2021 (1) TMI 649 - HC - Income Tax

Court rejects extension for Tax Audit & Income Tax Return deadlines, citing COVID-19 challenges.

The All Gujarat Federation Of Tax Consultants Versus Union Of India

The court declined to extend the deadlines for filing Tax Audit Reports and Income Tax Returns, noting the CBDT's previous extensions and the financial ... Extension of due date for filing the Income Tax Returns - COVID -19 Pandemic difficulties - whether this Court should issue a writ of mandamus to the CBDT for the purpose of extending the time limit to file the Tax Audit Reports and the Income Tax Returns? - HELD THAT:- Mandamus is an action or judicial proceeding of a civil nature extraordinary in the sense that it can be maintained only when there is no other adequate remedy, prerogative in its character to the extent that the issue is discretionary, to enforce only clear legal rights, and to compel courts to take jurisdiction or proceed in the exercise of their jurisdiction, or to compel corporations, public and private, and public boards, commissions, or officers, to exercise their jurisdiction or discretion and to perform ministerial duties, which duties result from an office, trust, or station, and are clearly and peremptorily enjoined by law as absolute and official It is true that a Coordinate Bench of this Court in the year 2015 had the occasion to deal with almost a similar issue as the one involved in the present case. This High Court had directed the CBDT to extend the due date for filing the Income Tax Returns under Section 139 from 30th September 2015 to 31st October 2015 so as to alleviate to a certain extent, the hardships caused to the assesses on account of delay in providing the utilities. However, this Court had to interfere in a situation when for the first time by way of a Notification the CBDT made it mandatory for the assessees to electronically file the Income Tax Returns relevant for the assessment year 2013­14 and onwards. Although Mr. Soparkar, the learned Senior Counsel has criticized the manner in which the decision is taken by the CBDT not to extend the time limit any further, yet we believe that such decision must have been taken after due deliberations, and in taking such decision, many financial experts must have applied their minds. It is true that the Board is vested with the power under Section 119 of the Act to extend the due date and the powers are discretionary in nature and that is the reason why we thought fit to ask the CBDT to look into the matter and take an appropriate decision in accordance with law. If the CBDT has looked into the matter closely and has arrived at the conclusion that the extension of time limit would not be in the interest of the Revenue, then it cannot be said that the CBDT has failed to exercise its discretionary powers vested in it under Section 119 of the Act. When there is a power coupled with duty, there is an obligation on the Board to exercise the same if the facts so warrant. Upon due consideration of all the relevant aspects of the matter, if the Board has taken the final decision not to extend the time limit any further, then it is difficult for this Court to issue a writ of mandamus to the Board to extend the time limit on the assumption that undue hardship would be caused to the taxpayers and the tax professionals, more particularly, in view of the latest data put forward before us by the Revenue. It is the case of the CBDT that it has declined to exercise its power under Section 119 of the Act as the conditions for exercise of such power do not exist. It is the case of the Revenue that the issue of hardship was dealt with considerably at the relevant point of time and that is the reason why three times the time limit came to be extended. The Board has now thought fit in the interest of the Revenue not to extend the time period any further. There are so many vital issues which the Revenue needs to keep in mind before taking such decision. The question is whether this Court should go into all such issues which weighed with the CBDT in taking a particular decision one way or the other and substitute the same with that of this Court on the ground that if the time limit is not extended, then the people at large would be put immense hardships? Interference at the end of this Court, at this point of time, in the matters relating to the Revenue may have far reaching implications. This Court may find it very easy to issue a writ of mandamus, as prayed for, saying that if the time limit has been extended in the past on three occasions, then why not for one last time upto 31st March 2021. However, such a line of reasoning or approach may upset the entire functioning of the Government and may lead to undesirable results. We have reached to the conclusion that we should not interfere in the matter. Both the writ applications fail and are hereby rejected. 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. Issues Involved:1. Whether the CBDT should extend the deadline for filing Tax Audit Reports and Income Tax Returns.2. Whether the delay in releasing filing utilities justifies an extension.3. Whether the COVID-19 pandemic warrants further extensions.4. The impact of international comparisons on the extension decision.5. The legal grounds for issuing a writ of mandamus.Issue-wise Detailed Analysis:1. Extension of Deadline for Filing Tax Audit Reports and Income Tax Returns:The court examined whether the CBDT should extend the deadline for filing Tax Audit Reports and Income Tax Returns. The court noted that the CBDT had already extended the deadlines thrice, and the decision not to extend further was taken after due deliberation. The court highlighted that the CBDT’s decision must be respected, especially considering the financial implications and the need for tax revenue for public welfare.2. Delay in Releasing Filing Utilities:The petitioners argued that the delay in releasing the utilities for filing the Tax Audit Reports and Income Tax Returns significantly reduced the time available for compliance. The court acknowledged this argument but noted that the CBDT had considered these delays and extended the deadlines accordingly. The court found that the delay in releasing utilities did not justify a further extension.3. COVID-19 Pandemic and Extension:The petitioners contended that the ongoing COVID-19 pandemic created genuine hardships for taxpayers and tax professionals, warranting further extensions. The court recognized the challenges posed by the pandemic but emphasized that the government had already extended deadlines thrice in response to these difficulties. The court concluded that the pandemic alone did not necessitate another extension, especially given the proactive measures already taken by the government.4. International Comparisons:The court reviewed the petitioners' comparison of deadline extensions in India with those in other countries. The court noted that India had been more generous in extending deadlines compared to many other countries. The court found that international comparisons did not provide a compelling reason for further extensions, especially considering the unique circumstances and needs of the Indian tax system.5. Legal Grounds for Issuing a Writ of Mandamus:The court examined whether it should issue a writ of mandamus to compel the CBDT to extend the deadlines. The court outlined the conditions for issuing a writ of mandamus, including the need for a clear legal right and a corresponding legal duty. The court concluded that the petitioners did not meet these conditions, as the CBDT had exercised its discretion reasonably and within its jurisdiction. The court emphasized that mandamus is an extraordinary remedy and should only be issued in exceptional circumstances, which were not present in this case.Conclusion:The court decided not to interfere with the CBDT’s decision not to extend the deadlines further. The court acknowledged the hardships faced by taxpayers and tax professionals but concluded that the CBDT had already taken these into account and acted within its discretion. The court dismissed the petitions, suggesting that the CBDT might consider issuing a circular to take a lenient view on the consequences of late filings under Section 271B of the Income Tax Act.