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R. Anand

R. Anand on the muddle raked up by the extension of `due date'

TIME limits have been prescribed in the Income-tax Act, 1961 for filing of several types of returns. The law has provided enough safeguards to ensure that if the required returns are not filed within the "due date", interest and penal consequences follow depending on the gravity of the lapse. Naturally, proof of filing of return of income and the related papers are an important evidence in the appellate proceedings.

Once e-filing of returns falls into place, the rigours of record keeping will be considerably lessened. Section 139(1) of the Act deals with return of income and requires various categories of assessees to file the return of income within the "due date". For this purpose, "due date" has been defined in Explanation 2 and is, at present, October 31, 2003, for companies, assessees whose accounts are to be audited, and working partner of a firm whose accounts are to be audited. This "due date" is July 31 in the case of other assessees. Recently, the Board relaxed the "due date" and gave extension of time under the powers bestowed under Section 119(2)(a) of the Act.

Orders of the Board

The CBDT issued two orders recently relaxing the time limit for filing the return of income for some categories of assessees.

The order dated October 16, 2003, is as follows: In exercise of powers conferred under clause (a) of sub-section (2) of Section 119 of the Income-Tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes, hereby orders that the due date of filing of return of income in case of all corporate assessees and those assessees whose accounts are required to be audited under Section 44AB of the Income-tax Act, 1961 is extended till November 30, 2003.

And the order of October 20, 2003, states: In exercise of the powers conferred under clause (a) of sub-section (2) of Section 119 of the Income-tax Act, 1961, the Central Board of Direct Taxes, hereby orders that the due date of filing of tax audit under Section 44AB of the Income-Tax Act, 1961, is extended to November 30, 2003.

In continuation of the order under Section 119(2)(a) of October 16, 2003, it is further clarified that the date for filing of returns in the case of partners, of firms required to file audit report under Section 44AB, also stands extended to November 30, 2003.

Reasoning

One is not clear as to why extension of time was first of all granted in such cases. Action has been initiated in using technology in a big scale and outsourcing repetitive and non-core functions in the administration of the Act. The process of audit, both in company law and tax audit, has also undergone drastic changes in the last decade and the process ensures a faster completion of the audit. In this background, the Board's decision to extend the time has actually come as a surprise to assessees. When specific dates have been mentioned in the Act, passing frequent orders relaxing the dates leads one to wonder whether "due dates" have to be prescribed in the Act at all.

Maybe, like the cost inflation index, which is released annually to compute capital gains, the "due dates" for each assessment year can be announced by way of notifications at the beginning of each year.

Further, it is suggested that when orders of this nature are passed, the consequent effects on other provisions have to be taken into account and a comprehensive order issued to avoid confusion.

Even in the current order, it is not clear whether the extension of time would apply to the report of the accountant to be given for transfer pricing provisions.

Further, similar orders have not been passed under the Wealth Tax Act granting extension of time for wealth tax cases. One hopes that a comprehensive view is taken before orders of such nature are passed.

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