ALL GUJARAT FEDERATION OF TAX CONSULTANTS vs. CENTRAL BOARD OF DIRECT TAXES

Facts

The petitioners, the All Gujarat Federation of Tax Consultants, challenged the Central Board of Direct Taxes' (CBDT) decision not to extend the due date for filing Income Tax Returns (ITR) beyond September 30, 2014, while extending the due date for furnishing Tax Audit Reports (TAR) under Section 44AB of the Income Tax Act, 1961, to November 30, 2014. The petitioners argued that the frequent changes in e-filing utilities and forms for TAR, introduced in July 2013 and modified multiple times, made it difficult for tax professionals to comply. The CBDT's extension of the TAR filing date without a corresponding extension for ITR filing caused significant hardship. The petitions sought a writ of mandamus directing the CBDT to make alterations in forms and utilities applicable from the assessment year subsequent to the one in which such alterations are introduced.

Held

The High Court held that the CBDT's notification dated August 20, 2014, extending the due date for furnishing the report of audit under Section 44AB of the Act to November 30, 2014, without extending the due date for filing the Income Tax Return (ITR) under Section 139 of the Act, was unsustainable. The Court reasoned that Section 44AB mandates that the 'specified date' for obtaining and furnishing the audit report is the due date for furnishing the return of income under Section 139(1). While the CBDT has the power under Section 119(2)(a) to relax the provisions of Section 139, it does not have the statutory power to relax the provisions of Section 44AB. The notification, by extending the 'due date' for furnishing the audit report, implicitly attempted to relax Section 44AB without a corresponding extension of the ITR due date, which is the 'specified date' for the purpose of Section 44AB. The Court found that the CBDT could have extended the due date for filing ITR under Section 139 in exercise of its powers under Section 119, which would have automatically extended the 'specified date' for filing TAR. The Court noted that the CBDT's reluctance to extend the ITR due date was likely due to concerns about deferring self-assessment tax, but suggested this could be managed by extending the ITR due date for all purposes except for Section 234A. The petition was allowed, directing the CBDT to relax the provisions of Section 139(1) by extending the due date for filing ITR till November 30, 2014.

Key Issues

1. Whether the CBDT, in exercise of its powers under Section 119 of the Income Tax Act, 1961, could extend the due date for furnishing the Tax Audit Report (TAR) under Section 44AB of the Act without extending the due date for filing the Income Tax Return (ITR) under Section 139 of the Act. Assessee's Contentions: - The frequent and random alterations in e-filing utilities and forms for TAR, particularly the overhaul of Forms 3CA, 3CB, and 3CD in July 2014 and the delayed availability of updated software until August 21, 2014, created a 'blackout' period, making it impossible to file TAR electronically. - The extension of the TAR filing date to November 30, 2014, without a corresponding extension for ITR filing, rendered the extension ineffective and caused enormous hardship. - The CBDT has the power under Section 119(2)(a) to relax the provisions of Section 139 of the Act, which would automatically extend the specified date for filing TAR under Section 44AB. - The CBDT should have extended the due date for filing ITR to November 30, 2014, to maintain parity and protect the interests of taxpayers and revenue. Revenue's Contentions: - The judgment records no specific contentions for the respondent (CBDT). However, the court's reasoning implies that the revenue likely argued that the CBDT had exercised its powers appropriately and that there was no obligation to extend the ITR due date.