Rajasthan Tax Consultants Association has filed a writ with Hon;ble Rajasthan High Court to direct the CBDT to decide the representation of the RTCA requesting extension due date of filing of Tax Audit Report and Income-tax Return for the assessment year 2020-2021 till December 31, 2020.
Relevant Text of the Petition is as follows:-
The Humble petitioner, above named, most respectfully begs to submit this Public Interest Petition as under:
1. THE PARTICULARS OF THE CAUSE/ORDER AGAINST WHICH THE PETITION IS MADE:
A. That the facts leading to this Public Interest Litigation are that due to Global Pandemic situation caused by COVID-19 and lockdown imposed in relation thereto, the Respondent No. 1 & Respondent No. 2 in public interest, pursuant to the powers vested vide notification dated 24.06.2020 has extended the due date of filing of income-tax returns under the provisions of Income Tax Act, 1961 (hereinafter referred to as the “Act”) for assessee’s whose books were required to be audited to 30th November 2020 and the time period for furnishing Tax Audit Report to 31st October 2020.
B. That while the country has been unlocked gradually, the spread and severity of the Corona virus has not been reduced and the peak was witnessed in the month of September 2020. Amidst this, several restrictions are still in place in various States and movement is still restricted. Commuting via public buses and/or other public transport is restricted and not fully operational. The numbers of reported cases of COVID-19 are still increasing and there is a fear among the people of getting infected due to which they prefer not travelling at all or restrict it to the vicinity of their homes for their necessity. Due to this, several industries and private offices have still not resumed functioning at all or fully. This also includes the offices of the Chartered Accountants and Tax Practitioners. Due to this, the details required for carrying on tax audit and filing the return of income are not being received promptly and thus the audits cannot be efficiently performed. Also travelling to the place of audit is very difficult for the professionals and their staff. Several Chartered Accountants and Tax Practitioners themselves have also been infected and have not been able to work for minimum of 14 days. Also, visiting any audit place all the more exposes them to the virus making them prone infection. Further, the senior citizens including senior professionals and senior assessee’s are advised to stay at home. These hindrances are making it very difficult for the assessee’s, the Chartered Accountants and the Tax Practitioners to comply with even the extended due dates.
C. That due to the current pandemic situation, the last date of holding AGM for corporates has been extended to 31st December, 2020 by Ministry of Company Affairs. Based on this, the statutory audit can be concluded even beyond 30th November, 2020. The tax audit can be conducted only post completion of statutory audit, post which only the income tax return can be filed by the Company. In a case where the Transfer Pricing audit is also applicable, the return shall be filed only after the filing of Transfer Pricing Report in Form No. 3CEB. One may note that since the date of AGM is extended, Annual Returns by the companies will be filed only subsequently. This will delay in getting database for the purpose of comparables for the Transfer Pricing audits. Adequate time must be provided to comply with the audit and return filing timelines in order to maintain the quality of work.
D. That the utilities for the income tax return were made available only June’20 onwards instead of April’20. Usually, the income tax returns are notified in the month of April, but due to the pandemic, the release of the returns also have been delayed on an average by 4 months. Meanwhile, amendment to Income Tax Rules and Forms vide Income-tax (22nd Amendment) Rules, 2020 by Notification No. G.S.R. 610(E) dated 1st October, 2020, has been amended. All reports (including reports ready for signature) after 1st October, 2020 needs to be accordingly updated in new form. These amendments of new forms will further require time for the assessee’s and professionals to carry out the changes for the proper compliance. Following is the chart showing the release date and the latest update date:
| S. No. | Income Tax Return |
Schema Release Date |
Schema Updation Date |
Utility Updation Date |
| 1 | ITR 1 | June 2, 2020 | June 15, 2020 | July 8, 2020 |
| 2 | ITR 2 | June 26, 2020 | September 11, 2020 | September 11, 2020 |
| 3 | ITR 3 | July 31, 2020 | August 29, 2020 | September 4, 2020 |
| 4 | ITR 4 | June 5, 2020 | July 8, 2020 | August 12, 2020 |
| 5 | ITR 5 | August 25, 2020 | – | August 25, 2020 |
| 6 | ITR 6 | September 22, 2020 | October 1, 2020 (Excel Utility) Java Utility not Released |
|
| 7 | ITR 7 | September 3, 2020 | – | September 3, 2020 |
E. That pursuant to the amendment to section 153 of the Income Tax Act, 1961 for the AYs commencing on 01-04-2018, the due date for completion of assessment proceedings is 18 months from the end of the AY i.e. September 2020. The same has been extended to March 2021. We are of considered opinion that when the regular assessment proceedings itself is difficult in these pandemic times, then self-assessment / fresh tax audit / such other primary compliances which by nature are more laborious are also equally difficult to complete in time.
F. That it is relevant to note that various relaxations provided via Ordinance 2020 in terms of extension of statutory timelines, reduction of TDS and interest rates, waiver of penalty, etc. have now been incorporated in Taxation and Other Laws (Relaxation & Amendment of Certain Provisions) Act, 2020, and the due date stands extended.
G. That the due date for filing of Annual Return GSTR-9 and Reconciliation Statement GSTR-9C for the FY 2018-2019, was also extended to 31st October 2020 which also clashes with the present due date of 31st October 2020 for filing of tax audit reports. These date clashes would actually add further pressure on the CA practitioners in timely completion of work.
