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Consider Extension of Due Date for ITR and Tax Audit Reports by Jan 12: Gujarat HC to CBDT

consider-extension-of-due-date-for-itr-and-tax-audit-reports-by-jan-12-gujarat-hc-to-cbdt

The Gujarat High Court while hearing a writ petition filed by The All Gujarat Federation of Tax Consultants directed the Central Board of Direct Taxation (CBDT) to take an appropriate decision by  12th January 2021 for the extension of filing of Income Tax Returns (ITR) and Tax Audit Reports (TAR) for AY 2020-21.


It further observed that the powers exercised by the CBDT are beneficial in nature and therefore, it should exercise it for the proper administration of fiscal law so that undue hardships are not caused to the taxpayers.


This interim direction to CBDT for taking "an appropriate decision" by January 12, 2021 on Petitioner's plea for extension of due dates for filing the Income Tax   Returns   (ITR)   and   Tax   Audit   Reports   (TAR)   for   AY   2020­21 was given by the Gujarat High Court in the case of The All Gujarat Federation of Tax Consultants vs. Union of India in R/Special Civil Application No. 13653 of 2020. The direction was issued vide Order dated 08.01.2021.



It should be noted that this petition was presented on 22/10/2020 and registered on 28/10/2020. In the meantime, on 30.12.2020, CBDT had extended the dates of filing ITR to January 10, 2021, in non-audit cases and to February 15, 2021, for audit cases and companies and for filing TAR to January 15, 2021 amid the outbreak of the COVID-19 pandemic. The same notified on 31.12.2020 vide Notification No. 93/2020 dated 31.12.2020.


Read the case details.


Case Title

The All Gujarat Federation of Tax Consultants vs. UOI

Court

Gujarat High Court

Appeal No./Citation

R/Special Civil Application No. 13653 of 2020

Section covered

119

Assessment Year

2020-21

Order Result

Appeal allowed. Decided in favour of assessee.

Date of judgment

08.01.2021


Facts of the case:


The petitioner, The All Gujarat Federation of Tax Consultants, filed a writ petition before the Gujarat High Court to direct Central Board of Direct Taxation (CBDT) to extend the date of filing the Income Tax Returns (ITR) and Tax Audit Reports (TAR) for the assessment year 2020-21 to 31.03.2021 due to disruptions caused by the COVID-19 pandemic.


It was stated in the petition that owing to COVID-19 pandemic situation, the CBDT thought fit to extend the due date for filing the tax audit report from 30th September 2020 to 31st October 2020 in the case of all those assessees who are required to get their books of account audited.


Issues: 


The issue involved in this writ petition is to direct the respondent to extend the due date of filing of return of income and tax audit report due to delay and frequent amendments in the forms and COVID-19 pandemic situation.


Arguments of the Petitioner:


The petitioner seeks direction from the Court to ask the CBDT to exercise its powers vested in it under Section 119 of the Income Tax Act, 1961 by extending the due date of 31st October 2020 at least for three months i.e. upto 31st January 2021 for the purpose of both : (1) filing the ITR and (2) tax audit report in case of assessees whose accounts are required to be audited.


The reason accorded by the petitioner in seeking the relief is that  in line with the reality of covid 19 pandemic and due to orders and directives for workplaces from the Central Government Home Ministry regarding “Work for Home”, “Staggering of work / Business hours'' and “reduced workforce” it is impossible for the Tax Practitioners to complete the Audit work to issue a certificate required under section 44AB within the extended due date of 30.10.2020. It is submitted that as reflected in the data released by the respondent No.2, for 2019 as many as 55% of the Income Tax Returns and Tax Audit Reports were filed outside of office hours which shows the sheer burden of workload upon the Tax Practitioners to work overtime to complete the assignment.


