2014 (9) TMI 795 - HC - Income Tax

Validity of Notification dated 25 July 2014 Introduction of new format for Tax audit reports Extension of time to file return u/s 44AB - Held that - The Madras High Court has already directed the CBDT to examine the representation of the assessees in general, before 30 September 2014 it is appropriate that the representation of the Petitioners is also considered by CBDT- there will be substantial hardship caused to the assessees, if the date of filing Return is not suitably extended - CBDT will look into all the practical difficulties and take a just and proper decision on the matter, before 30 September 2014, as already directed by the Madras High Court Decided in favour of petitioner.

Summary

Issues:
Challenge to Notification introducing new format for Tax Audit Reports under Income-tax Act 1961
Request to extend time for filing Income Tax Returns from 30 September 2014 to 30 November 2014

Analysis:

Issue 1: Challenge to Notification introducing new format for Tax Audit Reports
The petition challenged a Notification dated 25 July 2014 by the Government of India, exercising powers under Section 295 and Section 44 AB of the Income-tax Act 1961, which introduced a new format for Tax Audit Reports. The petitioner contended that the new format required examination and reporting on 27 additional aspects of the assessee's accounts, which would necessitate more time for completion. Filing the Income Tax Return before completing the audit could lead to inaccuracies in income declaration. The petition argued that the new format imposed an additional compliance burden without allowing adequate time, potentially resulting in penal provisions for non-compliance.

Issue 2: Request to extend time for filing Income Tax Returns
The petition sought a direction for the Central Board of Direct Taxes (CBDT) to extend the deadline for filing Income Tax Returns from 30 September 2014 to 30 November 2014. This request was based on the extension already granted for furnishing the Audit Report under Section 44 AB of the Act. The petition highlighted practical difficulties faced by taxpayers if the filing deadline was not aligned with the extended audit report deadline. Failure to extend the filing deadline could lead to errors in income declaration, necessitating revised returns and depriving assessees of various benefits and deductions under the Act.

Court's Decision
The High Court acknowledged the orders passed by other High Courts, including the Madras High Court, directing the CBDT to consider representations from assessees before the deadline. The Court emphasized the potential hardship faced by assessees if the filing deadline was not extended. While refraining from expressing a legal opinion, the Court urged the CBDT to address the practical difficulties raised by the petitioners and make a just decision before the deadline. The Court disposed of the petition without costs, leaving room for the petitioners to claim further relief based on orders from other High Courts.