H. That it is a fact that substantial numbers of CA practitioners in India are small/mid-sized practitioners. In this segment of CA firms, even a single Covid-19 infected case would warrant closing down of the entire office and sending the entire staff for getting quarantined and self-isolation. This abysmal situation is further aggravated due to identified covid-19 positive cases at the client’s place which would be a concomitant leading to impossibility of performance of audit functions.
I. That the aforesaid actions has adversely affected all assessee’s, who fall within the ambit of section 44AB of the Act and have to file their Income-tax returns after getting the books of accounts audited and shall lead to the assessee’s and their Chartered Accountants and Tax Consultants with unprecedented costs and into a situation of unprecedented chaos, confusion and litigation.
J. That the most affected category of tax payers are the assessee’s whose Accounts are required to be Audited in terms of section 44AB of the Act for the reasons aforesaid.
K. That several representations and requests have been filed by various associations including the petitioner whose members comprises of Advocates, Chartered Accountants & Tax Practitioners throughout India, highlighting the grievances and reasons for taking a sympathetic view of extending the date, however, the Respondents, have till date, not responded to any of the representations filed with them which have aggravated confusion and chaos.
L. That it is submitted that being aggrieved the petitioner herein has filed the present Public Interest Petition, thereby requesting and praying this Hon’ble Court to exercise its extra ordinary Writ jurisdiction for the protection of the fundamental rights and interest of the Petitioner, its members and also the public at large. It is further submitted that the issue in question in the present petition is in the nature of public interest as the outcome of the present petition will affect the similarly placed assessee’s throughout India.
M. That the Respondent No. 1 and 2 are the State, within the meaning of Article 12 of The Constitution of India and thus amenable to the Writ jurisdiction.
2. PARTICULARS OF THE PETITIONER:
A. That the humble petitioner is a voluntary registered association comprising of more than 2000 members and is duly registered under the Rajasthan Non-Trading Companies Act, 1960. Members of the petitioner association comprises of tax professionals consisting of Advocates, Chartered Accountants, Company Secretary, Tax Consultants engaged in the field of taxation. The petitioner from time to time takes up the issues concerning its members and also the functioning of officers with the tax administration. The petitioner association is organizing regular educational activities for the benefit of the members and public at large and also taking up the matter relating to the problems being faced by the members before appropriate authorities relating to Direct & Indirect taxes.
B. That in the present matter, the members of the association are aggrieved on account of non-extension of due date of filing of Tax Audit Report in Form 3CD, due date of which is 31st October 2020. Representation and Memorandum had been submitted to the Respondents several times but no action or response has been received and hence the Petitioner Association has no other option but to file the Public Interest Litigation. As there was no action being taken therefore the petitioner association decided in its executive meeting held on 16.10.2020 held by Circular motion to file Public Interest Litigation before the Hon’ble Rajasthan High Court, Bench at Jaipur and accordingly passed a resolution authorizing the filing of Public Interest Litigation and also authorizing its General Secretary Mr. Vinay Kumar Jolly, Advocate on behalf of the Association. Hence Mr. Vinay Kumar Jolly, General Secretary of the petitioner association is competent to file this Public Interest Litigation. Copy of registration certificate of the petitioner, Copy of Memorandum and Articles of Association of the petitioner and the Copy of the resolution of the Executive committee meeting held on 16.10.2020 is enclosed and marked as Annexure 1, Annexure 2 & Annexure 3 respectively.
C. That no other civil, revenue, criminal litigation in any capacity, before any authority, court or tribunal has been filed against the petitioner or by the petitioner. However, the petitioner has been filing Public Interest Litigations espousing the cause of its members.
3. DECLARATION AND UNDERTAKING OF THE PETITIONERS:
The humble petitioner humbly declares and undertakes as follows:
A. That the present petition is being filed by way of Public Interest Litigation and the petitioner do not have any personal interest in the matter. The petitioner is an Apex Association of tax practitioners whose more than 2000 members comprises of Advocates, Chartered Accountants, Company Secretary & Tax Consultants in the State of Rajasthan and is filing this petition in the larger interest of the members of the Association and on behalf of assessee’s who are required to get their books of accounts audited and file income-tax return thereafter.
B. That the Petitioner is a registered Association and the General Secretary of the Association is filing this Public Interest Litigation on behalf of the Association as per the resolution passed in the Executive committee meeting of the Association. The petitioner Association or/and the Authorized Signatory are having no personal interest in the Public Interest Litigation. The petitioner association or the Authorized Signatory are not members of any political party nor have fought any political election.
C. That the conduct of the Respondents in not extending the due date of filing of Tax Audit Report in Form 3CD, due date of which is 31st October 2020 is not correct and appropriate for the reasons afore-mentioned and are contrary to the provisions of Income Tax Act and directions of various Hon’ble High Court issued from time to time.
D. That the entire litigation cost including the Advocate fee and other charges are being borne by the Petitioner Association and the permanent account number of the Petitioner Association is AAAAR2496Q. No charges are borne by any individual.