It was further submitted that the Ministry of Law and Justice has in fact recognized the reality of the situation and extended en mass time limits (except otherwise specified) of the specified Acts to 31st March 2021 which falls during the period from 30th March 2020 to 31st December 2020 vide the Taxation and Others Laws (Relaxation and Amendment of Certain Provisions) Act, 2020


Thus, a meagre extension of one month in case of the filing of return of income under Section 139 is violative of Article 14 and Article 19(1)(g)   of   the   Constitution   of   India   being   manifestly   arbitrary, discriminatory and unreasonable. Further grievance was related to the amendment in the forms with additional requirements and utilities for e-filing of returns being available only belatedly curtails the time available for filing the income tax returns.


The petitioner had presented the below chart to give a fair idea as regards the delay caused in release of the utility to e-­file the forms.


ITR/Form

Due date of filing (original)

Due date of filing (extended)

Time available (extended)

Date of availability of e­filing utility

Effective time available

ITR 1

31.07.2020

30.11.2020

244 days

02.06.2020

182 days

ITR 2

31.07.2020

30.11.2020

244 days

26.06.2020

158 days

ITR 3

31.07.2020

30.11.2020

244 days

31.07.2020

123 days

ITR 4

31.07.2020

30.11.2020

244 days

05.06.2020

179 days

ITR 5

31.07.2020

30.11.2020

244 days

25.08.2020

98 days

ITR 6

31.07.2020

30.11.2020

244 days

10.10.2020

52 days

ITR 7

31.07.2020

30.11.2020

244 days

03.09.2020

89 days


The petitioner had strongly placed reliance on the following two decisions of this High Court-


(1) All Gujarat Federation of Tax Consultants vs. Central Board of Direct Taxes [2014] 50 taxmann.com 115 (Gujarat) [Special Civil Application No.12571 and 12656 of 2014 decided on 22nd September 2014]


(2) All Gujarat Federation of Tax Consultants vs. Central Board of Direct Taxes [2014] 50 taxmann.com 115 (Gujarat) [Special Civil Application No.15075 of 2015 decided on 29th September 2015]


Arguments of the Respondents:


The respondent argued that so far as ITR – 1 and ITR – 4 is concerned, the time limit expires on 10th January 2021.


The Tax Audit Reports are to be submitted by 15th January 2021 and the returns are to be filed by 15th February 2021. He would submit that for the Assessment year 2020­21, the due date for filing the ITR and TAR under the Act has been extended earlier considering the covid­19 pandemic as under: 


(a) The due date for filing income tax returns for A.Y.2020­21 was extended vide the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 to 30th November 2020. Subsequently, vide notification S.O. 3906 (E) dated 29th Oct, 2020, the due dates were further extended to 31st Jan. 2021 for cases in which tax audit report under section 44AB is required to be filed and 31st Dec. 2020 for others


(b) Since as per Section 44AB due date for filing tax audit report is one month prior to the due date for return, the due date for filing of tax audit report was also extended to 31st Oct. 2020 vide Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 and extended further to 31st Dec. 2020 vide notification S.O. 3906(E) dated 20th Oct. 2020


(c) Subsequently vide notification S.O. 4805(E), the due dates were further extended to 15th February, 2021 for cases in which tax audit report under Section 44AB is required to be filed and 10th January, 201 for others. 


The respondent also presented various statistical figures on the filing of returns and tax audit reports figures on the e-filing portal till 28th Dec., 2020.


It was stated that the reasons for frequent amendments to the forms and utilities was to incorporate the changes to give effect to the relevant Finance Act which comes into effect at the start of the said assessment year. and to bring about simplification of procedure, clarify in understanding and ease of compliance of the taxpayers. 


As per the respondents,  the Government has been proactive in analyzing the situation and providing relief to assessee. However, it should also be appreciated that filing of tax returns/audit reports are essential part of the compliance obligations of assessee and cannot be delayed indefinitely. Many functions of the Income­tax Department start only after the filing of the returns by the assessee. Filing of tax returns by assessee also results in collections of taxes either through payment of self assessment tax by the assessee or by the subsequent collection by the department post processing or assessment of the tax returns. The tax collections assume increased significance in these difficult times and the Government of India needs revenue to carry out relief work for poor and other responsibilities. Any delay in filing returns affects collection of taxes and hence providing relief to the poor. 


