CA Ajay K. Bhagwani

Problem in software issue in allowing Full and proper interest allowable u/s 244-A of Income TAx Act, 1961 while processing Income Tax returns for AY 2019-20.

It is observed that while processing of Income Tax returns for AY 2019-20, interest allowable u/s 244-A of Income Tax Act, 1961 from 1 st April to till the date of allowing refund to Assesse is not getting allowed by CPC, Banglore. In respect of corporate and other assesse, where books of account are required, the due date was extended from 30.09.2019 to 31.10.2019.  However, it seems that software is not considering extension of due date by CBDT and not allowing interest for period 1 st April to 30.9.2019. Application filed u/s 154 are rejected without reason. Brief note in respect of this is as under. The issue needs to be highlighted and to be taken up with CBDT to avoid unnecessary Litigation.

Note on Processing of Income Tax Return by CPC for AY 2019-20

1. Income Tax returns for AY 2019-20 are getting processed by CPC, Banglore and intimations are sent on e-mail. First page of Intimation clearly shows what was the due date of filing of return of income, what was extended due date of filing of return of income and what is the exact date of filing of return of income in respect of Income tax returns processed for the AY 2019-20.

2. It is important to mention here that in case of corporate assesse and assesse where books of accounts are required to be audited, the due date of filing of return of income was 30.09.2019. Due date of filing of return of income was extended to 31 st Oct. 2019 vide order passed u/s 119 by Central Board of Direct Taxes vide F. No. 225/157/2019/ITA.II dated 27 th September 2019. Copy enclosed. In the order passed, it was clearly mentioned that the due date is extended from 30.09.2019 to 31.10.2019. However, it was clearly mentioned in the said order passed u/s 119 that there is no extension of due date for the purpose of levy of interest u/s 234-A of Income Tax Act, 1961. However, for all other purposes other than for the purpose of levy of interest to be charged u/s 234-A, the due date was extended as there is no other mention in the said order.

3. Income Tax returns are getting processed by CPC, Bangalore and in case of refund due to assesse, refunds are allowed by CPC, Banglore. However, it is observed that while allowing refunds to assesse, interest allowable u/s 244-A of Income Tax Act, 1961 is not getting fully and properly allowed. Assesse is entitled for interest u/s 244-A of Income Tax Act, 1961 from 1 st April 2019 to till the date of allowing refund to assesse. However, it is seen from some of intimations u/s 143(1) that interest for the period 1 st April 2019 to 30.09.2019 is not allowed by CPC, Banglore while processing returns.

4. Application u/s 154 is filed for allowing full and proper interest allowable u/s 244-A of Income Tax Act, 1961. However, applications filed u/s 154 are rejected without assigning any reasons.

5. On one side, Government is trying to reduce litigation by introducing scheme ‘Vivaad Se Vishwas Tak’ however, on other hand, for small, procedural and no brainer issue will lead to filing of unnecessary appeals for allowing full and proper interest allowable u/s 244-A of Income Tax Act, 1961.It seems to be that it is software issue where period of allowing interest u/s 244-A of Income Tax Act, 1961 is incorrectly defined and returns filed during extended period are treated as late returns for the purpose of allowing interest u/s 244-A of Income Tax Act, 1961.

6. It is requested that necessary direction for allowing correct interest u/s 244-A of Income Tax Act, 1961 may kindly be given in respect of returns already processed while in respect of returns yet to be processed, due care should be taken to allow full and proper interest to avoid litigation on procedural and unnecessary issues.

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