E. That a thorough enquiry and research has been conducted in the matter raised through this Public Interest Litigation. The relevant material in respect of such research is as under:
(i) Section 139 of the Act prescribes the last date of filing of ITR after getting the books of accounts audited from the Chartered Accountants u/s. 44AB of the Act as 30th September, which was extended by the Respondents due to COVID-19 to 31st October;
(ii) Chartered Accountants after auditing the books of accounts of the assessee’s furnish Form No. 3CA/3CB along-with Form No. 3CD as prescribed under the Rules;
(iii) Representations filed by various reputed Institutes & Associations throughout India including by the petitioner association, requesting extension of due date of furnishing of Audit Report, etc. from the Respondents which are available on public domain:
| SNo. | Dated | Made by |
| 1. | 06.08.2020 | C.V.O. Chartered & Cost Accountants’ Association, Mumbai |
| 2. | 04.09.2020 | All India Federation of Tax Practitioners, Mumbai (Direct Tax Representation Committee) |
| 3. | 05.09.2020 | National Association of Tax Professionals (Haryana – Chapter) |
| 4. | 07.09.2020 | Tax Bar Association, Kota |
| 5. | 23.09.2020 | Lucknow Chartered Accountants Society (Lucknow), Bombay Chartered Accountants’ Society (Mumbai), Chartered Accountants Association (Ahmedabad), Chartered Accountants Association (Surat) and Karnataka State Chartered Accountants Association (Bangalore) |
| 6. | 07.10.2020 | Chamber of Tax Consultants, Mumbai |
| 7. | 08.10.2020 | Tax Bar Association, Alwar |
| 8. | 08.10.2020 | The Rajasthan Tax Consultants Association, Jaipur |
| 9. | 10.10.2020 | Tax Bar Association, Jodhpur |
| 0. | 10.10.2020 | Udaipur Tax Bar Association, Udaipur |
| 11. | 12.10.2020 | All Gujarat Federation of Tax Consultants, Ahmedabad |
| 12. | 12.10.2020 | Tax Consultants Association, Jaipur |
| 13. | 13.10.2020 | Tax Practitioners Association, Indore |
| 14. | 13.10.2020 | All India Federation of Tax Practitioners, Mumbai (Central Zone) |
| 15. | 14.10.2020 | Tax Bar Association, Bhilwara |
| 16. | 15.10.2020 | Karnataka State Chartered Accountants Association (Bangalore) |
Copy of representation filed by the petitioner is enclosed herewith and is marked as Annexure 4. Copies of representation filed by the various other institutes/associations are enclosed herewith and are collectively marked as Annexure 5;
(iv) Judgment’s passed on the issue earlier involving extension of due date of furnishing of Income-tax Returns by the Hon’ble Rajasthan High Court, Hon’ble Gujarat High Court, Hon’ble Delhi High Court, Hon’ble Punjab & Haryana High Court, Hon’ble Bombay High Court, Hon’ble Karnataka High Court, Hon’ble Orissa High Court.
F. That to the best of petitioner’s association knowledge and research the issues raised herein were not dealt with or decided earlier for the year under consideration and that a similar or identical petition was not filed earlier by them for the year under consideration.
G. That the petitioner association has understood that in the course of hearing of this petition, the Hon’ble Court may require any security to be furnished towards costs or any other charges and the petitioner association shall comply with such requirements/demands, if any.
4. FACTS IN BRIEF, CONSTITUTING THE CAUSE:
A. That the facts leading to the present Petition are set-out in greater detail here-under:
Section 139 of the Act
For ready reference and convenience, section 139(1), 139(6A), 139(9) of the Act are reproduced as hereunder:
Return of income.
139. [(1) Every person,—
(a) being a company [or a firm]; or
(b) being a person other than a company [or a firm], if his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to income-tax, shall, on or before the due date, furnish a return of his income or the income o f such other person during the previous year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed :
Provided that a person referred to in clause (b), who is not required to furnish a return under this sub-section and residing in such area as may be specified by the Board in this behalf by notification in the Official Gazette, and who [during the previous year incurs an expenditure of fifty thousand rupees or more towards consumption of electricity or] at any time during the previous year fulfills any one of the following conditions, namely :—
(i) ……; ……or
(ii) ……; ……or
(iii) [***]
(iv) …….; ……or
(v) …….; ……or
(vi) …….,
shall furnish a return, of his income [during any previous year ending before the 1st day of April, 2005], on or before the due date in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed:
Provided further that the Central Government may, by notification in the Official Gazette, specify the class or classes of persons to whom the provisions of the first proviso shall not apply:
Provided also that every company [or a firm] shall furnish on or before the due date the return in respect of its income or loss in every previous year:
[Provided also that a person, being a resident other than not ordinarily resident in India within the meaning of clause (6) of section 6, who is not required to furnish a return under this sub-section and who at any time during the previous year,—
(a) holds, as a beneficial owner or otherwise, any asset (including any financial interest in any entity) located outside India or has signing authority in any account located outside India; or
(b) is a beneficiary of any asset (including any financial interest in any entity) located outside India,
shall furnish, on or before the due date, a return in respect of his income or loss for the previous year in such form and verified in such manner and setting forth such other particulars as may be prescribed:
Provided also that nothing contained in the fourth proviso shall apply to an individual, being a beneficiary of any asset (including any financial interest in any entity) located outside India where, income, if any, arising from such asset is includible in the income of the person referred to in clause (a) of that proviso in accordance with the provisions of this Act
[Provided also that every person, being an individual or a Hindu undivided family or an association of persons or a body of individuals, whether incorporated or not, or an artificial juridical person, if his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year, without giving effect to the provisions of clause 38 of section 10 or section 10A or section 10B or section 10BA or Chapter VI-A exceeded the maximum amount which is not chargeable to income-tax, shall, on or before the due date, furnish a return of his income or the income of such other person during the previous year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed.]