The respondents prayed that there being no merit in this writ application, the same may be rejected.


The Decision:


The Court after going through the deliberations of the parties directed the Union of India, Ministry of Finance  to look into the matter and take an appropriate decision at the earliest in accordance with law.


The Court stated that the powers given to the CBDT are beneficial in nature to be exercised for proper administration of fiscal law so that undue hardship may not be caused to the taxpayers. The purpose is of just, proper and efficient management of the work of assessment and the public interest. One additional aspect needs to be kept in mind before taking any appropriate decision that the time period for the officials of the tax department has been extended upto 31st March 2021 having regard to the current covid­19 pandemic situation. If that be so, then some extension deserves to be considered in accordance with law. 


It directed the Union of India to take an appropriate decision by 12th January 2021.


Analysis:


It is indeed a need of the hour to extend the due dates for filing of return and tax audit reports amid COVID-19 pandemic. On 30th December, 2020, the government though extended the time limit to furnish the ITR and TAR for the AY 2020-21 but considering the impact of the pandemic, the extension was a meagre of 10 days to 15 days.


A further extension of the due dates would certainly bring immense relief to the taxpayers as well as the tax professionals.


Full text of the judgment:


IN THE HIGH COURT OF GUJARAT AT AHMEDABAD


R/SPECIAL CIVIL APPLICATION NO. 13653 of 2020



FOR APPROVAL AND SIGNATURE:


HONOURABLE MR. JUSTICE J.B.PARDIWALA


and


HONOURABLE MR. JUSTICE ILESH J. VORA


==================================================


1

Whether Reporters of Local Papers may be allowed to see the

judgment ?


Yes

2

To be referred to the Reporter or not ?

No

3

Whether their Lordships wish to see the fair copy of the

judgment ?


No

4

Whether this case involves a substantial question of law as to

the interpretation of the Constitution of India or any order

made thereunder ?


No


 ==================================================

THE ALL GUJARAT FEDERATION OF TAX CONSULTANTS

Versus

UNION OF INDIA

==================================================

Appearance:

MR SN SOPARKAR, SENIOR ADVOCATE WITH MR B S SOPARKAR(6851)

for the Petitioner(s) No. 1,2

MR VARUN PATE, ADVOCATE for the Respondent No.2, 3

DS AFF.NOT FILED (N)(11) for the Respondent(s) No. 1,2,3

================================================


CORAM: HONOURABLE MR. JUSTICE J.B.PARDIWALA

and

HONOURABLE MR. JUSTICE ILESH J. VORA

Date : 08/01/2021


ORAL JUDGMENT


 (PER : HONOURABLE MR. JUSTICE J.B.PARDIWALA)


1. The draft amendment is allowed. The same shall be carried out at the earliest.


2. By this writ application under Article 226 of the Constitution of India, the writ applicants have prayed for the following relief:


“The petitioners, therefore, prays that this Hon’ble Court be pleased to issue a writ of mandamus or a writ in the nature of mandamus or a writ of certiorari or a writ in the nature of certiorari or any other appropriate writ, direction or order and be pleased to:


(a) direct the respondent No.2 henceforth not make any alternations in Forms and Utilities or changes in tax compliance requirements, after the beginning of the Assessment year in which the same are made applicable; providing the tax payers and the tax practitioners a clear period of 183 and 214 days to prepare and submit the due reports and forms respectively.


(b) direct the respondent No.2 to extend the due date for filing the Income Tax Returns (ITR) and Tax Audit Reports (TAR) for AY 2020­21 to 31.01.2021


(c) any other and further relief deemed just and proper be granted in the interest of justice.


(d) to provide for the cost of this petition.”


