on filing of return / due date for filing of return.
Under the present scheme, there is no independent due date for payment of self assessment tax. The Section 140A only prescribes that the self assessment tax is to be paid before filing of the return. Thus, on every extension of due date of filing of return, the liability to pay self assessment tax automatically gets shifted to the extended due date for filing of return. If there was any separate and independent due date for payment of self assessment tax then on extension of due date of filling of return, the payment of self assessment tax would not have got delayed.
Similarly, as per section 234A, the interest is not directly chargeable on delay in payment of self assessment tax but is chargeable on delay in filing of income tax return. Thus, on every extension of due date of filing of return, the amount of interest chargeable U/s. 234A gets reduced. If there was any separate and independent due date for payment of self assessment tax and interest U/s.234A was chargeable on delayed payment of self assessment tax from that due date, rather than on delayed filing of return, then there would not have been any loss of interest on extension of due date of filing of return.
Here it is mentionable that the concept of levy of interest for delay in filing of return (i.e., delayed submission of papers / information) is also commercially unacceptable because the interest is chargeable for delayed payment of money and not for delayed submissions of paper / information (i.e., returns).
It is also mentionable here that in almost all the cases, the amount of self assessment tax is merely about 10% of the total tax payable (after TDS). Mostly 90% of tax payable (after TDS) is paid by way of advance tax. There are independent due dates for payment of advance tax. There is also an independent method of charging of interest for delayed payments of advance tax. Therefore, when concept of collection of substantial amount of taxes and charging interest for delay, without any reference to filing of return / due date of filing of return is already in successful use, then the extension of the above concept for the rest 10% of taxes will not be impracticable / unacceptable.
Thus, In the above background, it is suggested that :
(a) the liability to pay self assessment tax may be detached with the event of filing of return of income. It may be made an independent liability. For this purpose an independent due date for payment of self assessment tax may be fixed e.g., for tax audit cases 30th September itself. The section 140A may be amended to provide that the self assessment tax shall be paid before filing of return or above due date whichever is earlier. In such a situation, the liability to pay self assessment tax will not get shifted on extension of due date for filing of return.
(b) similarly, the levy of interest U/s. 234A may also be detached with the delay in filing of income tax return. It may be made chargeable for delay in payment of self assessment tax from the above independent due date for payment of self assessment tax. In such a situation, there will be no loss of interest to the government on extension of due date of filing of return.
Hope that the above suggestions may be helpful in removing hurdles in easy extension of due dates for filing of returns and consequently of audit reports, for the benefit of public at large, without any revenue losses. Whenever needed, the same may also be helpful for extending the due dates of filing of returns for non tax audit cases.
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