Explanation 1.—For the purposes of this sub-section, the expression “motor vehicle” shall have the meaning assigned to it in clause (28) of section 2 of the Motor Vehicles Act, 1988 (59 of 1988).
Explanation 2.—In this sub-section, “due date” means,—
(a) where the assessee [other than an assessee referred to in clause (aa)] is—
(i) a company [***]; or
(ii) a person (other than a company) whose accounts are required to be audited under this Act or under any other law for the time being in force; or
(iii) a working partner of a firm whose accounts are required to be audited under this Act or under any other law for the time being in force, the [30th day of September] of the assessment year;
[(aa) in the case of an assessee [who] is required to furnish a report referred to in section 92E, the 30th day of November of the assessment year;]
(b) in the case of a person other than a company, referred to in the first proviso to this sub-section, the 31st day of October of the assessment year;
(c) in the case of any other assessee, the 31st day of July of the assessment year.
Explanation 3.—For the purposes of this sub-section, the expression “travel to any foreign country” does not include travel to the neighbouring countries or to such places of pilgrimage as the Board may specify in this behalf by notification in the Official Gazette.]
Explanation 4.—For the purposes of this section “beneficial owner” in respect o f an asset means an individual who has provided, directly or indirectly, consideration for the asset for the immediate or future benefit, direct or indirect, of himself or any other person. Explanation 5.—For the purposes of this section “beneficiary” in respect of an asset means an individual who derives benefit from the asset during the previous year and the consideration for such asset has been provided by any person other than such beneficiary
(6A) Without prejudice to the provisions o f sub-section (6), the prescribed form of the returns referred to [in [***] this section, and in clause (i) of sub-section (1) of section 142] shall, in the case of an assessee engaged in any business or profession, also require him to furnish [the report of any audit [referred to in section 44AB, or, where the report has been furnished prior to the furnishing of the return, a copy of such report together with proof of furnishing the report], the] particulars of the location and style of the principal place where he carries on the business or profession and all the branches thereof, the names and addresses of his partners, if any, in such business or profession and, if he is a member of an association or body of individuals, the names of the other members of the association or the body of individuals and the extent of the share of the assessee and the shares of all such partners or the members, as the case may be, in the profits of the business or profession and any branches thereof.]
[(9) Where the [Assessing] Officer considers that the return of income furnished by the assessee is defective, he may intimate the defect to the assessee and give him an opportunity to rectify the defect within a period of fifteen days from the date of such intimation or within such further period which, on an application made in this behalf, the [Assessing] Officer may, in his discretion, allow; and if the defect is not rectified within the said period of fifteen days or, as the case may be, the further period so allowed, then, notwithstanding anything contained in any other provision of this Act, the return shall be treated as an invalid return and the provisions of this Act shall apply as if the assessee had failed to furnish the return :
Provided that where the assessee rectifies the defect after the expiry of the said period of fifteen days or the further period allowed, but before the assessment is made, the [Assessing] Officer may condone the delay and treat the return as a valid return.
Explanation.—For the purposes of this sub-section, a return of income shall be regarded as defective unless all the following conditions are fulfilled, namely:-
(a)…. ;
[(aa).. ;]
(b)
[(bb) the return is accompanied by the report of the audit referred to in section 44AB, or, where the report has been furnished prior to the furnishing of the return, by a copy of such report together with proof of furnishing the report;]
(c) …….;
(d) …….;
(e) …….;
(f) ……..;
B. Section 139(1) of the Act, requires every person to furnish their respective ITR, in the prescribed form, on or prior to the due-date prescribed in the statute;
C. The ‘due-date’, as set out in the Explanation 2 to Section 139(1) of the Act, applicable to the present case, is 30th September of the relevant assessment year (which was extended to 31st October for the year under consideration);
D. Further, Section 139(6A) of the Act, in addition to the filing of the ITR in the prescribed form, also inter alia mandates the furnishing of a TAR as stipulated in Section 44AB of the Act.
E. Further Explanation (bb) of Section 139(9) provides that the Income Tax Return furnished by the assessee shall be treated defective if the return is not accompanied by the report of Audit referred to in section 44AB or where the report has been furnished prior to the furnishing of return by no furnishing copy of such report together with proof of furnishing the report.
Section 44AB of the Act
For ready reference and convenience, section 44AB of the Act is reproduced as hereunder:
[Audit of accounts of certain persons carrying on business or profession.
