Background
The Central Board of Direct Taxes (CBDT), under Section 119 of the Income Tax Act, 1961, extended the deadlines for filing belated and revised income tax returns (ITR) for the Assessment Year (AY) 2024-25. This extension was specifically applicable to resident individuals, with the new deadline set to January 15, 2025, as per CBDT Circular No. 21/2024 issued on December 31, 2024.
Original Timelines
- Original Deadline for Filing Returns:
- The original deadline for filing an ITR for AY 2024-25 was July 31, 2024, applicable to individual taxpayers who are not required to audit their accounts under Section 44AB.
- Belated/ Revised ITR Deadlines:
- Belated returns under Section 139(4) and revised returns under Section 139(5) were initially due by December 31, 2024.
Need for Extension
- Taxpayer Intimation on AIS and ITR Mismatches:
- Many taxpayers received mismatch intimations regarding transactions in the Annual Information Statement (AIS) and the income reported in their filed ITRs.
- The extension provided additional time to identify, correct, or report unreported/misreported income or transactions.
- Section 87A Rebate Case:
- A Public Interest Litigation (PIL No. 32465 of 2024) was filed in the Bombay High Court by the Chamber of Tax Consultants.
- The case contested modifications in the ITR utility software, which impacted taxpayers’ ability to claim the Section 87A rebate—a tax rebate available to resident individuals with income below a specified threshold.
- The court directed the CBDT to extend the filing deadline to ensure eligible taxpayers were not deprived of their rights due to procedural issues.
Legal Directive
- Bombay High Court’s Interim Order:
- Dated December 20, 2024, the Bombay High Court instructed the CBDT to extend the deadline for belated and revised returns until January 15, 2025.
- The court emphasized protecting taxpayers’ rights under procedural challenges, including modifications to the ITR utility.
- CBDT Compliance:
- In response to the court’s directive, the CBDT issued Circular No. 21/2024 on December 31, 2024, formally extending the filing deadline.
Implications for Taxpayers
- Resident Individuals:
- All resident individuals benefit from the extended deadline.
- Particularly useful for those impacted by utility modifications affecting Section 87A claims.
- Equitable Access:
- The extension ensures procedural fairness and provides time to correct inaccuracies in previously filed returns or file returns for the first time as belated ITRs.
- Ongoing Judicial Oversight:
- The case is listed for a final hearing on January 9, 2025, which may lead to further clarifications or rulings affecting taxpayers’ filings and rebate claims.
Case Study: Section 87A Rebate
- Eligibility Criteria:
- Available to resident individuals with total income not exceeding ₹7,00,000.
- Provides a rebate of up to ₹25,000, effectively reducing tax liability to zero for eligible individuals.
- Challenge:
- Utility modifications during the financial year led to discrepancies, potentially depriving eligible taxpayers of this rebate.
- Court’s Role:
- Ensured taxpayers have sufficient time to reconcile their filings and claim the rebate, pending the court’s final ruling.
Key Points for Taxpayers
- Revised Returns:
- Taxpayers who have already filed their ITR can use the extended period to rectify errors or omissions.
- Belated Returns:
- Taxpayers who missed the original filing deadline can file their returns by January 15, 2025.
- Section 87A Protection:
- Individuals eligible for the rebate should review their ITR filings for compliance and accuracy.
Conclusion
The extension serves as a necessary intervention to uphold taxpayers’ rights amidst procedural challenges and discrepancies in tax filing systems. Taxpayers are advised to use this period judiciously to ensure compliance, accuracy, and the rightful claim of benefits under the Income Tax Act, 1961.