In a significant development, the Bombay High Court has directed the Central Board of Direct Taxes ( CBDT ) to extend the deadline for filing Income Tax Returns ( ITRs ) to January 15, 2025, following a Public Interest Litigation ( PIL ) filed by The Chamber of Tax Consultants.
A division bench comprising Chief Justice Devendra Kumar Upadhyaya and Justice Amit Borkar noted that recent modifications to the Income Tax Department’s utility software prevented eligible taxpayers from claiming the Section 87A rebate. This rebate allows individuals with taxable incomes up to ₹7 lakh to receive a 100% tax rebate, effectively reducing their tax liability to zero.
The PIL, argued by senior advocate Percy Pardiwala, contended that the modifications were arbitrary and deprived taxpayers of their statutory rights. The petitioner highlighted that Section 87A rebate is an inherent right under the Income Tax Act and cannot be curtailed by software changes. It further urged the court to direct the CBDT to allow affected taxpayers to file revised returns under Section 139(5) of the Act, enabling them to claim the rebate retroactively.
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Responding to the allegations, the Income Tax Department argued that the modifications were necessary to align with statutory requirements and prevent anomalies in rebate claims. However, the court dismissed this reasoning, emphasizing that procedural changes should not override substantive rights granted by legislation.
The court observed that the unilateral software changes made on July 5, 2024, disabled the rebate functionality for specific taxpayers. It emphasized that such procedural modifications undermined the legislative intent of the rebate and imposed an unjust financial burden on eligible taxpayers.
The court remarked, “Taxpayers should not bear the consequences of administrative inefficiencies or unilateral executive actions that undermine the legislative intent.”
Considering the gravity of the issue, the court issued interim relief, directing the CBDT to extend the ITR filing deadline. This extension provides taxpayers an opportunity to file returns with the corrected rebate claims. The court underscored the importance of fairness, equity, and transparency in tax administration, stating, “Statutory benefits must align with the legislature’s objectives and should not be impeded by procedural hurdles.”
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The matter is scheduled for final disposal on January 9, 2025, where the court will examine the broader implications of the software modifications and their impact on taxpayers’ rights.
The Bombay High Court, in the interim, has directed the CBDT to extend the ITR deadline to January 15, 2025, citing procedural anomalies in the Section 87A rebate. Case to be finalized on January 9, 2025.
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