Physical Filing Of Tax Audit Reports, ITR Not Feasible, Tax Department Tells Court

Physical filing of tax audit reports and income tax returns isn't feasible, the Central Board of Direct Taxes told the Gujarat High Court on Monday.

The tax department's stand came in response to a petition filed by the Southern Gujarat Income Tax Bar Association seeking to submit physical copies of tax returns and audit reports.

The petition also aims to extend the due date for filing tax returns and furnishing tax audit reports. And to not levy interest or penalty on belated filings owing to glitches in the tax e-portal.

Last week, the due dates for filing of income tax returns and various reports of audit for the assessment year 2021-22 were extended by the tax department.

This was after various chartered accountant groups filed representations highlighting the difficulties faced in completing filings due to a spike in Omicron-Covid cases and due to technical glitches in the income tax e-filing platform.

When the matter was taken up for hearing on Monday, Senior Advocate Manish Bhatt, appearing for the CBDT, informed that unlike GST returns, physical filing of tax audit reports and ITR won't be possible as the e-portal only captures digital figures.

The court was also told about the lesser time that the new portal takes to process returns.

Moreover, the portal has helpline numbers along with a multi-layered grievance cell. If any taxpayer is facing technical issues with the portal, they can always contact the helpline, he said.

"But the helpline is not helping, that's what the the petitioners are saying," a bench headed by Justice JB Pardiwala interjected to say.

Senior Advocate Tushar Hemani, appearing for the petitioner association, said that taxpayers are facing various difficulties in the tax portal while uploading tax returns and furnishing audit reports.

Only 35% have filed their audit reports till now, Hemani told the bench.

To this, the court said that it cannot direct the ministry on what to do.

"But the policy is not working," replied Hemani while suggesting an alternate solution.

If a taxpayer is not able to upload his returns because of technical glitches in the portal, the government can come up with an E-mail ID and taxpayers may be allowed to send an email to that ID, with the ITR or tax audit report as an attachment, he proposed.

After which, the CDBT can either upload the return directly or eventually allow the taxpayer to upload when the portal is problem-free. The email sent by the taxpayer can be treated as a document indicating that the taxpayer has complied with the Income tax provisions before the due date.

Also, the e-mail receipt from the authority would be an acknowledgement of having filed ITR.

Vyas will inform the court on Tuesday on the practicality of the proposal.

Making arguments on the technical glitches front as the hearing progressed, Bhatt said that interest liability for late filing of ITR and tax audit report is not affected due to glitches in the portal.

At this juncture, the court asked if the glitches were zone-specific.

Vyas replied in the affirmative, saying that the portal glitches aren't permanent and are only present for a short span of time.

"There is no permanent and continuous glitch as I understand, in technological terms."

The matter will be next heard on Jan. 18.

This is not the only plea before the high court underscoring the difficulties faced by taxpayers in filing ITR and audit reports owing to tax portal's glitches.

In the first week of January, the court had issued notice in a plea filed by the Surat Chartered Accountants Association, which asked it to direct the revenue department to not levy interest on belated filings, especially since the CBDT itself has extended filing deadlines on several occasions due to glitches in the e-filing platform.

On a related note, the Rajasthan High Court last week disposed of a plea moved by Tax Bar Association, Jodhpur seeking similar reliefs. The court was prompted to do so after the last dates for filing returns and tax audit reports were extended.

While parting with the order, a Division Bench of Chief Justice Akil Kureshi and Justice Rekha Borana also expressed hope that the CBDT would immediately fix the difficulties faced by taxpayers in the portal without its intervention.