3. The facts giving rise to this writ application may be summarised as under:


3.1 The writ applicant No.1 is a Trust formed and registered in accordance with the provisions of the Bombay Public Trust Act, 1950 (for short, “the Act, 1950”) and has, as it members, the various professions and various associations of professionals from the State of Gujarat engaged in the field of practicing taxation. The writ applicant No.2 is a practicing Chartered Accountant and a Co­Chairman of the representation committee of the writ applicant No.1. Mr. S. N. Soparkar, the learned Senior Counsel assisted by Mr. B. S. Soparkar, the learned counsel appearing for the writ applicant would submit that having regard to the covid­19 pandemic situation, the CBDT i.e. the respondent No.2 herein thought fit to extend the due date for filing the tax audit report from 30th September 2020 to 31st October 2020 in the case of all those assessees who are required to get their books of account audited. Mr. Soparkar wants this Court to issue a writ of mandamus to the Union of India, Ministry of Finance, to ask the CBDT to exercise its powers vested in it under Section 119 of the Income Tax Act, 1961 (for short, “the Act, 1961”) by extending the due date of 31st October 2020 at least for three months i.e. upto 31st January 2021 for the purpose of both : (1) filing the ITR and (2) tax audit report in case of assessees whose accounts are required to be audited. Mr. Soparkar would submit that in line with the reality of covid 19 pandemic and due to orders and directives for work places from the Central Government Home Ministry regarding “Work for Home”, “Staggering of work / Business hours” and “reduced workforce” it is impossible for the Tax Practitioners to complete the Audit work to issue a certificate required under section 44AB within the extended due date of 30.10.2020. It is submitted that as reflected in the data released by the respondent No.2, for 2019 as many as 55% of the Income Tax Returns and Tax Audit Reports were filed outside of office hours which shows the sheer burden of workload upon the Tax Practitioners to work overtime to complete the assignment. It is, therefore, submitted that in the year 2020 with covid infections and safety measures, such work is not possible. Mr. Soparkar would submit that the Ministry of Law and Justice has in fact recognized the reality of the situation and extended en mass time limits (except otherwise specified) of the specified Acts to 31st March 2021 which falls during the period from 30th March 2020 to 31st December 2020 vide the Taxation and Others Laws (Relaxation and Amendment of Certain Provisions) Act, 2020. Even in the specified extensions, in many cases, the effective extensions are substantial ranging to 3 to 6 months. It is, therefore, submitted that a meagre extension of one month in case of the filing of return of income under Section 139 is violative of Article 14 and Article 19(1)(g) of the Constitution of India being manifestly arbitrary, discriminatory and unreasonable. Mr. Soparkar would submit that as stated by this High Court in Special Civil Application No.15075 of 2015, there is a duty cast upon the respondents to ensure that necessary utility for e­filing of the income tax returns is made available to various categories of assessees at the beginning of the assessment year so that the assessees can plan their tax matters accordingly. However, the amendment in the forms with additional requirements and utilities for e- filing of returns being available only belatedly curtails the time available for filing the income tax returns. It is submitted that the amendment in rules and disclosure requirements as late as on 1st October 2020 has effectively given only 30 days (as opposed to extended 214 days) to the Chartered Accounts to furnish the Tax Audit Report. Also, the belated issuance of the ITR forms have also curtailed the effective time period. Any user who file e-­return will have to create an XML file based on the schema. The schema is needed by those, software companies and organizations who wish to use this code to help create their own software utility for filing up these forms. Due to frequent changes in schema or utility, third party services providers will have to upgrade their software which may take about 5 to 6 days to upgrade, depending upon nature of change. It is further submitted that more than 50% of the Income Tax Returns and Tax Audit Reports were e­filed in 2019 using private softwares and therefore, the issuance of Schema and Validation Rules before sufficient time is also crucially important for the same. Mr. Soparkar further submitted that due to delay in enabling of return of forms, the effective time available for filing return of income becomes very less and cause severe hardship to the assessees and the tax practitioners. 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. Understanding the need for the thoroughness of the Audit, the legislators, in their wisdom, have statutorily granted a reasonable time beginning from the Assessment Year on 1st of April. It may be noted that only after such thorough audit of accounts of an assessee is carried out, then a computation of the actual tax liability of an assessee can take place and ITR can be filed. Arbitration alternation of such mandatorily required details causes genuine and grave hardship upon the assessees, and the principle of natural justice only mandates that such introduction be made in systematic manner accounting for time line to take into account the changes brought-­in.


