TMI Blog2014 (9) TMI 784X X X X Extracts X X X X X X X X Extracts X X X X ..... he availability of TAR, the possibility would be manifold where this non-extension may give rise to multiplicity of proceedings - On making available the TAR subsequent to the filing of ITR, more and more revised returns, if are filed even though it is provided statutorily, this rise in the proceedings on account of non-extension of the due date cannot be left sight of. The impact of any extension of the due date, if at this stage, requires serious consideration as well - the entire situation is arising not on account of any contribution on the part of either the professionals or the assesses leading to such a situation - with the advancement of the technology, it is always commendable that the department takes recourse to the technology more and more - With the possible defects having been found in utility software in use in the previous year, the required changes in the clarification or the new format of such utility, if brought to the fore, the same would be desirable - At the same time, the complete black out for nearly a month's time would not allow accessibility to such utility software to the assessees, which has put them to a great jeopardy. In absence of any remedy a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions of section 44AB of the Act, it would be in the fitness of things if with a view to bring the notification dated 20th August, 2014 within the ambit of its jurisdiction, the Board relaxes the provisions of section 139(1) of the Act by extending the due date for filing the return of income till 30th November, 2014 as a direct consequence whereof, the "specified date" for obtaining and furnishing the report of audit under section 44AB of the Act would get automatically extended – decided in favour of assessee. The respondent Board is directed to modify the notification dated 20th August, 2014 issued in exercise of powers under section 119 of the Act by extending the due date for furnishing the return of income to 30th November, 2014. It would, however, be open for the Board to qualify such relaxation by extending the due date for all purposes, except for the purpose of Explanation 1 to section 234A of the Act. – decided in favour of assessee. - Special Civil Application No. 12656 of 2014, Special Civil Application No. 12571 of 2014 - - - Dated:- 22-9-2014 - Harsha Devani And Sonia Gokani,JJ. For the Petitioner : Mr. S. N. Soparkar, Sr. Adv. Mr. Manish K. Kaji, Adv. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 44AB of the Act provides that the specified date for getting the books of accounts audited and for obtaining and furnishing the audit report in the prescribed form in relation to the accounts of the assessees of the previous year relevant to the assessment year is the due date for furnishing the return of income under sub-section (1) of Section 139 of the Act. 8. In the year 2013, filing of such Tax Audit Report was made electronically with the technological advancement. 9. The respondent is averred to have made random and frequent alterations and modifications during the year for 12 times nearly in the utilities which are essential for e-filing of the tax audit reports. Such report is mandatorily required to be filed by the assessees in accordance with section 44AB read with section 6G of the Rules. This rule provides for filling up of Forms No.3CA, 3CB and 3CD in case of different assessees. 9(i) It emerges from the pleading that vide Notification No.33 of 2014 dated 25th July, 2014 the respondent overhauled the Forms No.3CA, 3CB and 3CD and such forms subsequently have been made far more comprehensive, making it more onerous for the Tax Consultants / Chartered Accountan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rrespondingly non-extension of the due date for filing ITR has led to the situation where such extension has virtually resulted into not allowing the actual benefits to flow. Thus, the present action of the respondent of extending time of filing of TAR without extending the period of ITR is averred to be causing enormous hardship, giving rise to the cause of filing these petitions. 11 (i) Accordingly, in both the petitions, the prayers sought for are as follows:- a. that this Hon'ble Court may be pleased to issue a writ of mandamus, or any other appropriate writ, order or direction, directing that the respondents henceforth, make any alterations in Forms and Utilities or changes in tax compliance requirements, applicable from the A.Y. Subsequent to the A.Y. In which such alterations are introduced; b. that this Hon'ble Court may be pleased to issue a writ of certiorari,or any other appropriate writ, order or direction holding the impugned Notification as being illegal, inasmuch as it promotes the filing of ITR without the mandatorily required TAR; c. that the Hon'ble Court may be pleased to issue a writ of mandamus, or any other appropriate writ, order or d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arned advocate Mr. Manish Kaji for and on behalf of the petitioner All Gujarat Federation of Tax Consultants has emphasized the consequences that would follow on account of delay in filing the return of income on account of non-extension of the period. It is urged strenuously by the learned counsel that