Impact of Extensions of dates which would change the prevailing system of Tax Administration and Practice of Income Tax

1.  The central Board of Direct Taxes (CBDT), has issued two important communiqués,

a.   It notified the Income Tax Returns for the Financial year ended on 31.03.2021 before March 2021.

b.  With the spread of COVID 19, second wave, without seeking any applications, in one Circular, the due dates of various compliances to be made has been extended.

This is for the first time, as far as I know, that the CBDT has suo moto, taken the cognizance of the problems , visualizing the same, and extending it. It will certainly reduce unnecessary litigations.

2.  To understand the reasons of the notifications, and the extensions, it is stated, that after the returns are notified, the returns can be filed by any person. But for a person to be ready, the Form 26AS, generated by the department has be visible correctly. For the correct visibility, the TDS returns have to be filed and uploaded. COVID impact, for the second time, has led to the lock down. So the dates were extended.

3.  The Income Tax department is using the artificial Intelligence, as stated in my earlier article, in collection of data, and in order to bring in the accountability from the side of the assesse, and keeping the intelligence open, it has been stated by the CBDT, that all such information would be available in 26AS. This indicated that the department is working on the change of its system. Now it looks that it has worked out and the trials are complete. So that it is put in system, the official web site of the Income Tax department would be closed from 1st June to 6th June. It assumed that after that, the site will be containing all the changes and data collected too. This will enable the assessee incorporate his explanation while filing the return itself. A good use of the time. The purposive construction of the action has to be taken. This is bases on several Press Releases so given by the CBDT earlier.

4.  The working pattern of Professionals assisting the assessee has to change with these changes. This looks to be a big drive. Good work has been done by our professional colleagues, who have pointed out the change of dates in the tabular form. This is being reproduced as under:

 The impact of aforesaid notifications and circulars on various time barring dates notified under TLA Act, 2020 and certain compliance of Income-tax Act are enumerated in the following table:

5.  This time, the CBDT has understood the problems which the assesses would be facing in advance. Unless the TDS returns are filed the Tax deducted cannot appear in Form 26AS. Without this updating of 26AS, the returns will not contain the true and correct picture as mentioned in the verification column. This would lead to revision of return, which in turn would be a waste of time. When the last dates come, there would be prayers for the extension of time. Some associations would be preferring writs before the different High Courts. In order to save this time and make it fruitful, the dates have been extended without any application by any assesees. The Income tax department, during this period, corrected the system too. This will start after 6th June. During the last year, the Faceless assessments and appeals had also started. Now with the correct systems, it will be easy for the assessee to comply and it will be easy for the Taxman to conclude the proceedings.

6.  This action of department draws an inference, that there will be no further extensions of dates this year. Unless and until something more comes out.

7.  Waiting to see the changes brought In the system. And in the mean while, it is the time for the practioners also to change their systems.

8.  The only concern at the stage is the implementations of the system by the department too. The disposals by CIT(A) needs to speed up, and the rules of online filing in the matters pertaining to the appeals before ITAT should also come up. It is to be mentioned that the Tribunal (ITAT) is not within the Ministry of Finance, but it is a division of Ministry of Law and Justice.