3.2 Mr. Soparkar invited the attention of this Court to the chart as below to give a fair idea as regards the delay caused in release of the utility to e-­file the forms:


ITR/Form

Due date of filing (original)

Due date of filing (extended)

Time available (extended)

Date of availability of e­filing utility

Effective time available

ITR 1

31.07.2020

30.11.2020

244 days

02.06.2020

182 days

ITR 2

31.07.2020

30.11.2020

244 days

26.06.2020

158 days

ITR 3

31.07.2020

30.11.2020

244 days

31.07.2020

123 days

ITR 4

31.07.2020

30.11.2020

244 days

05.06.2020

179 days

ITR 5

31.07.2020

30.11.2020

244 days

25.08.2020

98 days

ITR 6

31.07.2020

30.11.2020

244 days

10.10.2020

52 days

ITR 7

31.07.2020

30.11.2020

244 days

03.09.2020

89 days



Form

Due date of filing (original)

Due date of filing (extended)

Time available (extended)

Date of updation of utility

Effective time available

3CA, 3CB, 3CD

30.09.2020

31.10.2020

214 days

25.08.2020

67 days


DELAY IN AMENDING 3CA/3CB/3CD FORM


Date on which form / rules are amended

Date of providing amended form / utility

‘1.10.2020

Awaited as on 19.10.2020


4. It is submitted that the decision of the respondent No.2 to introduce the new forms to be made applicable 30 days prior to the due date and to subsequently amend the utility without corresponding extension of the due date to e­file is without any basis and contrary to law.


5. Mr. Soparkar, in support of his aforesaid submissions, has placed strongly reliance on the following two decisions of this High Court:


(1) All Gujarat Federation of Tax Consultants vs. Central Board of Direct Taxes [2014] 50 taxmann.com 115 (Gujarat) [Special Civil Application No.12571 and 12656 of 2014 decided on 22nd September 2014]


(2) All Gujarat Federation of Tax Consultants vs. Central Board of Direct Taxes [2014] 50 taxmann.com 115 (Gujarat) [Special Civil Application No.15075 of 2015 decided on 29th September 2015]


6. Mr. Soparkar would submit that in both these cases upon which reliance is placed, the tendency of the respondents to make multiple last minute changes was criticized. In both the judgements, directions were issued to grant additional time for filing returns.


7. Mr. Soparkar also pointed out that a detailed representation has been filed addressed to the Union Finance Minister of India dated 12th October 2020 at Annexure : I to this writ application (page : 108). However, there is no response in this regard at the end of the respondent No.1 till this date.


8. In such circumstances referred to above, Mr. Soparkar prays that there being merit in this writ application, the same may be considered accordingly.


9. On the other hand, this writ application has been vehemently opposed by Mr. Varun Patel, the learned Senior Standing Counsel appearing for the respondents Nos.2 and 3 respectively. Mr. Patel pointed out that so far as ITR – 1 and ITR – 4 is concerned, the time limit expires on 10th January 2021. The Tax Audit Reports are to be submitted by 15th January 2021 and the returns are to be filed by 15th February 2021. He would submit that for the Assessment year 2020­21, the due date for filing the ITR and TAR under the Act has been extended earlier considering the covid­19 pandemic as under:


[a] The due date for filing income tax returns for A.Y.2020­21 was extended vide the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 to 30th November 2020. Subsequently, vide notification S.O. 3906 (E) dated 29th Oct, 2020, the due dates were further extended to 31st Jan. 2021 for cases in which tax audit report under section 44AB is required to be filed and 31st Dec. 2020 for others.


[b] Since as per Section 44AB due date for filing tax audit report is one month prior to the due date for return, the due date for filing of tax audit report was also extended to 31st Oct. 2020 vide Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 and extended further to 31st Dec. 2020 vide notification S.O. 3906(E) dated 20th Oct. 2020.