the need for extension had happened because of the issue which had cropped up on account of the change in utility software midway the process. He urged that it was expected of the CBDT to act more pragmatically, and therefore, any request on the part of the professionals to extend the period of filing of TAR would also amount to seeking extension for the purpose of filing of the return (ITR). The action on the part of the authority of non-extension of due date for filing return of income is absolutely illogical and unpalatable, learned counsel added. According to him, some of the serious fall out of such action are that (I) no revised return under sections 139(4) and (5) would be permissible, if there is a delay in filing the return of income, (ii) carried forward losses would also not be permissible, (iii) deduction under Chapter VIA of the Act would also not be available (iv) the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, such e-filing portal of the department provides facility for filing of income-tax return without the TAR. Therefore, there is no requirement of filing of the TAR along with the return as claimed by the petitioner. It is the say of the respondent that there was delay in rolling out the utility for filing the TAR in the revised format for assessment year 2014-15. Due date in respect of those assessees, who were not required to furnish the report under section 92E of the Act, has already been extended from 30th September, 2014 to 30th November,2014 vide Order No.133/24/2014-TPL dated 20th August, 2014 with a clarification that those who had already filed Tax Audit Reports from 1st April, 2014 to 24th July, 2014 in the pre-revised formats, shall be treated as valid tax audit report. It is further contended that whatever information tax payer furnishes in the ITR of the assessment year, the chartered accountant is required to verify the same for the purpose of tax audit of that assessment year is not correct as the format of ITR does not require certification and lodging of information furnished in the return of income. It is further contended that due date for furnishing the ITR wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... suffer. The Court may not interfere in the present petition. It is further urged that in the event of tax audit reports being availed subsequent to the filing of the income tax return and there are no objections to revise the return, the law provides for sufficient mechanism for such filing of the revised return, if otherwise the ITR is furnished within the stipulated time period. He also further urged that available with the assessee is the mechanism of rectification as well, and therefore, the aspect of non-extension of period of due date for the purpose of the ITR along with TAR may not be unnecessarily blown out of proportion. He urged the Court, therefore, not to direct, in any manner, the exercise of powers to the CBDT in the given circumstances. 15. Responding to the issue of tax collection in the rejoinder, learned senior advocate Mr. Soparkar has pointed out that in the budget of 2014-15, the gross tax receipt estimated is of ₹ 13,64,524/-. Out of the said yearly receipt estimated by the Revenue possible loss of interest is ₹ 110 crores per month and, if the extension is provided for the period of two months, it may come to ₹ 220 crores maximum, which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n under section 44AD and he has claimed such income to be lower than the profits and gains so deemed to be the profits and gains of his business and his income exceeds the maximum amount which is not chargeable to income-tax in any previous year,get his accounts of such previous year audited by an accountant before the specified date and furnish by that date the report of such audit in the prescribed form duly signed and verified by such accountant and setting forth such particulars as may be prescribed: Provided that this section shall not apply to the person, who derives income of the nature referred to in section 44B or section 44BBA, on and from the 1st day of April, 1985 or, as the case may be, the date on which the relevant section came into force, whichever is later: Provided further that in a case where such person is required by or under any other law to get his accounts audited, it shall be sufficient compliance with the provisions of this section if such person gets the accounts of such business or profession audited under such law before the specified date and furnishes by that date the report of the audit as required under such other law and a further report by a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s may be prescribed. 