Gujarat High Court observation in CAAS ss. UOI and the Taxpayers Expectation

Gujarat High Court observation in CAAS ss. UOI and the Taxpayers Expectation

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Gujarat High Court observation in CAAS ss. UOI and the Taxpayers Expectation

 
Does anyone from the Department or Government need to apologize to the taxpayers for the irresponsible implementation of the new Income Tax Portal?
Appreciably, CBDT has on its own extended the due date of filing audit report and submitting ITR from 15th Jan 2022 and 15 Feb 2022 to 15th Feb 2022 & 15th March 2022 respectively. It is a welcome move by the CBDT. Probably, it didn’t realize this issue when numerous representations were submitted for extension of the due date of 31st December 2021. Better late than never, Thank you CBDT for Extending the current due dates.
I am a very strong follower of the CBDT who has been proactive in numerous innovative ideas and its successful implementation as far as direct tax law is concerned. The way the income tax law is governed is much better than various other departments of the country. It has been broadly successful in the implementation of the transparency, equity, tax friendly measures in the department. The most important part is that the taxpayers haven’t faced the trouble in moving from manual to e-regime of the department. What a silent and smooth transition it was, something to learn for the other fiscal department of the country.
There is an important development on the Judiciary front as well. Very timely, the writ was filed by the proactive Chartered Accountants Association, Surat in the Gujarat High Court. Though the Gujarat High Court in Chartered Accountants Association, Surat vs. Union of India has refused to extend the due date of the audit report, there are few important observations which have been made by the Court. Let us have an overview of the case:
  1. HC refuses to extend the Due date of Filing the Tax Audit Report.
  2. When Mr. Poddar, the learned counsel for the petitioner made a request that the deadline of 15.01.2022 for the purpose of filing the audit report may be extended to 15.02.2022, the court opined as under:
    “ We are not inclined to go into this controversy at this point of time”.
  3. HC observed that the issues of penalty, interest etc. would arise when the final order of assessment is passed and not at this stage. Even for the purpose of penalty under Section 271B, it is necessary to issue a notice to the assessee. If the assessee has not been in a position to file his return in time on account of his inability to upload the audit report on account of technical glitches in the Portal, he can always point out all such circumstances beyond his control when he is called upon to show cause as to why penalty should not be imposed.
  4. Court directed CBDT and UOI to attend to the technical glitches on the new Income Tax Portal. It remarked
    “We once again impress upon the respondent to attend to the technical glitches, which are being experienced in the Portal at the earliest. The Portal is something which is within the control of the respondent and if there are any technical problems in the same, it is only the respondents, who can take care of such problems”.
  5. HC taken note of Extension of Due Date by CBDT vide Circular No. 01/2022 dated 11.01.2022 CBDT has issued a Circular No. 01/2022 dated 11.01.2022 extending the timeline for filing the income tax return and various reports of audit for the A.Y. 2021-22. The due date of furnishing of Report of Audit under any provision of the Act for the Previous Year 2020-21, which was 30th September, 2021, in the case of assessees referred in clause (a) of Explanation 2 to sub­section (1) of Section 139 of the Act, as extended to 31St October, 2021 and 15th January, 2022 by Circular No. 9/2021 dated 20.05.2021 and Circular No. 17/2021 dated 09.09.2021 respectively, is hereby further extended to 15th February, 20222. The due date of furnishing of Report of audit under any provision of the Act for the Previous Year 2020-21 which was 31St October, 2021, in the case of assessees referred in clause (aa) of Explanation 2 to sub-section (1) of Section 139 of the Act, is hereby extended to 15th February, 2022.
What is missed by the Hon’ble Gujarat High Court while considering the date application plea:
  1. The taxpayers have to bear the burden of the unwanted glitches at the portal.
  2. If the audit report is not filed for any reason whatsoever, each and everyone could be issued the notice of penalty u/s 271B and each and everyone may be asked to justify the “reasonable cause”. This will not only increase the work of the taxpayers but will also cause anxiety and unwanted harassment to the taxpayers. The judiciary which is already overburdened will further be flooded with unwanted litigation as a result of this.
  3. Hon’ble High Courts have very aptly appreciated that fact the Respondent No. 2 i.e., Union of India can only control the technical glitches at the portal and not the applicant i.e., Chartered Accountants Association, Surat. The respected High Court has not closed the case but has just adjourned it for 2 weeks and has asked the Department to furnish the updates of the technical glitches.
  4. What Common Taxpayers Expects from the Hon’ble High Court”:
a)Every trial and error is carried out by the Government at the cost and consequences of the taxpayers. Why does it happen repetitively?
b)In the words of Nani Palkhiwala, the taxpayers are treated as the Biological species for the testing of the Government.  Why has the attitude not changed for so many years?
c)The Court may ask the Government why the new portal is implemented without homework at its end at least when it is paying Rs. 4242 Cr for its development.
d)Why didn’t the department plan for the implementation of the new portal during February – 22 to May -22 when it would not have been in much usage? I strongly believe that the bureaucracy could have deferred the implementation of the new income tax portal timing till its successful trial.
e)Who is responsible for such a casual approach in implementing the new portal?
f)Whether anyone from the Department or Government needs to apologize to the taxpayers for such an irresponsible implementation?
g)There are ways of implementing the law in a better way and the Hon’ble court may direct the Government to work on this approach. An effective solution for this could be to form a joint committee of taxpayers, tax collectors and tax professionals and every proposal of new trial and error must be routed through this committee so that the law could be implemented considering the practical difficulties it may face during implementation.

