New CBDT Notifications Relax Timelines for Tax Filing in Light of Covid Crisis

In light of the ongoing second wave of the covid crisis in India, the central government has released two notifications in April and May of 2021, which aim to reduce compliance burdens and help mitigate any adverse circumstances that may have been caused by the onset of the deadly second wave of the coronavirus pandemic in India. The notifications focus on extending and relaxing deadlines for filing tax returns and appeals.

In light of the ongoing second wave of the covid crisis in India, the government has been in receipt of several requests to extend several deadlines as part of income tax return filings and tax dispute redressals. Two notifications have been released in April and May of 2021, which aim to reduce compliances and mitigate adverse circumstances that may have been caused by the onset of the deadly second wave of the coronavirus pandemic in India.

The first notification was released by the Central Board of Direct Taxes (‘CBDT’) on April 24th, 2021, and it extends the timelines for passing orders for reassessments of tax filings, orders under DRP, etc. The second notification was subsequently released by the CBDT on 1st May 2021 and it relaxes several compliance requirements for filing appeals, filing of income tax returns, filings of tax deducted at source (‘TDS’), etc.
 
First Notification – Extension of Timelines:

The first notification passed by the CBDT is an extension of the Taxation and Other Laws (Relaxation And Amendment Of Certain Provisions) Act, 2020 (‘2020 Act’). The 2020 Act had extended several timelines falling during the period from the 20th day of March 2020 to 31st December 2020 for actions such as completion of any proceeding or passing of any order or issuance of any notice, intimation, notification, sanction or approval, or such other action by any authority, commission or tribunal; filing of any appeal, reply or application or furnishing of any report, document, return or statement or such other record; or such other transaction as mentioned in the Income Tax Act 1961 (‘ITA’), the Wealth Tax Act, The Customs Act, etc.

The timelines mentioned therein stood extended till 30th April 2021 and this measure had been provided to allow an extended period of respite for taxpayers and to reduce compliance burdens that may have been expounded due to the pandemic crisis. However, due to the onslaught of the second wave several timelines mentioned in the 2020 Act have now been further extended till 30th June 2021.

Hence, the following time limits stand extended:
  1. Time limit for passing of any order for assessment or reassessment as provided under Sections 153 or 153B of the ITA.
  2. Similarly, the time limit for issuance of notice under section 148 of the ITA for reopening the assessment where income has escaped assessment.
  3. Time limit for passing an order consequent to the direction of the Dispute Resolution Panel under Section 144C (13) of the ITA.
  4. Time Limit for sending intimation of processing of Equalisation Levy under Section 168 (1) of the Finance Act, 2016.
  5. The timeline for payment of any amounts payable under the Direct Tax Vivad se Vishwas Act, 2020, without any additional amounts, shall be further extended to 30th June 2021.
Under Section 153 and section 153B of the ITA, the assessing officer is required to make an order for assessment or reassessment within a period of twenty-one months from the end of financial year in which the last of the authorisations for search in relation to such assessment were executed. The reassessments may be conducted for assessments within six years from the particular assessment year.
 
Under Section 148 of the ITA, the assessing officers are allowed to reopen assessments for incomes they believe may have escaped assessment. The re-openings are allowed for assessments of incomes declared within three assessment years from the particular assessment year. This Section was recently amended by the Finance Act, 2021 wherein the limit for re-opening assessments was reduced from six years since the year of assessment to three years. Assessing officers may also open re-assessments up to ten assessment years since the particular assessment year, for serious cases such as fraud.
 
Direct Tax Vivad Se Vishwas Act, 2020 was introduced by the central government in an attempt to reduce pending litigation at various tax tribunals and forums. The appeals that are pending before the appellate forums such as the Supreme Court, High Court or Income Tax Appellate Tribunals on or before 31st January 2020 are eligible under the scheme.

Beyond appeals, the following proceedings are also covered under the scheme:
  1. Writ petitions
  2. Revision applications under Section 264 of the ITA
  3. DRP related proceedings
  4. Proceedings such as matters regarding arbitration, mediation, conciliation, etc.
Amounts payable have been declared under the scheme for certain classes of disputed tax, and taxpayers can pay these amounts if they wish to settle under the scheme.
 
Second Notification – Relaxation of Compliance Requirements

The second notification that was released in May 2021 focuses on extending the deadlines or time limits for various compliance requirements under Section 119. The relaxations are as laid down below:
 
  1. The last date of filing appeals to the Commissioner (Appeals) under Chapter XX of the ITA, has been extended to 31st May 2021 from 1st April 2021. The filing may also be made within the time period provided under the sections, whichever is later.
 
  1. Objections to Dispute Resolution Panel (DRP) under Section 144C of the Act, can be filed by 31st May 2021 or within the time period provided under the section, whichever is later.
 
  1. The last date of filing for Income-tax returns in response to notices under Section 148 of the ITA, has been extended to 31st May 2021 from 1st April 2021 or the time period mentioned therein, whichever is later.
 
  1. Filing of belated return under sub-section (4) and revised return under sub-section (5) of Section 139 of the Act, for Assessment Year 2020-21, which was required to be filed on or before 31st March 2021, may be filed on or before 31st May 2021.
 
  1. Payment of taxes deducted at source under Section 194-IA, Section 194-IB and Section 194M of the ITA and filing of challan-cum-statement for such tax deducted to be filed under Rule 30 of the Income Tax Rules, may be paid or furnished on or before 31st May 2021. The date has been extended from 30th April 2021.  
 
  1. Declaration and statements in Form No. 61 may be furnished on or before 31st May 2021.
 
The above extensions will provide some relief to taxpayers and businesses as the second wave of the pandemic continues and newer restrictions are introduced. These extensions will help reduce the compliance burdens that are imposed on the taxpayers and businesses during the April-May period as it is also the end of the financial year.