19.1 Explanation (2) provides for the due date, which means 30th day of September of the assessment year. 20. In this connection provisions of sub-section(6) and subsection 6(A) of section 139 as also sub-section (9) of section 139 would require reproduction and reference: Report of audit of accounts to be furnished under section 44AB (6) The prescribed form of the returns referred to in sub-sections (1) and (3) of this section, and in clause (i) of sub-section (1) of section 142 shall, in such cases as may be prescribed, require the assessee to furnish the particulars of income exempt from tax, assets of the prescribed nature, value and belonging to him, his bank account and credit card held by him, expenditure exceeding the prescribed limits incurred by him under prescribed heads and such other outgoings as may be prescribed. (6A) Without prejudice to the provisions of subsection(6), the prescribed form of the returns referred to in this section, and in clause (i) of sub-section (1) of section 142 shall, in the case of an assessee engaged in any business or profession, also require him to furnish the report of any audit referred to in section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the principal place where the assessee carries on the business or profession etc. Any defective return requires intimation from Assessing Officer and if such rectification is not done it would be treated invalid return. 21.1 At this juncture it is to be noted that with the insertion of sections 139C and 139D by the Finance Act, 2007 with effect from 1st June, 2006, the CBDT has been conferred the powers to dispense with furnishing documents etc. with return. It has also provided for filing of return in electronic form by way of section 139D. 22. Section 139C provides for making rules for a class or classes of persons, who may not be required to furnish documents, statements, receipts, certificates, reports of audit or any other documents, which are otherwise under any other provisions of this Act, except section 139D, are required to be furnished along with the return and instead, they are to be produced before the Assessing Officer on demand. 23. Reference would also be necessary, at this stage to Rule 12 of the Income Tax Rules:- Return of income and return of fringe benefits 12.(2)The return of income required to be furnished in Form SAHAJ(ITR-1) or Form No.ITR-2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nished in Form 3CD. 27. Yet another submission pressed into service was that when the income tax return is filed prior to the filing of the TAR, there are certain mandatory fields to be filled-in by the assessee, which require giving all the details of the number of Chartered Accountants, name and membership details, signing the tax audit report etc. This also had been emphasized all along. In the event of the date of TAR extended with the ITR, we are given to understand by the Revenue that the assessee would not be required to fulfill this requirement. In other words, those fields made mandatory in the utility otherwise of course, would be optional this year and hence, that may take care of this apprehension. Although reiteratively, petitioners' counsel made a valid point that whenever under the Income Tax Act the statute has made it mandatory for this report to go hand in hand with the ITR, no relaxation except as provided under section 119 of the Act is permissible by the act of the Board. 27.1 The aspect of section 271B at this stage requires a brief mention. This provision provides that if there is any failure to get the accounts audited in respect of the previous ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd unless those informations available as a result of tax audit report are utilized by the assessee for the purpose of filing the correct income-tax returns, possibility of mistakes for sure cannot be ruled out. If broadly, the entire requirement of introduction of the Tax Audit Report is viewed from the entire statutory scheme, this being a very complex and highly technical subject, aid of tax professional was deemed desirable for making the administration of the tax law more effective. 31. While dealing with the complexities of the issues, which the assessee is required to deal with, particularly, with regard to the computation of the income, it is required to be noted that the requirement of the tax audit report is made applicable in case of certain class of assesses where the total turnover or the gross receipt exceeds ₹ 1 crore in the previous year or in case of a person carrying on profession exceeds ₹ 25 lakhs in the previous year. Several changes in the tax audit report have been introduced by the Income Tax Rules (the 7th Amendment) 2014, which are applicable for the A.Y. 2014-15 onwards. Forms 3CA, 3CB and 3CD in the amended form require specific observatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etails, which may be provided by the assesses. We are convinced with the submissions made from the petitioners' side that the Revenue would still want those efforts made by the Tax Audit Consultants to be utilized for the purpose of better administration of the tax laws but while not extending the corresponding date, the assesses would be deprived of the fruits of such efforts of the professionals at least at the stage of filing of the tax returns. 