As directed by the Gujarat High Court in The All India Gujarat Federation of Tax Consultants Vs. Union of India, the CBDT has passed an order under section 119 of the Act dated 11th January 2021 on the the issue of extension of due dates for filing of Audit Report under section 44AB of the Income tax Act.
The CBDT has rejected the representation for further extension of the due date. It is stated that the Government of India has been very empathetic to the needs of the taxpayers as compared various other countries. No other country has extended the due dates as much as India. Even countries
which are comparatively worse hit by COVID-19, like the USA, UK etc., have provided no or lesser extensions in due dates.
It is also stated that filing of tax returns/audit reports are essential part of the obligations of assessee and cannot be delayed indefinitely. Many functions of the Income-tax Department start only after the filing of the returns by the assessee.
Any further extension would adversely affect the return filing discipline and shall also cause injustice to those who have taken pains to file the return before the due date. It would also postpone the collection of revenue thereby hampering the efforts of the Government to provide relief to the poor during these COVID times.
GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF REVENUE
(CENTRAL BOARD OF DIRECT TAXES)
(TAX POLICY AND LEGISLATION DIVISION)
New Delhi, 11th January, 2021
ORDER UNDER SECTION 119 OF INCOME TAX ACT, 1961
The Hon’ble Gujarat High Court vide judgement dated 8 th January, 2021 in
the case of The All India Gujarat Federation of Tax Consultants Vs. Union of India,
SCA 13653 of 2020, has directed the Ministry of Finance to look into the issue of
extension of due dates for filing of Audit Report under section 44AB of the Income
tax Act more particularly the representation dated 12.10.2020 and take an
appropriate decision in accordance with law.
2. In the wake of the global pandemic due to COVID-19 the due dates for filing
of income tax returns for A.Y. 2020-21 was extended vide the Taxation and Other
_laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (which was
enacted on 29th September,2020) to 30th November, 2020. Subsequently, vide
notification s.o. 3906(E) dated 29th October, 2020 the due dates for filing of returns
were further extended to 31st January, 2021 for cases in which tax audit report
under section 44AB of the Income tax Act (“the Act”) is required to be filed and 31 st
December, 2020 for all other cases. Further vide notification S.O. 4805 (E) dated
31st December, 2020 the above due dates were further extended to 15th February,
2021 and 10th January, 2021 respectively.
3. As per the provlslOns of the Act the due date for filing of the audit report
under section 44AB is one month prior to the due date of filing of income tax
return. Therefore, the said due date was extended to 31st October, 2020 vide the
Taxation and Other laws (Relaxation and Amendment of Certain Provisions) Act,
2020, 31st December, 2020 vide notification s.o. 3906(E) dated 29th October, 2020
and further to 15th January, 2020 vide notification s.o. 4805 (E) dated 31st
4. The due dates for payment of self-assessment tax, for taxpayers whose
amount due does not exceed rupees one lakh, also coincide with the due dates for
filing of income tax returns. The table below summarises the various due date
extensions given: –
5. Thus, it is apparent that the Government has not only considered
representations of various stakeholders but also has been proactive in providing
relaxation to the taxpayers by extending due dates regularly. The table below gives
the statistical data comparing the return filing statistics of A.Y. 2019-20 and A.Y.
From the above table, it is apparent that the number of returns filed this year has
already exceeded the number of returns filed last year up to 31 st August which was
the last day of filing of the all the returns other than the company/tax audit
returns, by about 6%.
The table below gives the statistical data comparing the filing statistics of tax audit
report for A.Y. 2019-20 and A.Y. 2020-21-
6. The above table also show that majority of the audit reports under section
44AB of the Act as well as income tax returns are filed within the last few days of
the dates only. For A.Y. 2019-20 it is seen that 24% of total audit reports were filed
in last 3 days before the due date. Therefore, lesser filing compliances having been
made much before the due date cannot be said to be an anomalous situation.
7. A look at the relaxation of similar nature provided by other economies globally
makes it clear that the Government of India has been very empathetic to the needs
of the taxpayers as compared various other countries. It is apparent from the table
no other country has extended the due dates as much as India. Even countries
which are comparatively worse hit by COVID-19, like the USA, UK etc., have
provided no or lesser extensions in due dates. The table below lists such extensions
given by a few countries: –
8. From the above it may be seen that 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
obligations of assessee and cannot be delayed indefinitely. Many functions of the
Income-tax 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 other welfare functions of the
state for the vulnerable and weaker sections of society which is funded through the
revenue collected. 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
9. From the above discussion, it is apparent that,-
• The due dates for filing of return/tax audit have already been extended on 3
• Intern ationally, the extension provided by India is more generous as •
compared to other countries.
