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Whether interest u/s 234A can be charged after due date extension?
Law makers are finding out new and new ways of recovering the tax dues. The one such way is extending the due date of filing income tax return u/s 139(1) and not leving the interest u/s 234A.
Whether it is legally possible or not are what we are going to discuss it now.
First of all let us have a look at the circular issued for extending the due date for filing income tax return and Tax Audit Form.
Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
North-Block, ITA II
Division New Delhi, the 24th of September, 2018
Order under Section 119 of the Income-tax Act, 1961
On due consideration of representations from various stakeholders for extending the due date, being 30” September, 2018, for filing of income-tax returns and various reports of audit pertaining to assessment-year 2018-19 for assessees’ covered under clause (a) of ‘Explanation 2 to section 139(1) of the Income-tax Act, 1961 (Act) read with relevant provisions of the Act & Income-tax Rules, the CBDT, hereby extends the due date for filing of income-tax returns as well as all reports of audit (which were required to be filed by the said specified date), from 30 September,2018 to 15 October, 2018. However, there shall be no extension of the due date for purpose of Explanation 1 to section 234A (Interest for defaults in furnishing return) of the Act and the assessee shall remain liable for payment of interest as per provisions of section 234A of the Act.
Under Secretary to the Government of India
The circular clearly mentions that the due date is extended for the purpose of Section 139(1) aand not for the purpose of 234A.
Let’s have a look at of Explanation 2 to section 139(1)
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 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 assessment year;
(aa) in the case of an assessee who is required to furnish a report referred to in section 92E, the 30th day of November of the assessment year;
(b) in the case of a person other than a company, referred to in the first proviso to this sub-section, the 31st day of October of the assessment year;
(c) in the case of any other assessee, the 31st day of July of the assessment year.
Section 234A provides levy of interest if return is filed after due date of filing. The meaning of due date is given in Explanation to Section 234A
Explanation 1.—In this section, “due date” means the date specified in sub-section (1) of section 139 as applicable in the case of the assessee.
It may be noted that Section 234A does not operate independently. It is linked to Section 139(1). It does not have its independent existence. It is inseparable from Section 139(1). The calculation of Section 234A is based on the due date given in section 139(1).
Under section 139(1), Central Board of Direct Taxes (CBDT) is empowered to extend the date. CBDT vide its notification number F.No. 225/358/2018/ITA.II dated 24th of September, 2018 has extended the date for 15 days. The same is done for uploading the audit report under section 44AB.
Once the date is extended u/s 139(1), interest u/s 234A has to be based on the revised date. Income Tax Act cannot be amended by issuing the notification. The notification number F.No. 225/358/2018/ITA.II dated 24th of September, 2018 issued yesterday is ultra virus to the extent that it provide for levy of interest not in accordance with the provision of the Income Tax Act, 1961.
The notification issued for levy of interest even after extending due date is illogical. It is now for the court only to decide the matter.
It is always better if the law makers give the benefit whole heartedly & not half heartedly by not incorporating the word for levy of interest u/s 234A in the notification no. F.No. 225/358/2018/ITA.II dated 24th of September, 2018 the operation would have been easy.
More we talk about ease of business more complicated we make the law.
How much interest the Government going to earn by issuing such notification. The tax payers are already covered by Section 234B and 234C in such cases. Providing the interest of 234A in such cases is not only unlawful but also inhuman.
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