34. We are also not impressed by the stand taken by the Revenue urging inter alia that the format of the tax audit report nowhere requires certification of the Tax Consultants or Tax Auditors in relation to the informations to be furnished for which Tax Audit is conducted. And that it is predominantly and essentially the duty of the assessees to furnish all proper and correct computation of taxable income. Both the filing of the return of income and the computation of correct taxable income being the responsibility of the tax payer, he needs to verify the correctness as per section 140 of the Act and whether such figures represented in the return of income are in any manner, incorrect or not. 35. But, that in no manner would ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Law Ministry for the purpose of vetting. However, without going into these details, when it could be noted that this change of utility and non-availability of the new version till 20th August, 2014 is the cause for the issue to have cropped up, the assesses cannot be put to the hardship nor can the professionals be made to rush only because the department chose to change the utility during the mid-year. 39. We also note, at this stage, that the three classes of the assessees, who are required to be taken care of: (1) those assessees who have filed their ITR and TAR prior to July, 2014 as the order under section 119 of Act dated 20th August, 2014 clarified that those who have filed the TAR from 1st April, 2014 to 21st July, 2014 in a pre-revised form, shall be treated as valid TAR under section 44AB of the Act. However, for those assessees whose ITR and TAR were underway and those who have not yet prepared them, it is undisputed that the availability of the time period is reduced remarkably from 180 days to 37 days. 40. Therefore, the scenario which had emerged is that ITR when to be filed without the completion of TAR, we can still hold that it would be a must to fill the ITR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the aggregate of the tax and interest as aforesaid, the amount so paid shall first be adjusted towards the interest payable as aforesaid and the balance, if any, shall be adjusted towards interest payable. 44. Sub-section (1A) of section 140A for the purposes of subsection (1) provides that for the interest payable under section 234A, it is also provided as to in what manner the total income is to be computed. 45. Sub-section (1B) provides that for the purposes of subsection(1), interest payable under section 234B shall be computed on an amount equal to the assessed tax or, as the case may be, on the amount by which the advance tax paid falls short of the assessed tax. 46. Reference would be needed of section 234A which provides for interest for defaults in furnishing return of income. It provides that where the return of income for any assessment year under sub-section (1) or sub-section (4) of section 139, or in response to a notice under sub-section (1) of section 142, is furnished after the due date, or is not furnished, the assessee shall be liable to pay simple interest at the rate of one per cent for every month or part of a month comprised in the period commenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to such utility software to the assessees, which has put them to a great jeopardy. 51. It would not be out of context to mention that this Court while considering the case of non-liability of the deduction made under the TDS had found various defects in the system of computerization introduced by the Income Tax department. 51.1 It would be apt to reproduce the relevant paragraphs of the judgment of this Court rendered in the case of Vaghjibhai S. Bishnoi v. Income Tax Officer and another reported in [2013] 36 taxmann.com 371 (Gujarat), at this stage. 14....On the contrary, we are of the firm opinion that computerization in every Department is objected with a view to facilitate easy access to the assessee and make the system more viable and transparent. In the event of any shortcoming of software programme or any genuine mistake, the Department is expected to respond to such inadvertence spontaneously by rectifying the mistake and give corresponding relief to the assessee. Instead of that, even when it is being brought to the notice of the Department by the assessee, by a rectification application and subsequent communication, not only it has chosen not to rectify the mist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. After stabilizing of the computer systems in the 3 RCCs, computerization of 33 other centres covering the rest of the country was taken up in the second phase. The Director General of Income Tax [Systems], {DIT [S]}, New Delhi was made the main nodal authority for overall planning and implementation of the computerization programme; including procurement of hardware and software and development/installation of application software. In addition, at each RCC, the Chief Commissioner of Income Tax [CCIT] was required to monitor and coordinate with the DIT [S]. He would be assisted by CIT [Computer Operations] who would monitor the functioning of the RCC. The main objectives of the computerization programme, as approved by the Committee on Non- Plan Expenditure [CNE], were (a) to improve the efficiency and effectiveness of tax administration; (b) to ensure timely availability and utilization of information; (c) to reduce compliance burden on honest tax payers; (d) to enhance equitable treatment of tax payers of income-tax and procedures; (e) to ensure better enforcement of tax laws; (f) to provide management with reliable and accurate information in time so as to assist them in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act, the CBDT also has specific powers to pass general or special orders in respect of any class or class of cases by way of relaxation of any of the provisions of section, which