[c] Subsequently vide notification S.O. 4805(E), the due dates were further extended to 15th February, 2021 for cases in which tax audit report under Section 44AB is required to be filed and 10th January, 201 for others


10. Mr. Patel would submit that based on Notified Forms, the software for preparation of ITRs have been prepared and the date of release of 1st version of ITR utilities in e­filing portal is as per table below. Due to changes in Notified Form or Press releases the ITR preparation software have been modified / are being modified:


ITR utility

Date of release of ITR utility in e­filing portal

ITR­1

’02­June­2020

ITR­2

’26­June­2020

ITR­3

’31­July­2020

ITR­4

’05­June­2020

ITR­5

’25­Aug­2020

ITR­6

’22­Sept­2020

ITR­7

’03­Sept­2020


11. Mr. Patel would further submit that ITRs 1 and 4 meant for salaried tax payers and business reporting income on presumptive basis, constitute 81% of all ITRs filed, and were available for filing within 1 week of Notification of the forms by CBDT. Til 28th Dec 4.37 Cr. ITRs had been filed for only AY 2020­21 as compared to 4.51 Cr for only AY 2019­20 as on 28th Aug 2019.


12. Mr. Patel would also submit that utility for filing TAR – Form No.3CA­3CD & 3CB­3CD for A.Y. 2020­21, incorporating amendments as per notification dated 01­Oct­2020 was released in e­filing portal on22­ Oct­2020. The utility before the date of notification for amendment of Form was already available in e­filing portal which would be used for filing the Form No.3CA­3CD & 3CB­3CD A.Y. 20202­21 till Oct. 1st Form No.3CEB for A.Y. 2020­21, incorporating amendments as per notification dated 01­Oct­2020 was released in e­filing portal on 28­Oct­2020. The utility before the date of notification for amendment of Form was already available in e­filing portal which could be used for filing the Form No.3CEB for A.Y. 2020­21 till Oct. 1st. Therefore, except for the gap from Oct 1st to Oct 21st necessitated to incorporate changes as per notification dated 01­Oct­2020 in the software/portal CAS/Tax payers could submit their Tax Audit Reports at all other dates. It is submitted that till 28th Dec 2020, 1,51,855 FORM 3CA and 13,63,277 FORM 3CB under Section 44AB have been filed.



 

13. Mr. Patel would further submit that the changes incorporated in the various forms and utilities during an assessment year are to give effect to the relevant Finance Act which comes into effect at the start of the said assessment year. Further, apart from the above, any changes to the forms and utilities, if made, are only to bring about simplification of procedure, clarify in understanding and ease of compliance of the tax payers


14. Mr. Patel would submit that the Government has been proactive in analyzing the situation and providing relief to assessee. However, it should also be appreciated that filing of tax returns/audit reports are essential part of the compliance obligations of assessee and cannot be delayed indefinitely. Many functions of the Income­tax Department start only after the filing of the returns by the assessee. Filing of tax returns by assessee also results in collections of taxes either through payment of self assessment tax by the assessee or by the subsequent collection by the department post processing or assessment of the tax returns. The tax collections assume increased significance in these difficult times and Government of India needs revenue to carry out relief work for poor and other responsibilities. Any delay in filing returns affects collection of taxes and hence providing relief to poor. It may also be noted that sufficient time has already been given to taxpayers to file their tax returns and a large number of taxpayers have already filed their returns of income.


15. In the last, Mr. Patel pointed out that the last extension for filing the ITRs and TARs has been given by press release dated 30th December 2020. The Government Notification dated 31st December 2020 has also been issued with respect to the extension for fling the ITRs and TARs.


16. Mr. Patel pointed out that having regard to the same, the Bombay High Court thought fit not to entertain an identical petition and the same came to be rejected vide order dated 31st December 2020. Mr. Patel invited our attention to page : 138 of the paper book on which the order passed by the Bombay High Court has been annexed.


17. In such circumstances referred to above, Mr. Patel prays that there being no merit in this writ application, the same may be rejected.


18. Having heard the learned counsel appearing for the parties and having gone through the materials on record, we intend to keep this writ application pending and pass an interim order in the larger interest of justice.


