Tax Court Dismisses Discrimination Claims on Return Deadlines, Urges Quick Relief Process

The court dismissed claims of discrimination between Kerala and Jammu & Kashmir assessees regarding tax return deadlines. It emphasized individual applications to the CBDT under Section 119(2)(a) and (b) for relief due to the Kerala floods. Assessees were directed to apply within two weeks for extensions or waiver of interest, with the CBDT to process applications within two months. The CBDT was urged to hold a camp sitting in Kerala for efficient processing.

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Issues:
Extension of deadline for filing tax returns in flood-affected Kerala for assessees requiring statutory audit under Section 44AB of the Income Tax Act, challenge to the order refusing extension, power of the Central Board of Direct Taxes (CBDT) under Section 119 of the Act to address hardships, discrimination in treatment of assessees in Kerala compared to Jammu & Kashmir.

Extension of Deadline for Filing Tax Returns:
The petitioners challenged the Income Tax Department's announcement setting the deadline for filing returns for Kerala-based assessees requiring statutory audit under Section 44AB of the Income Tax Act as 31.10.2018, despite the original due date being 30.9.2018. They argued that the extension was insufficient, requesting an extension until 31.12.2018 due to difficulties in finalizing audits and incorporating them into the returns. The petitioners also contested the order dated 26.10.2018 by the Government of India, Ministry of Finance, which denied the extension request made by the All Kerala Chartered Accountants Association, Thrissur. The petitioners claimed that similar extensions were granted in Jammu & Kashmir, highlighting a lack of justification for differential treatment.

Power of CBDT under Section 119 of the Act:
The court examined Section 119 of the Income Tax Act, which empowers the CBDT to issue orders for the proper administration of the Act. Specifically, Section 119(2)(b) allows the CBDT to authorize income-tax authorities to admit applications for exemptions, deductions, refunds, or other reliefs after the specified period to avoid genuine hardships. The court suggested that assessees facing difficulties due to the Kerala floods could approach the CBDT under Section 119(2)(b) to seek relief by explaining the circumstances causing delays in filing returns and claiming benefits. The court emphasized that individual applications could be considered by the CBDT to address specific grievances and hardships faced by assessees.

Discrimination in Treatment:
The court dismissed claims of discrimination against Kerala assessees compared to Jammu & Kashmir, where a longer extension was granted for filing returns. It held that a blanket extension of the due date for filing returns under Section 139(1) of the Act could not be directed to the Income Tax Department through Public Interest Litigations. The court noted that the CBDT could consider applications under Section 119(2)(a) and (b) on a case-by-case basis to address hardships faced by assessees, such as waiving interest on delayed tax payments. The judgment emphasized that individual applications should be made within specified timelines to seek relief, and the CBDT should consider them in light of the flood situation in Kerala.

Judgment and Directions:
The court directed that assessees facing difficulties in claiming deductions, exemptions, or refunds due to the flood impact could apply to the CBDT under Section 119(2)(b) within two weeks for an extension. The CBDT was instructed to consider these applications within two months, taking into account the flood situation in Kerala. Assessees aggrieved by interest accrued on delayed tax payments could apply under Section 119(2)(a) within two weeks for waiver consideration. The CBDT was mandated to process these applications within two months after hearing the assessees. Additionally, the CBDT was encouraged to hold a camp sitting in Kerala to address applications from residents in the state efficiently.

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