also includes section 139 of the Act. If the Board is of the opinion that it is necessary in the public interest to so do it. For avoiding the genuine hardship in any case or class of cases, the CBDT if considers desirable and expedient, by general or special order, it can issue such orders, instructions and directions for proper administration of this Act. All such authorities engaged in execution of the Act are expected to follow the same. Any requirement contained in any of the provisions of Chapter IV or Chapter VIA also can be relaxed by the CBDT for avoiding genuine hardship in any case or class of cases by general or special orders. This provision, therefore, gives very wide powers to the CBDT to pass general or special orders whenever it deems it necessary or expedient to so do it in respect of any class of income or class of cases. It has not only to see the public interest for so doing, but also for avoiding the genuine hardship in any particular case or class of cases, such powers can be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovisions, by issuing circulars in exercise of its statutory powers under Section 119 of the Income-tax Act which are binding on the authorities in the administration of the Act. Under Section 119(2)(a) however, the circulars as contemplated therein cannot be adverse to the assessee. Thus, the authority which wields the power for its own advantage under the Act is given the right to forego the advantage when required to wield it in a manner it considers just by relaxing the rigour of the law or in other permissible manners as laid down in Section 119. The power is given for the purpose of just, proper and efficient management of the work of assessment and in public interest. It is a beneficial power given to the Board for proper administration of fiscal law so that undue hardship may not be caused to the assessee and the fiscal laws may be correctly applied. Hard cases which can be properly categorised as belonging to a class, can thus be given the benefit of relaxation of law by issuing circulars binding on the taxing authorities. 55.1 Thus as held by the Apex Court the powers given to the Board are beneficial in nature to be exercised for proper administration of fiscal law so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er remedy available. It is essentially designed to promote justice. 59. The Apex Court in the case of Secretary, Cannanore District Muslim Educational Association, Karimbam v. State of Kerala and others, reported in (2010) 6 SCC 373, while emphasizing the importance of writ of mandamus and its applicability held and observed thus : 29. While dismissing the writ petition the Hon'ble High Court with respect, had taken a rather restricted view of the writ of Mandamus. The writ of Mandamus was originally a common law remedy, based on Royal Authority. In England, the writ is widely used in public law to prevent failure of justice in a wide variety of cases. In England this writ was and still remains a prerogative writ. In America it is a writ of right. (Law of Mandamus by S.S. Merrill, Chicago, T.H. Flood and Company, 1892, para 62, page 71). 30. About this writ, SA de Smith in 'Judicial Review of Administrative Action', 2nd edn., pp 378 and 379 said that this writ was devised to prevent disorder from a failure of justice and defect of police and was used to compel the performance of a specific duty. About this writ in 1762 Lord Mansfield observed that 'within ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting on the High Court's jurisdiction under Article 226 opined that this Article is deliberately couched in comprehensive language so that it confers wide power on High Court to 'reach injustice whenever it is found'. Delivering the judgment Justice Subba Rao (as His Lordship then was) held that the Constitution designedly used such wide language in describing the nature of the power. The learned Judge further held that the High Court can issue writs in the nature of prerogative writs as understood in England; but the learned Judge added that the scope of these writs in India has been widened by the use of the expression nature . 36. The learned Judge made it very clear that the said expression does not equate the writs that can be issued in India with those in England but only draws an analogy from them. The learned Judge then clarifies the entire position as follows : 4. ...It enables the High Courts to mould the reliefs to meet the peculiar and complicated requirements of this country. Any attempt to equate the scope of the power of the High Court under Article 226 of the Constitution with that of the English Courts to issue prerogative writs is to introduce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng that right, and it may issue in cases where, although there is an alternative legal remedy yet that mode of redress is less convenient beneficial and effectual. (See para 19, page 546 of the report) In paragraph 20, in the same page of the report, this Court further held : 20. ...and in a proper case, in order to prevent injustice resulting to the concerned parties, the Court may itself pass an order or give directions which the Government or the public authority should have passed or given had it properly and lawfully exercised its discretion. 