19. In All Gujarat Federation of Tax Consultants (supra), a Coordinate Bench of this High Court had the occasion to consider an identical situation. We quote few relevant observations made in the said judgement:


“38. We do not have very clear details as to what was the period made available for the receipt of the suggestion and consultation from the stakeholders and what was the extra time consumed by the Law Ministry for the purpose of vetting. However, without going into these details, when it could be noted that this change of utility and non­availability of the new version till 20th August, 2014 is the cause for the issue to have cropped up, the assesses cannot be put to the hardship nor can the professionals be made to rush only because the department chose to change the utility during the mid­year.


51.1 It would be apt to reproduce the relevant paragraphs of the judgment of this Court rendered in the case of Vaghjibhai S. Bishnoi v. Income Tax Officer and another reported in [2013] 36 taxmann.com 371 (Gujarat), at this stage.


14….On the contrary, we are of the firm opinion that computerization in every Department is objected with a view to facilitate easy access to the assessee and make the system more viable and transparent. In the event of any shortcoming of software programme or any genuine mistake, the Department is expected to respond to such inadvertence spontaneously by rectifying the mistake and give corresponding relief to the assessee. Instead of that, even when it is being brought to the notice of the Department by the assessee, by a rectification application and subsequent communication, not only it has chosen not to rectify the mistake, but, the lack of inter departmental coordination has driven the assessee to this Court for getting his legitimate due. This attitude for sure does not find favour with the Court, as more responsive and litigant centric system is expected; particularly in the era of computerization. Tax payers friendly regime is promised in this electronic age. For want of necessary coordination between the two departments, the assessee cannot be expected to be sent from pillar to the post.


14.1 Thus, from the discussion above, it can be very well said that the respondent no. 2 has failed to perform its duty as provided under section 154 of the Act. When a glaring mistake was pointed out to the authority, it ought to have amended the order of assessment by exercising powers under section 154 of the Act, which in the present case, the authority failed to exercise and consequently, the petitioner was compelled to approach this Court by way of the present petition.


We could not resist ourselves from taking note of details provided in the official website of Income­tax Department which reveals the extension of computerization in the department so far and their vision for the same in this field. With a view to improve the efficiency and effectiveness of Direct Taxes administration and to create a database on its various aspects, a Comprehensive Computerization programme was approved by the Government in October 1993. In accordance with the programme, computerization was taken up on a three tier system. In the apex level, a National Computer Centre [NCC] having large computers to maintain database and to execute processing work of a global nature was envisaged. At the second level, 36 Regional Computer Centres [RCCs] were to be established across the country equipped with large computers to maintain regional databases and to cater to regional processing needs. All the RCCs were to be connected to the National Computerization Centre through high speed data communication lines. At the third level, computers were to be installed in the rooms of all the Assessing Officers and connected with the respective Regional Computer Center for data/information exchange, in a phased manner. Accordingly, in the first phase, Delhi, Mumbai and Chennai City regions were taken up and provided with state of art hardware and software connected with RCC, through inter­city and intra­city linkages. After stabilizing of the computer systems in the 3 RCCs, computerization of 33 other centres covering the rest of the country was taken up in the second phase.


The Director General of Income Tax [Systems], {DIT [S]}, New Delhi was made the main nodal authority for overall planning and implementation of the computerization programme; including procurement of hardware and software and development/installation of application software. In addition, at each RCC, the Chief Commissioner of Income Tax [CCIT] was required to monitor and co­ordinate with the DIT [S]. He would be assisted by CIT [Computer Operations] who would monitor the functioning of the RCC.


The main objectives of the computerization programme, as approved by the Committee on Non­Plan Expenditure [CNE], were (a) to improve the efficiency and effectiveness of tax administration; (b) to ensure timely availability and utilization of information; (c) to reduce compliance burden on honest tax payers; (d) to enhance equitable treatment of tax payers of income tax and procedures; (e) to ensure better enforcement of tax laws; (f) to provide management with reliable and accurate information in time so as to assist them in tax planning and legislation and also in decision making; (g) to broaden the tax base; and (h) to keep the cost of administration at an acceptable level over a period of time.