44AB. Every person,—
(a) carrying on business shall, if his total sales, turnover or gross receipts, as the case may be, in business exceed or exceeds [one crore rupees] in any previous year [***]; or
(b) carrying on profession shall, if his gross receipts in profession exceed [[fifty] lakh rupees] in any [previous year; or
(c) carrying on the business shall, if the profits and gains from the business are deemed to be the profits and gains of such person under [section 44AE ] [or section 44BB or section 44BBB], as the case may be, and he has claimed his income to be lower than the profits or gains so deemed to be the profits and gains of his business, as the case may be, in any [previous year; or]] [***]
[(d) carrying on the [profession] shall, if the profits and gains from the [profession] are deemed to be the profits and gains of such person under [section 44ADA] and he has claimed such income to be lower than the profits and gains so deemed to be the profits and gains of his [profession] and his income exceeds the maximum amount which is not chargeable to income-tax in any [previous year; or]]
[(e) carrying on the business shall, if the provisions of sub-section (4) of section 44AD are applicable in his case and his income exceeds the maximum amount which is not chargeable to income-tax in any previous year,]
get his accounts of such previous year [***] audited by an accountant before the specified date and [furnish by] that date the report of such audit in the prescribed form duly signed and verified by such accountant and setting forth such particulars as may be prescribed :
[Provided that this section shall not apply to the person, who declares profits and gains for the previous year in accordance with the provisions of sub-section (1) of section 44AD and his total sales, turnover or gross receipts, as the case may be, in business does not exceed two crore rupees in such previous year:]
[Provided [further] that this section shall not apply to the person, who derives income of the nature referred to in [***] section 44B or [section 44BBA], on and from the 1st day of April, 1985 or, as the case may be, the date on which the relevant section came into force, whichever is later :
Provided [also] that] in a case where such person is required by or under any other law to get his accounts audited [***], it shall be sufficient compliance with the provisions of this section if such person gets the accounts of such business or profession audited under such law before the specified date and [furnishes by] that date the report of the audit as required under such other law and a further report [by an accountant] in the form prescribed under this section.
Explanation.—For the purposes of this section,—
(i) “accountant” shall have the same meaning as in the Explanation below sub-section (2) of section 288;
[(ii) “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 subsection (1) of section 139].]]
F. Section 44AB of the Act was introduced with effect from 01.04.1985, inter alia with the following objective, which is reflective from the Circular No. 387 dated 06.07.1984 issued by the Respondent No. 2, at the time of introduction of the aforesaid Section. The relevant extract of the aforesaid Circular is provided herein:
17.2A proper audit for tax purposes would ensure that the books of accounts and other records are properly maintained, that they faithfully reflect the income of the taxpayer and claims for deduction are correctly made by him. Such audit would also help in checking fraudulent practices. It can also facilitate the administration of tax laws by a proper presentation of the accounts before the tax authorities and considerably saving the time of assessing officers in carrying out routine verifications, like checking correctness of totals and verifying whether purchases and sales are properly vouched or not. The time of the assessing officers thus saved could be utilized for attending to more important investigational aspects of a case.
G. Section 44AB of the Act, in relation to the category of assessee’s specified therein, therefore, requires such assessee’s to get the accounts of such previous year audited by a Chartered Accountant, before the ‘specified date’ and furnish by that date, the TAR in the prescribed form duly signed and verified by such Chartered Accountant and setting forth such particulars as have been prescribed in such form, and the failure to furnish such TAR, inter alia, attracts a penalty in accordance with the provisions of Section 271B of the Act;
H. Explanation (2) to the aforesaid Section, states that the ‘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 under Section 139(1) of the Act (which in the present case is 30th September, 2019).
Rule 6G of the Rules
For ready reference and convenience, rule 6G of the Rules is reproduced as hereunder:
[Report of audit of accounts to be furnished under section 44AB.
6G. (1) The report of audit of the accounts of a person required to be furnished under section 44AB shall,—
(a) in the case of a person who carries on business or profession and who is required by or under any other law to get his accounts audited, be in Form No. 3CA;
(b) in the case of a person who carries on business or profession, but not being a person referred to in clause (a), be in Form No. 3CB.
(2) The particulars which are required to be furnished under section 44AB shall be in Form No. 3CD.]
I. The aforesaid Rule 6G of the Rules inter alia stipulates the submission of TAR in Form 3CA, 3CB or 3CD, based on the type of the assessee;
J. The aforesaid Forms, i.e., Form 3CA, 3CB or 3CD, have undergone several changes, alterations and modifications, time and again;
K. Amendments introduced in the Income-tax Returns has made these returns far more comprehensive and detailed and has put substantial onus and accountability on the Chartered Accountant to verify and provide minutest of the details of the respective assessee.
L. The quality of Tax Audit was effectively getting compromised, in view of the plethora of information sought and in light of adverse situation prevailing due to COVID-19.
Section 271J of the Act
For ready reference and convenience, section 271J
of the Act is reproduced as hereunder:
Penalty for furnishing incorrect information in reports or certificates.
271J. Without prejudice to the provisions of this Act, where the Assessing Officer or the Commissioner (Appeals), in the course of any proceedings under this Act, finds that an accountant or a merchant banker or a registered valuer has furnished incorrect information in any report or certificate furnished under any provision of this Act or the rules made thereunder, the Assessing Officer or the Commissioner (Appeals) may direct that such accountant or merchant banker or registered valuer, as the case may be, shall pay, by way of penalty, a sum of ten thousand rupees for each such report or certificate.
