All Gujarat Federation Of Tax Consultants vs. CBDT (Gujarat High Court)

In relation to the assessment year 2015-16, the Department delayed notifying the ITR forms being ITR-1, ITR-2, ITR-2A, ITR-4S but extended the due date for filing the income tax returns in the case of such assessees to 31st August, 2015. The on-line forms in relation to assessees subject to tax audit and other assessees, viz., Forms ITR-3, ITR-4, ITR-5, ITR-6 and ITR-7 in relation to assessment year 2105-16 came to be notified on 29.7.2015 and the forms were enabled and were available on the e-filing website of the Department only from 7th August, 2015. Since the income tax returns in case of such assessees were to be filed on or before 30.09.2015, the petitioners claimed that the delay in making the form available caused utter confusion and chaos amongst the Chartered Accountants and the assessees. It is the case of the petitioners that the tax audit returns can only be filed electronically which requires an appropriate “utility/software” to be made available by the respondents to the assessees. However, the respondents failed to make available the utilities for assessment year 2015 -16 until 07.08.2015, thereby creating a blackout of a period of more than four months making it impossible for assessees to file their return of incomes till 7th August, 2015 when the relevant forms were eenabled. In the aforesaid premises, several stake holders made several representations to the CBDT and the Central Government to extend the due date for filing the income tax returns from 30.09.2015 to 30.11.2015. However, the representations yielded no results, and the respondents did not grant extension of due date for filing the income tax returns. On the contrary by an announcement dated 9th September, 2015 the Government of India Ministry of Finance, it was stated that a decision had been taken that the last date of filing of returns due by 30th September, 2015 will not be extended. It is in these circumstances that the petitioners have approached the High Court seeking reliefs. HELD by the High Court:

(i) While it is true that the powers under section 119 of the Act are discretionary in nature and it is for the Board to exercise such powers as and when it deems fit. However, it is equally true that merely because such powers are discretionary, the Board cannot decline to exercise such powers even when the conditions for exercise of such powers are shown to exist. UCO Bank v. CIT, (1999) 4 SCC 599 (1999) 237 ITR 889. The power under section 119 of the Act is a beneficial power given to 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. In the case at hand, as is evident from the facts noted hereinabove, in the normal course, assessees who are subject to audit as well as other categories of assessees referred to hereinabove, can file their returns of income from 1st April to 30th September of the year in question. In view of the provisions of rule 12 of the rules, whereby, the assessees who are subject to tax audit, as well as the assessees referred to hereinabove, are required to file the tax returns electronically, that is, online. However, for filing the tax returns, appropriate utility is required to be made available by the respondents to the assessees. Therefore, till such utility is provided by the respondents, it is not possible for the assessees to file their returns of income. Therefore, there is a duty cast upon the respondents to ensure that necessary utility for e-filing 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, as noted hereinabove, the utilities for e-filing of returns have been made available only with effect from 7th August, 2015, thereby curtailing the time available for filing the income tax returns to a great extent. According to the petitioners, such curtailment of time causes immense hardship and prejudice to the petitioners and other assessees belonging to the above categories, whereas the respondent Board, on the other hand, has taken an adamant stand not to extend the time for e-filing of the returns despite the fact that the entire situation has arisen on account of default on the part of the Department and not the assessees.

(ii) It may be recalled that in relation to assessment year 2014-15, the respondent Board had extended the time for filing the tax audit reports, but had not extended the time for filing the returns and the petitioners were constrained to approach this court for extension of the due date for filing return of income. It may be noted that despite the fervent hope expressed by the court that the respondents in future may plan any change well in advance, a similar situation has prevailed in the present year also and the utilities for e-filing of income tax returns have been made available as late as on 7th August, 2015, leaving the petitioners and other assessees with less than one third of the time that is otherwise available under the statute. It may be noted that in the facts of the above case, there was a blackout for a period of one month, whereas in the year under consideration, the utility was not made available till 7th August, 2015. Thus, it was not possible for any of the assessees who are required to file returns in Forms No.ITR-3, ITR-4, ITR-5, ITR-6 and ITR-7, to file income tax returns before such date.

(iii) Another notable aspect of the matter is that non-filing of returns before the due date would result into the assessees being deprived of their right to file the revised return or claiming loss, whereas insofar as the revenue is concerned, no hardship or prejudice is likely to be caused, inasmuch as the interest of the revenue can be taken care of by providing that the due date shall stand extended for all purposes, except for the purposes of Explanation 1 to section 234A of the Act. Under the circumstances, when no prejudice is caused to the revenue and the assessees are put to great hardship on account of the short period within which the income tax returns are to be filed, it was expected of the Board to exercise the discretionary powers vested in it under section 119 of the Act to ameliorate the difficulties faced by the assessees on account of no default on their part, at least to a certain extent, by extending the due date for filing the income tax returns for a reasonable time. In the opinion of this court, the Board should not create a situation whereby the assessees are required to knock the doors of the court year after year, more so, when on account of the delay on the part of the respondents, it is the assessees who would have to face the consequences of not filing the returns in time. The contention that no prejudice is caused to the petitioners/assessees, therefore, does not merit acceptance.

(iv) Unfortunately, however, despite the aforesaid position, the Board has declined to exercise the discretion vested in it under section 119 of the Act to come to the rescue of the assessees and grant them some relief, leaving the court with no option but to direct the Board to extend the due date for filing the income tax returns under section 139 of the Act from 30th September, 2015 to 31st October, 2015 so as to alleviate to a certain extent, the hardships caused to the assessees on account of delay in providing the utilities.

(v) The Board while not extending the due date for filing return was also of the view 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. It may be 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, have in fact, been made available only on 7th August, 2015 and the assessees are given only seven weeks to file their tax returns. Therefore, laxity, if any, evidently is on the part of the authority which is responsible for the delay in making the utility for E-Filing the return being made available to the assessees. When the default lies at the end of the respondents, 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.

(vi) In the light of the above discussion, the petition partly succeeds and is accordingly allowed to the following extent. The respondent Board is hereby directed to forthwith issue requisite notification under section 119 of the Act extending the due date for e-filing of the income tax returns in relation to the assessees who are required to file return of income by 30th September, 2015 to 31st October, 2015. The respondents shall henceforth, endeavour to ensure that the forms and utilities for e-filing of income tax returns are ordinarily made available on the 1st day of April of the assessment year. Rule is made absolute to the aforesaid extent with no order as to costs.