Extend ITR due date ; Release Audit Forms & ITR before 1st April every year – ICAI to CBDT

As per unconfirmed sources a message from ICAI to CBDT is doing rounds on social media and whatapp groups, in which ICAI president K. Raghu has suggested to CBDT that

a)     the due date of filing return of income under section 139(1) for assessees mentioned under clause (a) of Explanation 2 to section 139
(1) be extended in line with the extension granted for submission of tax audit report under section 44AB of the Act.

b)     Since the provisions applicable to every Assessment year are clarified by the relevant Finance Act well in advance, it is further suggested that all ITR forms and forms of Audit reports be notified well in advance by 1st April every year, to avoid such situations.

We have not found the below representation hosted on ICAI Website so readers are advised to confirm from official sources before relying on the same.

Full text of such Message is as follows :-

​ICAI/DTC/2014-15/Rep -09                                           

To, Shri. K.V.Chowdary, Chairman, Central Board of Direct Taxes, Department of Revenue, Ministry of Finance, Government of India, North Block, New Delhi–110 001

Dear Sir,

At the outset, let me thank you for sparing your valuable time and sharing your wisdom with our Council on 27th August, 2014 at the headquarters of ICAI. Since ICAI’s prerogative is to strengthen the relationship between the taxpayers and the Department, we are duty bound to once again bring to your kind notice, the difficulties being faced by the assessees who are required to get their accounts audited under section 44AB of the Income-tax Act, 1961.

The new forms were notified through Notification no. 33/2014 on 25/7/2014. As there were massive changes in the new forms prescribed by the CBDT, certain genuine concerns were raised by our members, regarding the date of effectiveness of the new formats which were brought to your kind notice. It was suggested that the new formats of audit report be made effective from the Assessment year 2015-16 and not Assessment year 2014-15. Alternatively, it was suggested that the due date for furnishing tax audit reports for the Assessment Year 2014-15 may be extended to 30th November, 2014.

ICAI’s first recommendation of making the new formats effective from the AY 2015-16 did not find favour with the Department but the second alternative regarding extension upto 30th November was favourably considered. ICAI had given the second alternative presuming that the date of filing return of income under section 139(1) would also be extended since both the dates are inseparable. However, the extension was granted only for the due date of obtaining and furnishing tax audit reports without extension of due date of filing return of income. While we appreciate the speed with which the efforts were made to address the concerns of ICAI, however, non extension of due date of filing return along with the date of furnishing tax audit report has been a cause of major concern amongst the assessees, which was not the intention of the representation made by ICAI. Through this letter, we wish to bring the same to your kind attention:

“Specified date” of furnishing tax audit report under section 44AB is directly linked with “due date” of filing return of income under section 139(1)
“Section 44AB of the Income-tax Act, 1961 provides that every person-

(a)…     ….

(d)…

gets his accounts audited 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 an accountant and setting forth such particulars as may be prescribed:

Provided….

Provided further….

Explanation- For the purposes of this section-

(i)  ……….

(ii) “Specified date” in relation to the accounts of the assessee of the previous year relevant to an assessment year, means the due date of furnishing the return of income under sub-section (1) of section 139.”  (Emphasis supplied)

“Explanation 2 to section 139(1) provides for the meaning of “due date”. As per Clause (a) of the said Explanation, “due date” means where the assessee (other than as assessee referred to in clause (aa)) is -

a)     Company; or

b)     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

c)      A working partner of a firm whose accounts are required to be audited under this Act or under any other law for the time being in force;

the 30th day of September of the assessement year.”

The order No. F.No.133/24/2014-TPL dated 20th August, 2014 issued by the Department under section 119 provided for extension of the due date for obtaining and furnishing of the report of audit under section 44AB of the Act for Assessment Year 2014-15 in case of assessees who are not required to furnish report under section 92E of the Act from 30th day of September, 2014 to 30th November, 2014.

Since the due date of obtaining and furnishing tax audit report under section 44AB is directly and clearly linked with the due date of filing of return of income under section 139(1), the aforementioned order has caused unrest and confusion amongst the assessees. There is a very strong view that extension of due date of furnishing tax audit reports automatically stands extended with the due date of filing return of income under section 139(1) since the date of furnishing tax audit report is linked with and is dependent upon the “due date” of filing  return of income under section 139(1).

Concerns of a genuine taxpaying non-corporate assessees

For majority of the asessees who are required to get their accounts audited under section 44AB, the due date of filing return of income and tax audit report is presently 30th September. The due date for filing return of income of large corporates is already 30th November. Concerns are being raised by the non- corporate assessees, who are equally law abiding and thus have been in past finalizing their accounts after considering the issues raised by the tax auditors. Such assessees rely on the tax audit report for computation of total income after knowing their disallowances like disallowance u/s 40(a) etc. Since the tax audits are not completed (nor likely to be completed by 30th September), these assessees are finding it difficult to file their income tax returns.

Although we are aware that such assessees can file a revised return under section 139(5) once the tax audit report is completed, this however would increase the compliance burden of assessee who would have to do the whole process again. On the other hand, if the Department completes its assessment before the expiry of one year from the end of the relevant Assessment year i.e. the time provided under section 139(5), the genuine assessee would have no choice, but to face penal consequences for almost no fault on his own part.

Norm followed in earlier years

Even though, prior to the amendment made by the Finance Act, 2008 when the due date of filing return of income under section 139(1) was NOT directly linked with the date of furnishing tax audit report, the extension of time, if any, was granted for both e-filing of returns and for tax audit reports.

Also, in the year 2006-07 when the tax audit report was revised last through Notification No.208/2006 dated 10.8.2006, the due date of filing tax audit reports and their corresponding ITR were extended to 30th November, 2006.

It is the first occasion in past several years when the due date of furnishing tax audit report has been extended without extension of due date of filing of returns. This is a major reason for the assessees to believe that the intention of the lawmakers is to extend both the due date of filing return of income and the tax audit report.

Efforts of ICAI to supplement the initiatives of the Department

We all are aware, the formats of tax audit reports were issued very late i.e 25th July 2014 and thereafter approximately a month’s time was taken by the Department to make the utility available to the auditors. Despite the same all efforts are being made by ICAI, as a partner in nation building, to bring awareness among the auditors and auditees:

a)     Guidance Note on tax Audit under section 44AB of the Income-tax Act, 1961 has been revised to guide the members regarding the new reporting responsibilities.

b)     Tax Awareness programmes are being organized by ICAI for creating awareness among the members all over India.

Suggestion

In the interest of the nation as a whole we suggest and request that:

a)     the due date of filing return of income under section 139(1) for assessees mentioned under clause (a) of Explanation 2 to section 139
(1) be extended in line with the extension granted for submission of tax audit report under section 44AB of the Act.

b)     Since the provisions applicable to every Assessment year are clarified by the relevant Finance Act well in advance, it is further suggested that all ITR forms and forms of Audit reports be notified well in advance by 1st April every year, to avoid such situations.

We are hopeful for a positive consideration of our suggestion.

With best regards

Yours faithfully,                                                            

CA. K. RAGHU