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Accounting professionals seek legal intervention for clarity on tax audit deadline
September, 15th 2014

Some accounting professionals in the country have sought legal intervention to bring clarity into a recent directive from the Central Board of Direct Taxes extending deadline for furnishing tax audit report, after failing to get any response from the authorities.

The Central Board of Direct Taxes (CBDT) had on July 25 extended the due date for filing tax audit report (TAR) under section 44AB of the Income Tax Act 1961, for assessment year 2014-15 to November 30 from the earlier date of September 30. The circular, however, did not refer to the deadline for filing incometax return (ITR).

"We decided to slug it out in courts since written representations and emails to concerned authorities including the finance ministry, CBDT and apex professional institutes went unheeded," said a Delhi-based chartered accountant. "Discussion on various public fora as well as writing on social media did not elicit response," added the person who did not want to be named.

Accounting professionals said a Delhi High Court bench has admitted a writ petition filed by Mahesh Kumar & Co, a Delhi-based chartered accountant firm. The court will hear the case on September 15.

Tax professionals and taxpayers in other parts of the country, too, are likely to move the courts, as they feel the CBDT directive has added to confusion rather than providing any relief.

"It is not clear whether the due date for filing ITR under section 139 of the Income Tax Act in cases where tax audit is applicable has also been extended," said Paras Kochar, president of Direct Taxes Professionals' Association, which represents about 1,300 tax professionals in Kolkata. As per Income Tax Act 1961, the deadline for filing ITR is the same as that for filing TAR. For some assesses it has been September 30 and for others it has been November 30. A section of chartered accountants say that the due date for furnishing TAR u/s 44AB and the due date for filing return of ITR in case where the assessees are required to get their accounts audited u/s 139(1) cannot be detached from each other.

"Therefore, there cannot be an amendment of the deadline for filing TAR without a corresponding amendment of the due date for filling ITR," said chartered accountant Kamal Nayan Jain, president of Association of Corporate Advisers & Executives.

Technically speaking, ITRs can be filed without tax audit report, but this action is neither advisable nor is it practical as a taxpayer has to compute total income after taking into consideration various deductions which are based on tax audit report.

"If an assessee files ITR without TAR, he will have to file a revised return which will only multiply the workload of the income-tax department," said Alok Gupta, director - taxation of Delhibased chartered accountant firm S S Kothari Mehta & Co. S Santhanakrishnan, central council member of the Institute of Chartered Accountants of India, said change in details required in tax filings should be made available for a given year only if notified prior to March 31. "Changes notified thereafter, could be made applicable from subsequent years. This will avoid last minute rush and also requests for postponement of filing dates from assesses and accounting professionals," he said.

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