No one is against the law or the Government or the new policies.  Every citizen of the country wants to pay the tax and wants to be a part of Country’s growth and development. But not at the cost of trial, error, trouble, annoyance and harassment.

Let us all come forward, not to say that the taxpayers and tax collectors are not two sides of the same coin but to say that the taxpayers and tax collectors are the same side of the same coin. They are one only and have work in close harmony for the betterment of the country.

The copy of the High Court Order is as under:
  1. We have heard Mr. Avinash Poddar and Mr. Nikul Singhavi, the learned counsel appearing for the writ applicants, Mr. M.R. Bhatt, the learned senior counsel appearing for the respondent No.2 and Mr. Devang Vyas, the learned Additional Solicitor General of India appearing for the respondent No.1 – Union of India
  1.  We have been able to understand to some extent the difficulties, which are being experienced by the assessee in uploading the audit report for the purpose of filing the its income tax return. Our attention has also been drawn to the Circular No.17/2021 issued by the Ministry of Finance Department of Revenue, CBDT dated 09.09.2021 with respect to extension of the time limit for filing income tax returns and various reports of audit for the A.Y. 2021-22. Prima facie, it appears that the writ applicants are aggrieved by the clarification 1 in the Circular.
Clarification 1 reads thus:
“Clarification 1: It is clarified that the extension of the dates as referred to in clauses (9), (12) and (13) of Circular No.9/2021 dated 20.05.2021 and as referred to in clauses (1), (4) and (5) of this Circular shall not apply to Explanation 1 to section 234A of the Act in cases where the amount of tax on the total income as reduced by the amount as specified in clauses (1) to (vi) of sub-section (1) of that section exceeds one lakh rupees.”
  1. The learned counsel appearing for the writ applicants pointed out that for the purpose of uploading the audit report, the assessee has to generate the Unique Document Identification Number (for short “the UDIN”). This has been made mandatory from 07.2019 for all audit. The grievance voiced by the learned counsel appearing for the writ applicants is that on account of technical glitches in the Portal, the Chartered Accountants are finding it very difficult to upload the audit report. In other words, even after generating the UDIN on account of some technical problems in the Portal, the audit reports are not being uploaded. Once the audit report is not uploaded and the return is not filed in time, the some would entail interest under Sections 234A and 234B respectively, late fees under Section 234F and penalty under Section 271B of the Act respectively.
  2. M.R. Bhatt, the learned senior counsel would submit that the apprehension expressed by the writ applicants in the aforesaid regard is not well founded. Mr. Bhatt, the learned senior counsel would like to file a detailed reply explaining the correct position. At this stage, we may only say that if there are any technical problems with the Portal so far as uploading of the audit report is concerned, the same should be attended and looked into by the Authority concerned at the earliest.
  1. Mr. Poddar, the learned counsel made a request that the deadline of 15.01.2022 for the purpose of filing the audit report may be extended to 15.02.2022. We are not inclined to go into this controversy at this point of time. The issues of penalty, interest etc. would arise when the final order of assessment is passed. Even for the purpose of penalty under Section 271B, it is necessary to issue a notice to the assessee. If the assessee has not been in a position to file his return in time on account of his inability to upload the audit report on account of technical glitches in the Portal, he can always point out all such circumstances beyond his control when he is called upon to show cause as to why penalty should not be imposed.
  1. However, with all the aforesaid, we once again impress upon the respondent to attend to the technical glitches, which are being experienced in the Portal at the earliest. The Portal is something which is within the control of the respondent and if there are any technical problems in the same, it is only the respondents, who can take care of such problems. At this stage, Mr. Devang Vyas, the learned Additional Solicitor General of India received information that CBDT has issued a Circular No. 01/2022 dated 11.01.2022 extending the timeline for filing the income tax return and various reports of audit for the A.Y. 2021-22. The due date of furnishing of Report of Audit under any provision of the Act for the Previous Year 2020-21, which was 30th September, 2021, in the case of assessees referred in clause (a) of Explanation 2 to sub­section (1) of Section 139 of the Act, as extended to 31St October, 2021 and 15th January, 2022 by Circular No.9/2021 dated 20.05.2021 and Circular No. 17/2021 dated 09.09.2021 respectively, is hereby further extended to 15th February, 20222. The due date of furnishing of Report of audit under any provision of the Act for the Previous Year 2020-21 which was 31St October, 2021, in the case of assessees referred in clause (aa) of Explanation 2 to sub-section (1) of Section 139 of the Act, is hereby extended to 15th February, 2022.
  2. Post this matter on 08.02.2022 to enable the respondents to file their counter. One copy of the counter shall be furnished to the learned counsel appearing for the writ applicants well in advance. The further progress in the matter with regard to the technical glitches shall be reported to us on the next date of hearing. One copy each of this order shall be furnished at the earliest to Mr. M.R. Bhatt, the learned senior counsel and Mr. Devang Vyas, the learned Additional Solicitor General of India for its onwards communication.

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