Gujarat HC refuses to extend income tax return filing deadline

Gujarat High Court has dismissed a writ petition by tax consultants seeking extension in deadline for filing income tax returns and tax audit reports. In its order on Thursday, the court noted that the Central Board of Direct Taxes has looked at the matter closely and the court cannot order it to extend the time limit considering the effect it will have on revenue collection. It further observed that CBDT can offer some leeway regarding consequences of delay in filing tax audit reports.

The Gujarat High Court was hearing writ petitions filed by a body of tax consultants seeking the court's direction to tax department to extend the timeline for filing tax returns. The petitioners had argued that the coronavirus pandemic had delayed tax returns filing due to disruption in availability of the staff, employees, working hours, client meetings and audit work.

The petitioners had stated that taxpayers and tax professionals are facing hardships due to such disruptions in finishing audit assignments and collecting the requisite details to file the income tax returns and tax audit reports. The petitioners also pointed out that "not less than 18 organisations (including the Institute of Chartered Accountants of India) have made representations for this purpose".

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Following the representation by tax consultants, the court had asked Central Board of Direct Taxes (CBDT) to look into the matter. In its response, the direct tax authority had noted that the due dates for filing of return and tax audit have already been extended on 3 occasions.

"Internationally, the extension provided by India is more generous as compared to other countries. The return filing statistics of the current year indicates that returns filed in this financial year already far exceeds the returns filed which were due on the last date of filing of returns," CBDT had said in its response dated January 11, 2021.

"Any further extension would adversely affect the return filing discipline and shall also cause injustice to those who have taken pains 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," the tax authority had added.

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Following the response, the high court stated, "In the overall view of the matter, we have reached to the conclusion that we should not interfere in the matter."

The court judged that it cannot issue a writ of mandamus to CBDT to extend the time limit for filing returns "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".

"In the result, 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," the court further said.

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