ITR due date extended for tax audit case cannot be applied to assessee liable for audit under any other Act: ITAT

In the matter of Gulu Hassanand Raney vs Asst. Director of I.T. Bangalore-CPC; the Income Tax Appellate Tribunal (ITAT) has held that for A.Y 2016-17 the CBDT had sought to extend the due date from 30/09/2016 to 17/10/2016 only in respect of those cases where accounts are required to be audited under the provisions of Income Tax Act while filing the income tax returns. The said extended due date benefit cannot be extended to those assessee who were liable to get their accounts audited under any other law for the time being in force.

assessee is carrying on business of Agencies of shipyards and marine electronics by way of representing foreign shipyard and /or ship owner for ship repairing and/or day docking purposes as a proprietor in the name of Nautilus international (India). Assessee is carrying on business since 1975-76 in the above Proprietorship Name. Thereafter, in the Year 1983-84 (AY 1984-85) he became Non-Resident and continued the said business.

Since he became Non-Resident, as required, under Foreign Exchange Regulation Act (FERA) provisions, he was required to take approval from Reserve Bank of India for continuing his said Proprietary business. Permission was granted u/s 29(1)(a) of the FERA 1973 vide RBI’s Letter dated 05/08/1985. As per the clause (iii) of said R.B.I permission, one of the condition was Accounts are to be audited by Chartered Accountant.

Accordingly, for the year under consideration i.e. for A.Y.2016-17, the accounts of the assessee were audited by a Chartered Accountant on 15/10/2016. The return of income for the A.Y.2016-17 was filed on 17/10/2016. The assessee claimed the business loss of Rs.8,38,301/- in the return of income to be carried forward to subsequent years. The ld. AO observed that since the return was not filed within the due date prescribed u/s.139(1) of the Act, in terms of Section 139(3) r.w.s.80 of the Act, the loss claimed by the assessee shall not be allowed to be carried forward to subsequent years. The ld. AR before us placed on record copy of press release dated 09/09/2016 issued by CBDT extending the due date of filing of returns to 17/10/2016 for A.Y.2016-17. For the sake of convenience, the said press release is reproduced hereunder:-

Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes

New Delhi, 9th September, 2016

Press Release

Sub:- CBDT Extends due date for filing of Income Tax Returns – reg

The due date for filing of Income tax returns by tax payers whose accounts are required to be audited under the Income Tax Act is the 30th September of the following year. The tax payers whose business receipts exceed Rupees One Crore or professional receipts exceed Rupees twenty-five Lakh during the previous year 2015-16 are required to file an Income Tax return accompanied by an audit report by the above mentioned due date.

However, taking into consideration that the last date for making declarations under the Income Declaration Scheme 2016 is also 30th September, 2016, the Central Board of Direct Taxes has decided to extend the last date for such returns which were due on 30th September, 2016 to 17th October, 2016 in order to remove inconvenience and to facilitate ease of compliance

(Meenakshi J Goswami)
Commissioner of Income Tax
(Media and Technical Policy)
Official Spokesperson, CBDT.

According to the ld. DR, only those cases where accounts of tax payers are required to be audited under the Income Tax Act alone would get extended time limit up to 17/10/2016 for filing the returns. The assessee in the instant case admittedly is not liable to get his accounts audited under the provisions of Income Tax Act. Per contra, the ld. AR stated that assessee is liable to get the accounts audited only as per RBI permission letter dated 05/08/1985 vide clause (iii) of the said letter. The assessee being a non-resident, this approval was necessary for the assessee to continue his business in India. We find that the expression “due date” is defined in Explanation-2 to Section 139(1) of the Act which reads as under:-

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.

ITAT Order:

3.3. We find that assessee’s case herein falls under the ambit of Explanation 2(a)(ii) to Section 139(1) of the Act, as the assessee is liable for audit under any other law for the time being in force. This expression “due date” is also mentioned in press release dated 09/09/2016. But on bare reading of the press release dated 09/09/2016, we are of the considered view that “due date” of filing of income tax return is extended from 30/09/2016 to 17/10/2016 only in respect of assessees whose accounts are required to be audited under the Income tax Act. This fact is further strengthened by the last line of the first paragraph of the press release extending the due date for professionals whose accounts are to be audited under the Income Tax Act by stating the expression “above mentioned due date”. Further, in the second para of the press release dated 09/09/2016, the CBDT in categorical terms states that it has decided to extend the last date for “such returns” which was due on 30/09/2016 to 17/10/2016. These words categorically go to prove that the CBDT had sought to extend due date from 30/09/2016 to 17/10/2016 only in respect of those cases where accounts are required to be audited under the provisions of Income Tax Act while filing the income tax returns. The said extended due date benefit cannot be extended to those assessee’s who were liable to get their accounts audited under any other law for the time being in force which is the case as that of the assessee before us. Hence, we hold that due date of filing of income tax return for the assessee for A.Yrs. 2016-17 is 30/09/2016 and not 17/10/2016 as contended by the ld. AR.

3.4. With regard to observation made by the ld. CIT(A) in page 6 of the order, that assessee has not carried out business in the name of any limited company thereby warranting the accounts to be audited by a person who is capable to audit the limited company, are of absolutely no relevance to the facts and we hold that the same are completely fallacious. From the perusal of the RBI permission letter dated 05/08/1985 mandating the assessee to get his accounts audited, we are of the considered opinion that what RBI mandate was only for the competence of the Chartered Accountant i.e. to say that a Chartered Accountant who is capable of auditing the corporate assessees should conduct the audit of the assessee herein. This was the sole mandate of RBI permission letter dated 05/08/1985. In our considered opinion, as stated supra, this has been completely misunderstood by the ld. CIT(A) while rendering his decision in page 6 of his order. Either way, this misunderstanding would not in any way advance the case of the assessee in view of our findings that the due date for the assessee herein is only 30/09/2016 and not 17/10/2016. Hence, we hold that assessee is not entitled to carry forward business loss incurred during the year to subsequent years. Accordingly, the grounds raised by the assessee are dismissed.

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