When tax professionals and businesses were expecting government to be lenient regarding income tax return and tax audit due date extension, several representations were made to government, amid all this CBDT through a detailed order u/s 119 of the Income Tax Act, 1961 dated 11.01.2021 clarified that there would be no further extension of tax audit due dates. All the representations for further extension of due dates were rejected by Government vide this order.
After all what are the reasons mentioned in the order as to why CBDT rejected ITR and tax audit due date extension. Lets hear what the Government said:
1. ITR and tax audit Due date extension already given three times
CBDT in its order explained that in view of the Covid-19 pandemic they have already extended the due dates on three occasions. As per CBDT the authority has been proactive to the situation and considered the representations made to the government, thereby providing relief to the taxpayers through the time extensions of due dates.
Due to the Covid-19 pandemic, the income tax return filing dates were extended first to 30th November 2020.
The ITR due dates were again extended to 31st January 21 in case tax audit is required and 31st December 2020 for other cases.
Latest vide notification S.O. 4805 (E) dated 31.12.20, the income tax return filing date was extended to 15th February 2021 in respect of those taxpayers who have to get their accounts audited under section 44AB of the IT Act and 10th January for other than tax audit cases.
The tax audit date vide the same notification was extended to 15th January 2021.
2. In comparison to other countries, India has provided more extensions
Comparing the similar extensions of tax return dates in other countries, CBDT concluded that the Government of India in comparison to other countries has been very empathetic to the needs of the taxpayers.
As per the order, the countries which comparatively have been worse hit by the Covid-19 pandemic like UK, USA, etc have provided lesser extensions or no extensions at all in the tax return filing due dates.
3. Number of returns filed in this Financial year already more than last year
The CBDT order also provided t the data of returns filed for AY 2020-21 up to 10th January 21 and number of returns filed for AY 2019-20 upto its last date i.e. 31st August 2019.
| AY 20-21 ITRs filed upto last date (10.01.2021): 5,95,15,322 |
| AY 19-20 ITRs filed upto last date (31.08.2019): 5,61,79,905 |
The order concludes that as per above data it is clear that the number of returns filed this year for AY 20-21 for which extension is being requested, has already exceeded the number of returns filed last year up to its last due date of 31.08.2019.
Therefore, the government is of the opinion that there is no requirement of any further extension since the number of returns filed this year has already been more than last year filed ITRs
4. Any further extension would affect the return filing discipline
Citing the data and statistics, CBDT drove the point home that tax audit reports and ITRs are filed during the last few days of the due date. It stated that even last year, 24% of the tax audits for AY 19-20 were filed in last three days. Therefore CBDT concluded that lesser returns filed much before the due date is a norm and doesn’t indicate any anomalous situation.
For this reason, CBDT tried to negate the impact of the Covid-19 pandemic on pending returns when it said that outstanding returns before the last days are normal.
The government stated that any further extension if granted would affect the return filing discipline.
5. Injustice to those who have taken pain in timely filing the returns
Govt. says that any further extensions would be an injustice to those taxpayers who have made efforts and taken pain to get their returns filed within time.
So this was another reason given by the government in its order while rejecting the representation.
6. Extensions would postpone the Collections of revenue
Collections of revenue would take a hit in case the Government decides to go ahead with further extensions of due date. Out of series of reasons given by the government for not extending the due dates, one of them was that postponing the due dates for income tax return filing and tax audit would also postpone the revenue collections.
7. Relief measures by Govt. during Covid-19 would be affected
Since the collections would be deferred on extension of due dates if would also affect the relief measures being undertaken for the poor of the country during the pandemic. The government here related the relief measures with the revenue. Therefore, from their end due date extensions might not be possible.
8. Cut off dates fixed by the authority cannot be termed as Arbitrary
CBDT in the later part of its order pitched some of the Supreme court Judgements where in the apex court held that fixing cut off dates is within the power of the executing authority and the court should not interfere to change it unless the dates appear prima facie discriminatory or arbitrary.
TaxPyramid Comments
We are still very much in a pandemic crisis. Struggling to find a way out of it but still in a pandemic.
Though the economy is open we all know it had to when its own survival was at stake. After several weeks of lockdown, there was no option left neither with the government nor with the businesses themselves.
There is no respite at all from the ever-growing Covid-19 cases around.
This is altogether an unprecedented situation that cannot be compared to the previous year or the returns filed therein as has been done by the CBDT order.
Amid this crisis, the Government is expected to be a little bit lenient with its ‘return filing y
Offices still not open, business not operating at original scale, staff doing work from home, public transport having serious risks, the situation is obviously not conducive for time-bound compliances. Tax professionals facing all these problems find it hard to maintain pace with fully squeezed out compliance schedules.
We still expect the Government would be empathetic to the demands of the situation and take necessary steps.
CA Kalpak Kaplash