40. In a subsequent judgment also in Shri Anadi Mukta Sadguru Shree Muktajee Vandasjiswami Suvarna Jayanti Mahotsav Smarak Trust and Ors. v. V.R. Rudani and Ors. - AIR 1989 SC 1607, this Court examined the development of the law of Mandamus and held as under : 22. ...mandamus cannot be denied on the ground that the duty to be enforced is not imposed by the statute. Commenting on the development of this law, Professor De Smith states: To be enforceable by mandamus a public duty does not necessarily have to be one imposed by statute. It may be sufficient for the duty to have been imposed by charter common law, custom or eve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period of filing of the tax return and granting benefit of such extension for all other provisions, interest charged under section 234A for late filing of return would be still permitted to be levied, if the Board so choses for the period commencing from 1.10.2014 to the actual date of filing of the return of income. Those tax payers covered under these provisions if choose to pay the amount of tax on or before the 30th September, 2014, no interest in any case would be levied despite their filing of return after the 30th September, 2014. 63. This may provide requisite safeguard against the possible loss to the Revenue as at the base of its apprehension and denial for invoking the powers was such loss, due to deferred collections. 64. We are not inclined to stay new utility for one year as sufficient measures are already taken by the Board to redress this grievance. However, it needs to be observed at this juncture that any introduction or new utility/software with additional requirement in the middle of the year ordinarily is not desirable. Any change unless inevitable can be planned well in advance, keeping in focus that such comprehensive process re-engineering may not resu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Since the notification only extends the due date for filing of tax audit report without extending the period for filing the return of income for assessment year 2014-15, the Chartered Accountants Association, Ahmedabad made a representation to the respondent on 21st August, 2014. However, since there was no response thereto and the due date for furnishing the return of income under section 139(1) of the Act is about to be over, the petitioners have moved the present petitions. 69. The case of the petitioners is that the whole purpose for tax audit report is for assessing the correct income of the assessee. Therefore, unless the tax audit report is available, the assessee would not be in a position to file the return of income in a proper manner. It is further the case of the petitioners that in case in view of the extension of time in filing the report under section 44AB of the Act, the return of income is filed after some delay, the assessee looses the right (i) to file the revised return of income under section 139(4) of the Act; (ii) to carry forward the losses under section 80 of the Act; (iii) to claim deductions under sections 10A, 10AA and 10B of the Act; (iv) in view of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceed twenty-five lakh rupees in any previous year , or (c) carrying on the business shall, if the profits and gains from the business are deemed to be the profits and gains of such person under section 44-AE, as the case may be, and he has claimed his income to be lower than the profits or gains so deemed to be the profits and gains of his business, as the case may be, in any previous year; or get his accounts of such previous year audited by an accountant before the specified date and furnish by that date of report of such audit in the prescribed form duly signed and verified by such accountant and setting forth such particulars may be prescribed: (d) carrying on the business shall, if the profits and gains from the business are deemed to be the profits and gains of such person under Section 44-AD and he has claimed such income to be lower than the profits and gains so deemed to be the profits and gains of his business and his income exceeds the maximum amount which is not chargeable to income tax in any previous year, Provided that this section shall not apply to the person, who derives income of the nature referred to in section 44-B or section 44-BBA, on and from the 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... borated in the Departmental Circular No.528 dated 16th December, 1988, wherein it has been, inter alia, stated thus: Sub-section (6A) of section 139 of the Income-tax Act provides that an assessee engaged in any business or profession should furnish along with a return of income certain particulars. This section has been amended so as to provide that an assessee engaged in any business or profession who is required to get his accounts audited under section 44AB of the Incometax Act should file an audit report along with the return of income. Further, section 139(9) of the Income-tax Act has also been amended to provide that a return of income shall be regarded as defective if the audit report obtained under section 44AB of the Income-tax Act is not furnished with the return of income. 