Gujarat HC declines to interfere in CBDT’s order of not extending due date of Audit Reports

Gujarat High Court has decided not to overrule the order by Central Board of Direct Taxes (CBDT) related to the due date for filing Audit Report under Income Tax Act.

This means Audit Report related with AY2020-21 (FY 2019-20) under section 44AB needs to be filed by January 15. After filing these reports, concerned assesses will be required to file Income Tax Return by February 15.

“In the overall view of the matter, we have reached to the conclusion that we should not interfere in the matter,” a division bench of Gujarat High Court said while rejecting plea of All Gujarat Federation of Tax Consultant.

“At this stage, we may only observe that the CBDT may consider issuing an appropriate circular taking a lenient view as regards the consequences of late filing of the Tax Audit Reports as provided under Section 271B of the Act. We leave it to the better discretion of the CBDT in this regard,” the bench said.

The bench took note of CBDT order dated January 11 which made it clear that no further extension for filing of audit reports related with Assessment Year 2020-21 will be given. “All the representations for further extension of due date are hereby rejected,” CBDT had said in an order. CBDT is apex policy making body for the Income Tax.

This order came in the wake of judgement by Gujarat High Court on January 8 on the petition of the All Gujarat Federation of Tax Consultants. The Court directed Finance Ministry to look into the issue of extension of due dates for filing of Audit report under Section 44 AB of the Income Tax Act more particularly the representation dated October 12 and take an appropriate decision in accordance with law.

CBDT, in its order, argued that date has been extended for all categories of taxpayers thrice with the last one was announced on December 30. It mentioned that majority of audit reports as well as income tax returns are filed within the last few days of the dates only. For AY 2019-20, it was seen that 24 per cent of total audit reports were filed in last three 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,” the order said.

The order also noted that countries such as the UK, and USA have provided no or lesser extensions in due dates. In the USA, due dates for filing returns by individual and corporate was April 15 which was extended to October 15. At the same time the UK did not give any extension while India gave extension thrice to all categories of taxpayers. For example, individuals who were supposed to file returns for AY 2020-21 by July 31, 2020, got time till January 10,2021.

“Any further extension would adversely affect the return filing discipline and shall also cause injustice to those who have taken pain 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,” order mentioned.