An Open Letter to FM for Tax Audit Due date extension

Shri Arun Jaitely
Finance Minister of Govt. Of India
New Delhi,

Ref: Request to take note of CBDT wrongdoing and now an adamant to go ahead with Tax Audit  Last Date 30th September 2018.

Dear Sir,

I would like to attract your attention for seeking an extension of the Tax Audit date of 30th September 2018 being totally unjustified to look towards the fraternity of Chartered Accountants to complete their job within few days against the statutory availability of 180 days. Every year CBDT failed to notify the Income Tax returns in time, which compress the time of Tax Audits. In the year 2014 & 2015, a number of cases were filed against the CBDT for extension of time and it is worth noting that more or less, all the cases were in favour of petitioners. The petitioners were from every walk of like from trade associations to professional bodies.

This year is a unique year in term of an economy of the country. A mix of four content is must to file a return. The last year was marked by the implementation of GST in the country. The earlier regime of Service Tax & VAT is bound to be here being three months of its existence. Many changes were made in Form 3CD to be applicable from only 20th August of this year. Further, some of the changes were deferred for 31st March 2019. The date for completion and furnishing of the tax audit report is 30th Sept. 2018 and it genuinely requires an extension. The judgments of the last years of 2014 & 2015  clearly shown a way for the timely release of ITRs but this year also CBDT has failed in its job.  It’s a simply mockery at the part of CBDT to play with the dates of ITR extensions. Your Government should craft out a simple formula to the extension of dates and you must ensure the availability of full period as statutes provided in the act. Earlier the Governments were taking the extensions notifications on time, but the day, this Govt. has taken charge of, and a flimsy adamantly is being shown to the Taxpayers resulting in their endless sufferings.

Our Alma Mater ICAI through its organ, the Direct Taxes Committee has given three representations requesting CBDT  to extend the due date. Many Chartered accountants groups of Delhi already met you and requested you to extend the due date.

I am the moderator of a group, ICAI_CIRC_MEERUT_CA group. This group is also having PAN India exposure and having 25000 Chartered accountants as its members.

Kindly pass a necessary  order to  the CBDT to take the decision in the spirit of 2014 & 2015  judgements

2014- GUJARAT HIGH COURT

i.e Rajni Mangaldas Shah V/S Central Board Of Direct Taxes (Gujarat High Court), SCA/12571/2014 & All Gujarat Federation of Tax Consultants Vs. CBDT (Gujarat High Court) SCA 12656/ 2014. Your attention is drawn towards para 62 of the order which is reproduced herewith.

62. Here, we notice that subsequent to the representation made on 21st August 2014, the CBDT could have responded to such representation by either acceding or refusing to the request of extending the period of filing of ITR and making it extendable up to 30th November 2014. Ordinarily, in such circumstances, the Court would direct the authority to consider the representation and pass a specific order. In wake of the constraints of time, as the due date of the filing of the return is expiring on 30th September, 2014 and when the respondent Board has chosen not to respond to the same, but, later on by offering the comments before this Court in writing in no uncertain terms, it has termed such a request impermissible and has chosen to refuse the same on the ground that all the grievance made by the petitioners are not sustainable. Therefore, considering the larger cause of public good and keeping in mind the requirement of promotion of justice, we chose to exercise the writ of mandamus directing the CBDT to extend the date of filing of return of income to 30th November, 2014, which is due date for filing of the TAR, as provided in the Notification dated 20th August, 2014.

2015- Gujarat, Karnataka, Punjab & Haryana, Orissa, Bombay  High Court

The petitions were presented to various High Courts in the year 2015. All Gujarat Federation of Tax Consultants vs. CBDT, Special Civil Application No. 15075 Of 2015, Dated-15.09.2015 in which the Honourable Gujarat High Court Directed CBDT to Extend due date to 31.10.2015. Further Karnataka State Chartered Accountant Society (KSCAA) & Ors vs Union of India & Ors, Writ Petition (WP)  41109/2015, 41110/2015 The Hon’ble Karnataka high court directed CBDT to consider representation of KSCAA, Chandramappa Ramanna  Dhavalagi  Vs Union of India, WP 110253/2015 Karnataka High Court (Dharwad Bench) disposes petition and  directs CBDT to consider representation submitted by ICAI for extension of due date, Vishal Garg & Ors. Vs. Union of India & Anr., CWP- 19770 -2015, Dated- 15.09.2015 Punjab & Haryana High Court Directed CBDT to Extend due date to 31st October 2015,  The Chamber of Tax Consultants Vs. Union of India & Ors., WP 2764/2015, Filed on 22.09.2015Bombay HC criticises CBDT move of extending of ITR due date for only two states & one Union territory & extended due date to 31.10.2015, Jagdish Prasad Mittal Vs.  Union of India,  Writ Petition No. WP(C)-17178/2015, Date- 21/09/2015 Orissa High Court Instructed CBDT to extend the due date to 31.10.2015.

Some of the observations of the High Court are clear and require your immediate attention to intervene in the matter. such as

• The powers under section 119 of the Act are discretionary in nature and it is for the Board to exercise such powers as and when it deems fit. However, it is equally true that merely because such powers are discretionary, the Board cannot decline to exercise such powers even when the conditions for the exercise of such powers are shown to exist. At this juncture, reference may be made to the decision of the Supreme Court in the case of UCO Bank v. CIT, (1999) 4 SCC 599ó (1999) 237 ITR 889, wherein the court had interpreted the section 119 of the Act and it was held “The power is given for the purpose of just, proper and efficient management of the work of assessment and in public interest. It is a beneficial power given to the Board for the proper administration of fiscal law so that undue hardship may not be caused to the assessee and the fiscal laws may be correctly applied.”
• When no prejudice is caused to the revenue and the assessees are put to great hardship on account of the short period within which the income tax returns are to be filed, it was expected of the Board to exercise the discretionary powers vested in it under section 119 of the Act to ameliorate the difficulties faced by the assessees on account of no default on their part, at least to a certain extent, by extending the due date for filing the income tax returns for a reasonable time.
• The Board should not create a situation whereby the assessees are required to knock the doors of the court year after year, more so, when on account of the delay on the part of the respondents, it is the assessees who would have to face the consequences of not filing the returns in time.
• The Board has declined to exercise the discretion vested in it under section 119 of the Act to come to the rescue of the assessees and grant them some relief, leaving the court with no option but to direct the Board to extend the due date for filing the income tax returns under section 139 of the Act from 30th September, 2015 to 31st October, 2015 so as to alleviate to a certain extent, the hardships caused to the assessees on account of delay in providing the utilities.

We are again standing on the same platform. The grounds are the same as raised by the petitioners in the year 2014 & 2015. A petition on the same line has been filed at Gujrat High Court and likely to be heard on 24th September 2018.

Also, Read about tax audit due date.

I request you to take the timely decision over the extension of Tax Audit Reports. This shall be a great help to the CA fraternity from your good office. This will help CBDT to come out with a concept of inertia. According to Webster’s Dictionary, “inertia” is the tendency of a body to remain at rest or stay in motion unless acted on by an external force. This means that if something is moving, it will keep moving unless something else acts on it to slow it down or stop it and that if something is standing still, it will continue to stand still unless something else causes it to move.

Your help should reach to the CA fraternity well in time, then it’s a real help otherwise in the last hours, the help will be no help.

(About the Author– Author was Member of ICAI- Capacity Building Committee 2010-11 and ICAI- Committee For Direct Taxes 2011-12 and can be reached at email [email protected] or on phone Phone: 0121-2661946. Cell: 9837515432 having office at 115, Chappel Street, Meerut Cantt, UP, INDIA)

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