23.2 Under the existing provisions of section 271B of the Income-tax Act, penalty is leviable in a case where any person fails to get his accounts audited in respect of his income in any year or to obtain a report as required under section 44AB of the Act. By the Finance Act, 1988, such penalty will now be leviable also in cases of failure on the part of an assessee to furnish his report of suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of income, as a consequence whereof it would not be possible for the assessee to furnish the return of income reflecting the true income on or before the due date. When the object of section 44AB of the Act is to ensure that the true income is reflected in the return of income through the books of account duly audited, one fails to understand the stand of the respondent Board that filing of return of income and computation of correct taxable income is the primary responsibility of the assessee and that the tax auditor is in no way connected with the filing of the return. The above stand of the Board is reflected in paragraph 19 of the comments submitted before this court, which reads thus: Comments on para 19 : Filing of return of income and computation of correct taxable income is the primary responsibility of the assessee and as per section 140 of the Income-tax Act, 1961, it is the taxpayer who has to verify the correctness of the facts and figures reported in the return of income. The tax auditor is in no way connected to the filing of the return of income, he is only supposed to verify and report in the Tax Audit Report the amount of allowance/deduction for which the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Board may, if it considers it necessary or expedient so to do, for the purpose of proper and efficient management of the work of assessment and collection of revenue, issue, from time to time (whether by way of relaxation of any of the provisions of Sections 115-P, 115-S, 115-WD, 115-WE, 115-WF, 115-WG, 115-WH, 115-WJ, 115-WK, 139, 143, 144, 147, 148, 154, 155, 158-BFA, sub-section (1-A) of Section 201, Sections 210, 211, 234-A, 234- B, 234-C, 271 and 273 or otherwise), general or special orders in respect of any class of incomes or fringe benefits or class of cases, setting forth directions or instructions (not being prejudicial to assessees) as to the guidelines, principles or procedures to be followed by other Income Tax authorities in the work relating to assessment or collection of revenue or the initiation of proceedings for the imposition of penalties and any such order may, if the Board is of opinion that it is necessary in the public interest so to do, be published and circulated in the prescribed manner for general information; (b) the Board may, if it considers it desirable or expedient so to do for avoiding genuine hardship in any case or class of cases, by general ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ertinent to note that section 44AB of the Act provides for getting the accounts of an assessee of the previous year audited by an accountant before the specified date and to furnish report of such audit by that date in the prescribed form, setting forth such particulars as may be prescribed. As to what is the specified date is provided under clause (ii) of the Explanation to section 44AB which postulates that specified date in relation to the accounts of an assessee of the previous year relevant to an assessment year, means the due date for furnishing the return of income under sub-section (1) of section 139. It would, therefore, be necessary to examine as to what is the due date for furnishing return of income under sub-section (1) of section 139 of the Act. For this purpose, reference may be made to Explanation 2 to section 139 of the Act, which reads thus: Explanation 2.-In this sub-section, due date means,- (a) where the assessee other than an assessee referred to in clause (aa) is- (i) a company; or (ii) a person (other than a company) whose accounts are required to be audited under this Act or under any other law for the time being in force; or (iii) a wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct is the specified date as envisaged under section 44AB of the Act, the Board appears to have consciously used the expression due date and not specified date in the said notification. However, it cannot be gainsaid that there cannot be two due dates, one for the purposes of filing of return under section 139 of the Act and the other for the purpose of determining the specified date under section 44AB of the Act. 81. Nonetheless, for the purpose of extending the due date for obtaining and furnishing the report of audit under section 44AB of the Act, the Board, in exercise of powers under clause (a) of sub-section (2) of section 119 of the Act, can relax the provisions of section 139 of the Act and can extend the due date for filing the return of income, in which case, the specified date under section 44AB of the Act would stand automatically extended. Therefore, the Board, if at all it was of the view that it was necessary to extend the due date for obtaining and furnishing the report of audit under section 44AB of the Act, could have resorted to extending such date only by extending the due date for filing the return of income under section 139 of the Act. For this reason ..... X X X X Extracts X X X X X X X X Extracts X X X X
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