Bombay High Court directs CBDT to extend the ITR deadline for Select Taxpayers

The Bombay High Court has directed the Central Board of Direct Taxes (CBDT) to extend the Income Tax Return (ITR) filing date to January 15, 2025. The decision follows a Public Interest Litigation (PIL) filed by The Chamber of Tax Consultants, as previously reported.

Why this ITR Extension?

The court pointed out that recent changes to the Income Tax Department’s utility software hindered qualified taxpayers from claiming the Section 87A rebate.

This rebate enables individuals with taxable incomes of up to Rs.7 lakh to decrease their tax liability to zero.

The division bench, chaired by Chief Justice Devendra Kumar Upadhyaya and Justice Amit Borkar, noted that software updates dated July 5, 2024, prevented certain taxpayers from claiming rebates.

The judicial bench stressed that such procedural changes contradict the rebate’s legislative objective and place an undue burden on taxpayers.

PIL alleges Procedural Changes Violate Rights

Senior counsel Percy Pardiwala, representing the petitioner, said that the software changes were arbitrary and violated taxpayers’ statutory rights. The PIL contended that the Section 87A rebate is a basic right under the Income Tax Act that cannot be reduced through technical changes.

The petition also requested that the court direct the CBDT to allow impacted taxpayers to file revised returns under Section 139(5) of the Act to claim the rebate retroactively.

Response of Income Tax Department

The Income Tax Department defended the changes by arguing they were required to resolve irregularities in rebate claims and maintain legal compliance.

However, the court rejected this claim, stating that administrative changes should not supersede substantive rights established by legislation.

Grant of Interim Relief

Recognising the concern, the court provided interim relief by requesting that the CBDT extend the ITR filing date.

The judge said, “Taxpayers should not bear the consequences of administrative inefficiencies or unilateral executive actions that undermine the legislative intent.”

The case will have its final hearing on January 9, 2025. The court will then consider the larger consequences of the software changes, including their impact on taxpayer rights.

The court’s interim order gives taxpayers until January 15, 2025 to file their returns and get the rebate.