Case Law Details
Tata Rao Gali Vs ITO (INT. Taxn) (ITAT Hyderabad)
Introduction: The Income Tax Appellate Tribunal (ITAT) Hyderabad’s ruling in the case of Tata Rao Gali vs. ITO (International Taxation)-1 has set a precedent regarding the extension of the due date for income tax return filing under CBDT circulars and its consequent effect on the quantification of interest under Section 234A of the Income Tax Act, 1961. This ruling sheds light on the intricate relationship between administrative circulars issued by the Central Board of Direct Taxes (CBDT) and statutory provisions concerning interest levied for late filing.
Detailed Analysis: The core of the dispute revolved around the appellant’s contention that despite filing the return within the extended due date provided by CBDT via Circular No. 9/2021 and Press Release dated 09/09/2021, the Assessing Officer (AO) levied interest under Section 234A from the original due date. The appellant argued that the tax liability was settled before the extended due date, and hence, no interest should accrue for the period post the original due date up to the date of actual filing within the extended period.
ITAT’s deliberation highlighted a significant aspect of CBDT’s circulars extending filing deadlines. Specifically, it examined Circular No. 17/2021, which further extended the due date to 31/12/2021 but introduced a caveat limiting this extension to cases where the interest liability under Section 234A does not exceed Rs. 1 lakh. This clarification created an anomaly, as it implied different due dates for taxpayers based on their interest liability, which could vary over time.
The tribunal noted the purpose behind extending filing deadlines was to alleviate difficulties faced by taxpayers, particularly in light of challenges for electronic filing. It reasoned that the clarification creating a variable extension based on interest liability did not serve this purpose and instead introduced uncertainty and complexity.
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