Explanation.—For the purposes of this section,—
(a) “accountant” means an accountant referred to in the Explanation below sub-section (2) of section 288;
(b) “merchant banker” means Category I merchant banker registered with the Securities and Exchange Board of India established under section 3 of the Securities and Exchange Board of India Act, 1992 (15 of 1992);
(c) “registered valuer” means a person defined in clause (oaa) of section 2 of the Wealth-tax Act, 1957 (27 of 1957).]
M. Section 271J of the Act provides for levy of penalty of Rs. 10,000/- for any incorrect information submitted by a Chartered Accountant.
N. Respondent No. 2, vide its Notification dated 01.05.2013, has made it mandatory for the assessee’s, to electronically file such TAR relevant for the A.Y. 2013-14 and onwards.
O. The various schemas & utilities required for filing various returns of income which were notified subsequent to 1st April 2020 are as per following table:
| SNo. | Income Tax Return |
Schema Release Date |
Schema Updation Date |
Utility Updation Date |
| 1 | ITR 1 | June 2, 2020 | June 15, 2020 | July 8, 2020 |
| 2 | ITR 2 | June 26, 2020 | September 11, 2020 | September 11, 2020 |
| 3 | ITR 3 | July 31, 2020 | August 29, 2020 | September 4, 2020 |
| 4 | ITR 4 | June 5, 2020 | July 8, 2020 | August 12, 2020 |
| 5 | ITR 5 | August 25, 2020 | – | August 25, 2020 |
| 6 | ITR 6 | September 22, 2020 | October 1, 2020 (Excel Utility) Java Utility not Released |
|
| 7 | ITR 7 | September 3, 2020 | – | September 3, 2020 |
P. The TAR can only be filed electronically, which requires an appropriate ‘Utility’ / ‘Schema’ to be made available by the Respondent No. 2, to the assessee’s. However, the Respondent No. 2 continues to make frequent changes to the ‘Utilities’ / ‘schema’, thereby adding the compliance formalities.
Q. That it may also be highlighted here that the finalisation of statutory and tax audit also includes compilation and reconciliation of GST data. Many errors had been made in annual return filed by the dealers which is now under audit and reconciliation of the turnover, GST paid, ITC availed/utilised etc. with GST returns is long and time-consuming process.
R. Consequently, several representations were made to the Respondent No. 2 by various associations and institutes seeking extension of the ‘due-date’ for filing the ITR and TAR including by the petitioner (Annexure 4 & 5), but of no avail and response.
S. That in assessment year 2018-2019, the Respondent No. 2 vide its order dated 24.09.2018 had suo-motu extended the date of filing of ITR & TAR till 15th October 2018 from 30th September 2018. On intervention by the petitioner herein the Hon’ble Rajasthan High Court considering the backdrop and hardship involved in B. Civil Writ (PIL) No. 21774/2018 dated 01.10.2018 was pleased to direct as under:
Mr. R.D. Rastogi, learned Additional Solicitor General appearing on behalf of the respondents submitted that CBDT has already in the past and in this case also considered the matter for extension of the date to a reasonable extent. If any grievance further remains, the petitioner should be required to approach Respondent No. 2-CBDT by filing representation which looking to the genuine difficulties and hardships of the taxpayers as also the Chartered Accountants shall consider the same in accordance with law.
Having regard to the submissions aforesaid as also cited judgments, orders and taking into consideration the fact that CBDT has already extended the date for filing TARs and ITRs by those assessees whose accounts are not required to be audited for a month without levy of any interest, we deem it appropriate to direct Respondent No. 2, CBDT to consider the representation of the petitioner-Association and take a decision on both the aspects i.e. extension of date by another 15 days and extension of due date for the purpose of Explanation 1 to Section 234A of the Act for waiver of interest and decide the same by passing speaking order preferably before 10.10.2018. With the aforesaid observation and direction, writ petition is disposed of. A copy of this order be provided to Mr. R.D. Rastogi, learned Additional Solicitor General for onward transmission and compliance.
That on the basis of directions passed by the Hon’ble Rajasthan High Court the Respondent No. 2 vide its order dated 08.10.2018 had ultimately extended the date of filing of ITR & TAR till 31st October 2018. Copy of order dated 01.10.2018 passed by the Hon’ble Rajasthan High Court and order dated 08.10.2018 is enclosed herewith and is marked as Annexure 6 & 7 respectively.
T. That in assessment year 2019-2020, the petitioner herein filed a Public Interest Litigation seeking extension of due date of filing of Tax Audit Report. The Hon’ble Rajasthan High Court issued notices and thereafter the Respondent No. 2 suo-motu extended the due date till 31st October vide its order dated 26.09.2019. The Hon’ble High Court accordingly in D.B. Civil Writ (PIL) No. 16691/2019 dated 27.09.2019 was pleased to observe as under:
Learned counsel for the petitioner seeks permission of this Court to withdraw this writ petition as the grievance raised by the petitioner-Rajasthan Tax Consultants Association has been remedied by the Central Board of Direct Taxes.
Permission is granted.
Writ petition is dismissed as withdrawn.
Copy of order dated 27.09.2019 passed by the Hon’ble Rajasthan High Court is enclosed herewith and is marked as Annexure 8.