• The return filing statistics of the current year indicates that returns filed in
this financial year already far exceeds the returns filed which were due on the
last date of filing of returns.
Any further extension would adversely affect the return filing discipline and shall
also cause injustice to those who have taken pains to file the return before the due
date. It wou ld also postpone the collection of revenue thereby hampering the efforts
of the Government to provide relief to the poor during these COVID times.
10. In this regard, the decisions of the Hon’ble Supreme Court have also been
considered. The Hon’ble Supreme Court in the case of Govt. of A.P. v. N.
Subbarayudu, (2008) 14 see 702 at page 703:
((5. In a catena of decisions of this Court it has been held that the
cut-off date is fIXed by the executive authority keeping in view the
economic conditions, financial constraints and many other
administrative and other attending circumstances. This Court is
also of the view that fixing cut-off dates is within the domain of
the executive authority and the court should not normally interfere
with the fvcation of cut-off date by the executive authority unless
such order appears to be on the face of it blatantly discriminatory
and arbitrary. (See State of Punjab v. Amar Nath Goyal [(2005) 6
SCC 754 : 2005 SCC (L&S) 91 OJ.
7. There may be various considerations In the mind of the
executive authorities due to which a particular cut-off date has
been fvced. These considerations can be financial, administrative
or other considerations. The court must exercise judicial restraint
and must ordinarily leave it to the executive authorities to fvc the
cut-off date. The Government must be left with some leeway and
f ree play at the joints in this connection.
8. In fact several decisions of this Court have gone to the extent of
s aying that the choice of a cut-off date cannot be dubbed as
arbitrary even if no particular reason is given for the same in the
counter-affidavit filed by the Government (unless it is shown to be
totally capricious or whimsical), vide State of Bihar v. Rarnjee
Prasad [(1990) 3 SCC 368 : 1991 SCC (L&S) 51J , Union of India v.
Sudhir Kumar Jaiswal [(1994) 4 SCC 212: 1994 SCC (L&S) 925:
(1 994) 27 ATC 561J (vide SCC para 5), Ramrao v. All India
Backward Class Bank Employees Welfare Assn. [(2004) 2 SCC 76
: 2004 SCC (L&S) 337J (vide SCC para 31), University Grants
Commission v. Sadhana Chaudhary [(1996) 10 SCC 536 : 1996
SCC (L&S) 1431 J , etc. It follows, therefore, that even if no reason
has been given in the counter-affidavit of the Government or the
executive authority as to why a particular cut-off date has been
chosen, the court must still not declare that date to be arbitrary
and violative of Article 14 unless the said cut-off date leads to
some blatantly capricious or outrageous result. JJ
11. In fact several decisions of the Hon’ble Supreme Court have gone to the
extent of saying that the choice of a cut off date cannot be dubbed as arbitrary even
if no particu lar reason is given for the same in the counter affidavit filed by the
Government, (unless it is shown to be totally capricious or whimsical). [State of
Bihar vs. Ramjee Prasad 1990(3) SCC 368, Union of Indian & Anr. vs. Sudhir
Kumar JaiswaI1994(4) SCC 212 (vide para 5), Ramrao & Ors. vs. All India
Backward Class Bank Employees Welfare Association & Ors. 2004 (2) SCC 76 (vide
para 31), Un iversity Grants Commission vs. Sadhana Chaudhary & Ors. 1996(10)
SCC 536, etc .] When it is seen that a line or a point there must be and there is no
mathematical or logical way of fIxing it precisely, the decision of the legislature or
its delegated must be accepted unless it can be said that it is very wide off the
reasonable mark. (See Union of India & Anr. v. Mis Parameshwaran match works
Ltd., 1975 (2) SCR 573, at p. 579; and Dr. (Mrs.) Sushma Sharma etc. etc. v. State
of Rajastha n & Ors. 1985 (3) SCR 243, at p. 269)
12. In view of the above reasons, all the representations for further extension of the
due date a re hereby rejected.