CA Nilay G. Popat
Whether CBDT have any power to extend due date Under section 44AB of the Income Tax Act,1961 without extending due date for filing return of income u/s 139(1)?
Recently, on 20.08.2014, CBDT issued an order under Section 119 of the Income Tax Act, 1961, by which it extended the due date for obtaining and furnishing tax audit report u/s 44AB from 30/09/2014 to 30/11/2014 for AY 2014-15. At the outset, we should thank them for extending due date for Section 44AB. However, the said order doesn’t have any reference to Section 139(1), (which provides for due date of filing income tax returns). This has created doubts amongst many of us as to whether due date of return of income has been actually extended or not.
As we all know, Section 44AB of the Income Tax Act, 1961 provides tax audit for every assessee who are covered in either of the four clauses viz. Clause (a), (b), (c) & (d) of Section 44AB. Such assessees are required to get their accounts audited by an accountant before the “SPECIFIED DATE” and furnish BY THAT DATE the report of such audit in prescribed form (viz. Form 3CA or Form 3CB along with Form 3CD).
Explanation (ii) of the said Section 44AB provides that “Specified date”, in relation to the accounts of the assessee of the previous year relevant to an assessment year, means the due date for furnishing the return of income under sub-section (1) of section 139. Thus, it is crystal clear that due date u/s 44AB is directly linked to due date u/s 139(1) as applicable to an assessee.
Further Section 44AB does not provide for any powers to any authority with respect to alteration of the “Specified Date”. Therefore, the “Specified Date” for the purpose of obtaining and furnishing the tax audit report shall be the due date for furnishing the return of income under section 139(1). It also makes it clear that there cannot be an isolated extension of due date u/s 44AB without extension of due date u/s 139(1).
Order U/s. 119 dated 20.08.2014 (as referred above) starts with “In exercise of power conferred by section 119 of the Income-tax Act (‘the Act’), the Central Board of Direct Taxes (CBDT) hereby extends the due date for obtaining and furnishing of the report of audit under section 44AB…” Neither Section 44AB nor Section 119 contains any provision which conferred power to CBDT for providing any relaxations from the provisions of Section 44AB.
Hence, if at all CBDT wants to extend due date of obtaining and furnishing Tax Audit Report u/s 44AB, it can do so only by way extending due date u/s 139(1). Only parliament can amend/alter provisions of Section 44AB and hence, any isolated extension of due date u/s 44AB would ultra vires the Income Tax Act and may not survive in front of judicial review.
We hope that CBDT will squarely avoid this and instead of extension of due date of tax audit reports, it will come up with extension of due date u/s 139(1) at its earliest.
Views herein above are personal in nature and shall not be used for any commercial or professional purpose. Counter views/suggestions as well as critical review of above write up is always welcome.
(Author can be reached at eM@il : nilay@canilaypopat.in)
updation
Excellent analysis and conclusion. I agree with your conclusoni.
thx.
Practical issues : The IT customer care agent, on being asked about the validity issues, has informed us to mention the date of audit report as the date on which return is being filed to avoid such Validity issues.
Can it get any more ridiculous ?
Board is competent to issue any instructions/notifications/orders under 119(2)(b) of the I.T. Act
Thanks Sir
Its still all a mystery of extention of due date of audit report under section 44AB without extension of due date of 139(1). There is no meaning in extention at all.
Yes, You are absolutely right. if they want to extend the due date for furnishing report U/s 44AB, they should have extended the due date for furnishing the return U/s 139(1).
I strongly differ on the above and firstly wish to point out that regarding the power u/s 119, sub-section (1) states that “The Board may, from time to time, issue such orders, instructions and directions to other income-tax authorities as it may deem fit for the proper administration of this Act, and such authorities and all other persons employed in the execution of this Act shall observe and follow such orders, instructions and directions of the Board”.
The absence of section 44AB and reference to section 139 as pointed out in this write-up is in clause (a) of sub-section (2) and it is important to note that the sub-section (2) starts with “Without prejudice to the generality of the foregoing power,—”.
It makes it very clear that the powers mentioned in sub-section (2) are in the nature of clarification and does not restrict the powers under sub-section (1).
The section does not give the power to vary its contents but all these powers, wherever required, are given by way of section 119 and thus the contention “Section 44AB does not provide for any powers to any authority with respect to alteration of the “Specified Date” ” is not correct.
Section 139 and section 44AB are two distinct sections and specified date is linked with due date under section 139 which was prior to amendment in 2012 was not linked and specifically mentioned as 30th September.
Thus linkage will only play a role when the due date under section 139 is changed and NOT vice verse as its a linkage from section 44AB to section 139 and not linkage from section 139 to section 44AB.
Accordingly any change in section 44AB will not affect section 139 unless a separate notification or order u/s 119 is issued in this respect.
Nlay,
Excellent analysis and conclusion. I agree with your conclusions and logic. Good work.
Friends,
Almost all the Central Acts are parliamentary declaration under our constitutional provisions. For enforcement and proper implementation of law, powers are conferred on enforcement Authorities.
Extension of Return filing dates are not unknown provided supported with bona fide and genuine practical reasons in public good and capable of withstanding legal scrutiny. Generally Tax audit and Filing of return go together except special cases CBDT ( A constitutionally formed body) can safely extend the due date of filing ITR date from 30.09.2014 to 30.11.2014 as well in tune with their circular order dated 20.08.2014 and there would not be any impediment in doing so in the interest of better and effective Tax administration and above all common good. Hasty decision and hurried-worried compliance are imprudent and always cost heavily. There should not be any apprehension on validity of extension of ITR filing date during judicial review as no material/vital change is going to take place in the parent enactment. First step would be representation seeking clarification of notification dated 20.08.2014 followed with request for extension of date of Filing of ITR in tune with it. It will remove confusion as also bring clarity in future course of action from all concerned.
AK Bhargava, 09425157452
Bhargava Lane,
Nai basti, Katni (MP)
the matter is absolutely right
yes, you are right in pointing out that the extension of the due date for filing the Audit report only can not be extended.Is the CBDT is over and above the Parliament? More once you say that the Return of Income should be accompanied with the audit report, again now you say that file the returns in due date, file the audit report after that.How far this is natural justice?If this done the importance of the Audit report is gone and even if the same is not filed nothing will happen, as the assessee has already filed the return of income.We thought that under the new government the CBDT working condition will change, but it is still becoming worse than ever.THe small assessees are still facing problem with refunds, and rectifications from the CPC.When all these are analyzed critically, it is better to abolish the CBDT like Planning Commission.
Dear Sir,
Power of CBDT is not questioned. How ever it can not misuse its power by ordering what is not possible. They must then ensure procedure to upload ITRs without mentioning tax audit date. If one can not validate the xml without mentioning the tax audit date and not extending the return filing date is as good as not extending tax audit filing date. Hope that they are mature enough that their own circular does not becomes null and void ab-initio.
Probably they need a Court ruling to rectify such unmindful circulars.
Like they revised their ciruclar on TDS on Service tax component wide circular no.1/2014.
Very important point highlighted.