U. Chartered Accountants are specializing in the areas of direct taxes, indirect taxes, financial services, information technology, insurance sector, joint ventures, mutual funds, exchange risk management, risk and assurance services, environment/energy/quality audits, investment counseling, corporate structuring and foreign collaborations, etc., etc. and each service areas’ have to be given their proper time and attention, as even a small mistake can prove hazardous not only for the Chartered Accountant but also for the assessee’s.
V. It is submitted that some of the apparent fallouts of belated filing of the TAR & ITR would be:
(i) No revised return under sections 139(4) and (5) would be permissible, if there is a delay in filing the return of income,
(ii) Carried forward losses would also not be permissible,
(iii) Deduction(s) under Chapter VIA of the Act would also not be available,
(iv) The availability of exemptions would not be available;
(v) Penalty upto Rs. 1,50,000/- for non-filing of Audit Report.
W. Hon’ble Delhi High Court in the case of Avinash Gupta v. Union of India {WP (C) 9032/2015, Dated-21.09.2015} had directed CBDT that with effect from assessment year 2016-17, ensure that income tax returns/utility software for filing TAR to be filed along be available as on 1st April of the assessment year unless there is a valid reason therefor and which should be recorded in writing by the Board, without waiting for any representations to be made. It was further directed that the CBDT, while doing so, shall also take a decision whether owing thereto any extension of the due date is required to be prescribed and accordingly notify the public.
X. The Respondent No. 2 had admitted before the Hon’ble Punjab and Haryana High Court in the case of Vishal Garg & Ors. v. Union of India & Anr. {CWP 19770-2015 dated-15.09.2015} as under: that since returns in ITRs 4, 5 and 6 were mandatorily required to be e-filed, no assessee’s in these categories could have filed their returns of income before they were made available. The Hon’ble High Court opined that the CBDT has not only to see the public interest for so doing but also for avoiding the genuine hardship in any particular case or class of cases powers u/s 119 can be exercised. The Hon’ble High Court observed that it was not disputed that the forms were not available on the very first day of the assessment year as required. The Revenue could not furnish any satisfactory explanation or justification for not prescribing Forms 4, 5 and 6 prior to 1st, 2nd and 7th August, 2015 respectively. The Hon’ble High Court rejected the plea of the department that there were only minor changes in the forms as not justified and extended the dates holding that the period required for e-filing of the return was not reasonable.
Y. In a writ filed by All Gujarat Federation of Tax Consultant v. CBDT {Special Civil Application No. 15075 Of 2015, dated 15.09.2015} before the Hon’ble Gujarat High Court, the CBDT argued that due date should not be extended just for the benefit of those who have remained lax till now for no valid reason in discharging their legal obligations.
However, the Hon’ble High Court noted that: despite the fact that ordinarily the ITR Forms which should be prescribed and made available before the 1st of April of the assessment year, had in fact, been made available only on 7th August, 2015 and the assessee’s were given only seven weeks to file their tax returns.
The Hon’ble High Court pointed out that: therefore, laxity, if any, evidently was on the part of the CBDT which was responsible for the delay in making the utility for E-Filing the return being made available to the assessee’s.
The Hon’ble High Court further commented that: when the default lies at the end of the CBDT, some grace could have been shown by the Board instead of taking a stand that such a trend may not be encouraged. Had it not been for the laxity on the part of the respondents in providing the utilities, there would not have been any cause for the petitioners to seek extension of the due date for filing tax returns.
The Hon’ble High Court ordered CBDT to issue notification under section 119 extending the due date for e-filing of the income tax returns.
Z. Hon’ble Gujarat High Court in All Gujarat Federation of Tax Consultant v. CBDT {SCA 12656/2014} has noted: 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.
AA. Under similar circumstances various other directions and order have been passed by Hon’ble Madras High Court in All India Federation of Tax Practitioners v. CBDT {WP No. 25443/2014}. Hon’ble Bombay High Court in Chamber of Tax Consultants & Others v. CBDT {WP No. (L) 2492/2014}.
5. SOURCE OF INFORMATION:
The petitioner association received various complaints from its members, continuous feedback was received from the members of the association and other local associations about the problems in the finalizing of TAT & filing of ITR in Audit Cases. The information is available on public domain on internet. The information available has been cross-checked.
6. NATURE AND EXTENT OF INJURY CAUSED/APPREHENDED:
The Public Interest Litigation is being filed by the petitioner association for the inconsistency and the discrepancy and illegal and improper working of the respondents and also the changes brought in by the Respondent No. 2 in the reporting format during the current year leading to reduced time for compliance and the problem being faced by the assessee’s at large and also the Professionals i.e. the Chartered Accountants which are the members of the Association. Professionals and assessee’s cannot be made to suffer because of the inconsistencies of the Respondents. Further due to COVID-19, the working has become complicated and difficult. The non-extension will affect all the assessee’s requiring to get their books of accounts audited. The respondents’ inaction reeks of high handedness approach ignoring the binding decisions given by various Hon’ble High Courts.
7. ANY REPRESENTATION ETC. MADE:
The petitioner association and also various other institutes & association of repute have repeatedly filed representations with the Respondents copies whereof have been enclosed with this petition and marked as Annexure 4 & Annexure 5 respectively.