15.1 Thus, computerization of the Income Tax Department when has undergone the exercise of a comprehensive business process re­ engineering, it is expected that Departments wish to herald Taxpayers friendly regime becomes the reality. A paradigm shift is programmed as taxpayers population has been growing exponentially, ushering all the imperative changes and modernization of administration.


15.2 If the Centralized Processing Center meant for return processing, accounts, refund, storage of data etc. adds to the difficulties of the Tax payers, due to lack of distribution of work between back office and front office, and that too, after having been pointed out the actual error, a serious re­look is expected.


55. While examining the CBDT’s powers exercisable under section 119 of the Act, of course, in some other context, the Apex Court has held and observed thus:


9. What is the status of these circulars? Section 119(1) of the Income­tax Act, 1961 provides that, “The Central Board of Direct Taxes 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. Provided that no such orders, instructions or directions shall be issued (a) so as to require any Income Tax authority to make a particular assessment or to dispose of a particular case in a particular manner: or (b) so as to interfere with the discretion of the Appellate Assistant Commissioner in the exercise of his appellate functions.” Under sub­section (2) of Section 119 without prejudice to the generality of the Board’s power set out in sub­ section (1) a specific power is given to the Board for the purpose of proper and efficient management of the work of assessment and collection of revenue to issue from time to time general or special orders in respect of any class of incomes or class of cases setting forth directions or instructions, not being prejudicial to assesses, as the guidelines, principles or procedures to be followed in the work relating to assessment. Such instructions may be by way of relaxation of any of the provisions of the sections specified there or otherwise. The Board thus has power, inter alia, to tone down the rigour of the law and ensure a fair enforcement of its provisions, by issuing circulars in exercise of its statutory powers under Section 119 of the Income­tax Act which are binding on the authorities in the administration of the Act. Under Section 119(2)(a) however, the circulars as contemplated therein cannot be adverse to the assessee. Thus, the authority which wields the power for its own advantage under the Act is given the right to forego the advantage when required to wield it in a manner it considers just by relaxing the rigour of the law or in other permissible manners as laid down in Section 119. 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 proper administration of fiscal law so that undue hardship may not be caused to the assessee and the fiscal laws may be correctly applied. Hard cases which can be properly categorised as belonging to a class, can thus be given the benefit of relaxation of law by issuing circulars binding on the taxing authorities.


55.1 Thus as held by the Apex Court the powers given to the Board are beneficial in nature to be exercised for proper administration of fiscal law so that undue hardship may not be caused to the taxpayers. The purpose is of just, proper and efficient management of the work of assessment and the public interest.


56. Not that the Revenue is not alive to the vital importance of TAR in filing the ITR and the possible complications and genuine hardship that may arise in future in all those tax returns filed without the aid of TAR, however, non­collection of the tax for a period of two months and possible loss of Rs.220 crore in terms of interest for a period of two months in the event the self­assessed tax not paid, appear clearly as the reasons in the foundation for CBDT to deny such extension. For the purpose of filing ITR and furnishing TAR difference in due date possibly may lead many assesses not to file the ITR without the aid of the TAR and thereby the angle of gaining the interest under the provision of law for such late filing of the returns would not have been missed by the Revenue. The Revenue can surely safeguard the interest of both the collection of tax, as also of possible loss of interest on the tax collected, the Revenue cannot be permitted to take advantage of its own error or delay, by putting forth magnified figures of loss and thereby also possibly in the process gaining interest for late filing of return in complete disregard to requirement of efficient management.


58. Consequences that would follow on account of the delay in filing the return of income also are weighing factors for the Court to consider such request. Being conscious of the fact that the writ of mandamus, which is highly prerogative writ is for the purpose of compelling the authorities of any official duties, officially charged by the law either refuses or fails to perform the same, the writ of mandamus is required to be used for the public purpose, particularly, when the party has not other remedy available. It is essentially designed to promote justice.


Download Copy of the Gujarat High Court Order dated 08.01.2021 directing CBDT to consider extension of due dates for AY 2020-21 in pdf format.

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