HC adjourns petition challenging CBDT directive


The Delhi High Court had adjourned the writ petition challenging the Central Board of Direct Taxes, CBDT directive to extend deadline for furnishing tax audit report till Thursday (TAR). The decision had set chartered accounts (CAs) into a tizzy as they feel that the petition will become irrelevant if the court does not give its decision on Thursday. The deadline for filling tax returns is on September 30, 2014.

The HC has issued directions to the CBDT to file an affidavit stating that returns filed without tax audit reports should not be treated as invalid. However, the CBDT has to state the consequences for filling income tax reports without TARs as per the new rule.

Mahesh Kumar, a chartered accountant remarked “An assessee’s ITR computed after the TR is finalized will always differ from ITR finalized before TAR is computed because we incorporate deductions and disallowances based on TARs before finalizing ITRs”. He further added that the CBDT directive will not only cause inconvenience, but also raise the tax payers’ expenses incurred for filing reverse returns.

The CBDT’s move to extend the deadline for furnishing tax audit report has sparked severe criticism from accounting professionals across the country. According to the tax consultants, the due date for furnishing TAR u/s 44 AB and the due date for filing ITR in case where there is  a need to get the assessee’s account audited u/s 139(1) cannot be separated from each other.

Accounting firms have filed various petitions challenging the directive in courts across the country. The accounting professionals are also of the opinion that the practice of introducing fresh formats in the middle of the financial year for filling TARs would affect their functioning. Although the CBDT is empowered to introduce new rules and amend the existing ones, the accounting professionals feel that last minute changes will give rise to confusion and errors.