The Finance Ministry and the CBDT, which had earlier shown a spark of efficiency and pro-activeness, appear to have gone back to their usual ways of turning a blind eye, and maintaining an indifferent attitude, to matters concerning taxpayers.
Though the deadline for filing the Tax Audit Report and Income Tax Return for the Assessment year 2020-21 is fast approaching and the Country is still under severe stress due to Covid-19, the authorities have not yet issued any extension order.
Though several representations have been made to the Central Board of Direct Taxes (CBDT) and the Finance Minister, these have not been acted upon.
Naturally, this sorry state of affairs has aroused the ire of leading professional associations like The Chamber of Tax Consultants and The Rajasthan Tax Consultants.
Both premier bodies have filed writ petitions before the Bombay High Court and the Rajasthan High Court respectively to challenge the indecision of the Government in the matter of granting extension of the due date of filing of the Tax Audit Report and Income Tax Return for the Assessment year 2020-21.
Orders are awaited from the respective Courts.
The synopsis of the Writ Petition filed by the Rajasthan Tax Consultants is as follows:
“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;
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. \
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.
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.
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 selfassessment / fresh tax audit / such other primary compliances which by nature are more laborious are also equally difficult to complete in time.
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.
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.
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 selfisolation. 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.
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.
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.
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.
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.”