2025 (11) TMI 100 - HC - Income Tax

CBDT must extend income tax return due date to 30.11.2025 under s.119 to match s.44AB Explanation (ii)

HC held that the CBDT's Circular No.14/2025 extending the 'specified date' to 31.10.2025 cannot stand without a corresponding one-month extension of the ... Extension of specified date for filing the tax audit report under section 44AB - whether the due date u/s 139 (1) is required to be extended in view of the Circular No. 14/2024 dated 25.09.2025 as per Explanation (ii) to Section 44AB of the Act or not by the respondent no. 2. - “specified date” in relation to the accounts of the assessee of the previous year relevant to an assessment year - HELD THAT:- From the analysis of the provisions of the Act and taking into consideration the Explanatory Memorandum for Finance Act, 2020, by which the Explanation (ii) to Section 44AB has been amended and all other Sections referred to herein-above also have been amended to mean the specified date in relation to the accounts of the assessee of the previous relevant Assessment Year means date one month prior to “the due date for furnishing the return of income under sub-section(1) of Section 139 of the Act. Therefore, extending the specified date without extending the due date for furnishing the return of income under sub-section (1) of Section 139 of the Act would be contrary to the statutory provisions. As the specified date is extended as per the Circular No. 14/2025, the due date has to be extended accordingly by one month from the date of extension of the specified date. For the Assessment Year 2025-26, the due date for furnishing the return of income under sub-section (1) of Section 139 of the Act read with Explanation-2(a) is prescribed as 31st October, 2025. Therefore, as per the Explanation (ii) to Section 44AB of the Act, the specified date in relation to the account of the assessee of the previous year relevant to the Assessment Year 2025-26 would be the date one month prior to the due date of furnishing the return of income under sub-section (1) of Section 139 of the Act would be 30.09.2025. Respondent no. 2 – CBDT by Circular No. 14/2025 has extended the “specified date” in exercise of the power conferred upon it u/s 119 of the Act has from 30th September to 31st October, 2025 for the assesses which are required to file the return of income as per Explanation (a) to Section 139 (1) of the Act which provides filing of return by 31.10.2025. Considering the above facts and the Explanation (ii) to Section 44AB of the Act the “specified date” has to be one month prior to the “due date” of furnishing return of income meaning thereby that there has to be is gap/ difference of one month between the “specified date” and “due date” for filing return of income, otherwise, the Explanation (ii) to Section 44AB of the Act would be rendered negatory and otiose. The statutory provisions which have been amended by Finance Act,2020 cannot be rendered nugatory or otiose. Hon’ble Apex Court in case of Bansal Wire Industries Ltd. & Anr. v. State of Uttar Pradesh & Ors. [2011 (4) TMI 77 - SUPREME COURT] observed 'It is a settled principle of law that the words used in the section, rule or notification should not be redundant and should be given effect to. It is also one of the cardinal principles of interpretation of any statute that some meaning must be given to the words used in the section” In view of the above dictum of law, the Circular No. 14/2025 is not in consonance with the provisions of the Act meaning thereby that merely extending the “specified date” without extending the “due date” for filing of return would be contrary to the Explanation (ii) to Section 44AB of the Act and contrary to the legislative intention to bring amendment by Finance Act, 2020. This fact is further fortified from the previous years data which is placed on record which clearly demonstrates that at no point of time the difference between the “specified date “ and the “due date” is less than one month after the Assessment Year 2021-22 from which the amendment brought on record by the statute by Finance Act, 2020 is applicable and the last five years data. As the respondent no. 2 CBDT has not issued any Circular while exercising its power under Section 119 of the Act to extend the “due date” for filing the return of income for the assessees covered by Explanation (a) to Section 139 (1) of the Act to 30th November,2025, when the “specified date” is extended from 30.09.2025 to 31.10.2025, a consequential Circular to extend the “due date” to 30.11.2025 as per the provisions of Explanation (ii) to Section 44AB read with Section Explanation (a) to Section 139 (1) of the Act is required to be issued. If ‘due date’ for filing return of income under Section 139(1) of the Act is not extended by the respondent no. 2 -CBDT then the Explanation (ii) to Section 44AB of the Act shall be rendered negatory and the “specified date” defined therein would as per the extended date by the CBDT and not as per the statutory provision being one month to the due date of filing of the return . The present situation would restore the pre amended provision of filing audit report and return of income together contrary to existing provisions of the Act. In the aforesaid circumstances, and having regard to the provisions of Explanation (ii) of Section 44AB of the Act, we direct the respondent no. 2 CBDT to issue Circular exercising power under sections 119 of the Act to extend the “due date” of filing of return up to 30th November,2025 for the assessees who are required to file audit report as per clause (a) of Explanation 2 to sub-section (1) of section 139 of the Act or requiring to file the report of audit under the provisions of the Act for the Financial Year 2024-25 (Assessment Year 2025-26). ISSUES PRESENTED AND CONSIDERED 1. Whether a Circular issued by the Board under section 119 of the Income-tax Act, 1961 extending the 'specified date' under section 44AB can stand without a simultaneous extension of the 'due date' for filing return under section 139(1), in view of Explanation (ii) to section 44AB (as amended by Finance Act, 2020). 2. Whether the Board (CBDT) has the statutory power under section 119 to extend the 'due date' under section 139(1) as a necessary consequence of extending the 'specified date' under section 44AB, and whether failure to do so renders Explanation (ii) to section 44AB otiose. 3. Whether judicial precedent and statutory interpretation require the Board to issue a consequential notification extending the due date where it has extended the specified date for furnishing tax-audit reports. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Validity and effect of extending 'specified date' under section 44AB without extending 'due date' under section 139(1) Legal framework: Section 44AB mandates that certain assessees obtain an audit and furnish the audit report before the 'specified date'; Explanation (ii) to section 44AB (post-Finance Act, 2020) defines 'specified date' as 'date one month prior to the due date for furnishing the return of income under sub-section (1) of section 139.' Explanation 2(a) to section 139(1) prescribes the 'due date' (for relevant assessees) as the 31st day of October of the assessment year (for the assessment year in question). Interpretation and reasoning: The Finance Act, 2020 deliberately introduced a one-month gap between the 'specified date' and the 'due date' to enable pre-filling of returns. That legislative design amended multiple provisions that reference the 'specified date' so that various substantive benefits and compliance preconditions operate only if the audit report is furnished one month prior to the return filing due date. Giving effect to the statute requires that the distinct meaning of 'specified date' be preserved; extending the specified date alone collapses the intended one-month gap and thereby frustrates the legislative purpose. Precedent treatment: This Court's earlier decision (All Gujarat Federation of Tax Consultants v. CBDT) was relied upon and reiterated; that decision holds that the Board cannot extend the tax-audit due date (specified date) alone without extending the return due date, because the two are inextricably linked. The Board's past practice of separately issuing two circulars in different months does not negate the statutory requirement that the 'specified date' be one month prior to the 'due date'. Ratio vs. Obiter: Ratio - where Explanation (ii) ties the specified date to the due date, an executive circular extending the specified date must be accompanied by an extension of the due date to preserve the statutory one-month interval; otherwise the statutory scheme is undermined. Obiter - observations about administrative convenience or portal monitoring are incidental and do not displace the statutory requirement. Conclusion: Extending the 'specified date' without concomitant extension of the 'due date' is contrary to Explanation (ii) to section 44AB and to the legislative intent of Finance Act, 2020; the Board's Circular extending only the specified date lacks consonance with the statute insofar as it does not effect a corresponding extension of the due date for filing returns. Issue 2 - Scope of section 119 power to extend the 'due date' and the necessity of a consequential notification Legal framework: Section 119 empowers the Board to issue instructions and relax provisions of the Act in appropriate cases. Section 44AB itself contains no express power to be relaxed by section 119; section 139(1) can be relaxed by the Board under section 119(2) by extending the due date for filing returns. Interpretation and reasoning: Where the Board purports to extend the 'specified date' (a term defined by reference to the due date of section 139), the only administratively and legally coherent method to place that extension within the Board's jurisdiction is to exercise power under section 119 to extend the due date under section 139(1). Doing so preserves the statutory relation and avoids rendering Explanation (ii) nugatory. The Board's technical delineation between 'due date' and 'specified date' in prior notifications cannot override the statutory linkage created by the Finance Act, 2020. Precedent treatment: This Court's earlier ruling (All Gujarat Federation of Tax Consultants) held that the Board cannot lawfully extend the tax-audit specified date alone without extending the return due date and that the valid exercise of section 119 must extend section 139(1) when section 44AB is to be given effect as intended. The Supreme Court's dismissal of SLPs against that ruling left the question open (i.e., not finally decided by the Apex Court), but did not negate the High Court's reasoning; thus the High Court's position remains binding in the present proceedings. Ratio vs. Obiter: Ratio - section 119 empowers the Board to relax section 139(1), and where the Board extends the specified date under section 44AB it must concomitantly relax section 139(1) so that the one-month gap mandated by Explanation (ii) survives; failure to do so places the Board's action outside the statutory scheme. Obiter - administrative statements about portal monitoring and discretionary timing for extensions are not determinative of the legal requirement. Conclusion: The Board has the requisite power under section 119 to extend the due date under section 139(1); where it extends the specified date for audit reports it is required, as a legal consequence and to give effect to Explanation (ii) to section 44AB, to issue a simultaneous (or consequential) notification extending the due date for filing returns. Issue 3 - Appropriate remedy and direction Interpretation and reasoning: Given the statutory linkage and prior judicial rulings, and to avoid rendering statutory amendments nugatory, a direction requiring the Board to exercise its section 119 power and extend the due date is an appropriate and proportionate remedy. Administrative convenience (monitoring e-filing) cannot justify divergence from the legislated one-month interval where the Board has already altered the specified date by circular. Precedent treatment: Consistent with this Court's earlier decision, and applying statutory interpretation principles that no provision should be rendered redundant, the Court concluded that a consequential extension of the due date is required. Ratio vs. Obiter: Ratio - where the Board extends the specified date, the Board must issue a consequential extension of the due date so that Explanation (ii) to section 44AB operates as amended; judicial direction to issue such consequential circular is permissible to vindicate statutory intent where the executive has already acted in a manner that requires supplementation. Obiter - criticisms of the Board's timing practices are incidental. Conclusion and operative outcome: The Court directed the Board to issue a Circular under section 119 extending the due date for filing returns for assessees required to furnish audit reports (clause (a) of Explanation 2 to section 139(1)) to 30th November, 2025, as a necessary consequence of extending the specified date to 31st October, 2025; petitions disposed accordingly and notice discharged.