8. GROUNDS
A. BECAUSE the Respondent No. 1 and 2, by not extending the due-date for filing the TAR & ITR fail to take into consideration the fact that the said TAR requires a Chartered Accountant to vouch for the veracity of the details provided therein (and an erroneous certification potentially holds the Chartered Accountant liable for appropriate legal actions including levy of penalty being initiated against him), pursuant to which the tax liability is computed. Therefore, action of the Respondent No. 2 of not extending the due-date for filing the TAR & ITR is unfair, illegal and contrary to the scheme of the Act, but also smacks of the highhanded and arbitrary manner in which decisions are taken by the Respondent No. 2.
B. BECAUSE the actions / inactions of the Respondent No. 2 directly impinge upon the rights of the Chartered Accountants and the duties fastened upon them under the statute therefore require an immediate corrective action.
C. BECAUSE the actions / inactions of the Respondent No. 2 ignore the prevalent ground reality due to COVID-19 and the circumstances under which books of accounts are required to be Audited.
D. BECAUSE COVID-19 has disrupted existing working systems, the economy is healing itself and the assessee’s require sympathetic views from the Government.
E. BECAUSE the actions / inactions of the Respondent No. 2 effectively ignores the earlier judgments & orders passed by Hon’ble Rajasthan High Court, Hon’ble Delhi High Court, Hon’ble Gujarat High Court & Hon’ble Punjab & Haryana High Court and is of an unprecedented nature.
F. BECAUSE the present in-action of the Respondents in ignoring the representations filed by various institutes & association is perverse and unlawful.
G. BECAUSE filing of an ITR without proper verification of records by way of TAR, may lead to situation wherein data may need to be altered, thereby requiring a rectification under section 154 of the Act and or the revised returns are to be filed. This will only lead to a multiplicity of proceedings, making life miserable for the assessee and the Chartered Accountants.
H. BECAUSE the details which are sought to be furnished in the new TAR is time consuming and the TAR would form the very substratum of an ITR and the consequent computation of tax liability.
I. BECAUSE, in case the date of filing TAR & ITR is not extended then it will lead to huge confusion and chaos.
J. BECAUSE the Tax Audit of accounts of an assessee, is a detailed and time-consuming exercise, wherein the Chartered Accountant is required to vouch for and certify the correctness of the details provided in the TAR. It may be noted that, it is only after such thorough audit of an assessee is carried out, that a computation of the actual tax liability of an assessee can take place and an ITR can be filed. The entire scheme of the Act (Section 139 read with Section 44AB of the Act) is weaved based on the aforesaid ‘fundamental principle’. Arbitrary alteration of such mandatorily required details causes a genuine hardship upon the assessee’s and principles of natural justice only mandate that such introduction be made in a systematic manner.
K. BECAUSE it is settled law that consistency in tax laws is the need of the hour and such complications (which are beyond the control of the professionals & assessee’s) especially qua compliances, only adds to the woes of a person and acts as a barrier to the promotion of efficient tax compliances.
L. BECAUSE keeping the aforesaid time frames in mind, the Chartered Accountants schedule their audits for the assessee’s, in a manner to meet with the aforesaid timelines. However, due to COVID-19, entire planning has failed.
M. BECAUSE action/inaction of the Respondent No. 2 is therefore violative of Article 14, Article 19(1)(g) & Article 265 of the Constitution of India and the same ought to be rectified immediately.
N. BECAUSE the Respondent No. 2 ought to have decided the representations filed before it by various stakeholders for extending the due-date for filing the TAR & ITR.
O. BECAUSE the petitioner places reliance upon detailed reasons spelt out in the representations filed by various stakeholders for extending the due-date for filing the TAR & ITR and which for the sake of inconvenience is not being repeated.
P. BECAUSE the petitioners seek permission to add, alter, amend, and modify any one or more ground at before hearing.
9. DELAY IF ANY, IN FILING THE PETITION AND EXPLANATION:
There is no delay or default or inaction or negligence on the part of the humble petitioner association.
10. RELIEF:
It is, therefore, most humbly and respectfully prayed as under:-
(i) That this Hon’ble Court may be pleased to issue a writ of mandamus, or any other appropriate writ, order or direction, directing the Respondent No. “1” and/or ”2” to extend the due date of filing of Tax Audit Report and Income-tax Return for the assessment year 2020-2021 till December 31, 2020;
(ii) That this Hon’ble Court may be pleased to grant interim / ad-interim reliefs in terms of prayer clause above;
(iii) For costs of this Petition and Orders thereon;
(iv) For such further and other reliefs, as this Hon’ble Court may deem fit and proper in the nature and circumstances of the case.
11. INTERIM RELIEF:
During the pendency of this Public Interest Petition it is most humbly prayed as under:
(i) To direct the Respondents to decide the representation of the petitioner extending the extension of Tax Audit Report and Income-tax Return and to direct the Respondent No. “1” and/or ”2” to extend the due date of filing of Tax Audit Report and Income-tax Return for the assessment year 2020-2021 till December 31, 2020;
(ii) Any other relief as this Hon’ble Court may deem fit may be granted.
12. CAVEAT:-
That no notice has been received of lodging a caveat by the opposite parties.
