GUJARAT HIGH COURT SEEKS EXPLANATION FROM CBDT OVER FAILURE TO EXTEND AUDIT REPORT DEADLINE ALONGSIDE ITR FILING EXTENSION:

The Gujarat High Court has raised concerns regarding the Central Board of Direct Taxes (CBDT)’s decision to extend the due date for filing the Tax Audit Report without simultaneously extending the due date for filing the Income Tax Return (ITR) for the financial year 2024–25. The Court was hearing a series of petitions filed under Section 44AB of the Income Tax Act, 1961, seeking an extension of the specified date for filing the Tax Audit Report. The Division Bench comprising Justice Bhargav D. Karia and Justice Pranav Trivedi observed that when the CBDT extends the specified date for filing audit reports, the due date for filing the ITR should also be correspondingly extended by one month.

The Court referred to its previous decisions where it had held that any extension of the specified date for the audit report must be accompanied by a similar extension of the ITR filing date under Section 139(1) of the Act. In view of this, the Bench questioned the CBDT for not issuing a simultaneous notification extending the ITR deadline when it had already extended the audit report due date. The judges stated that the Board was required to explain why such a simultaneous notification was not issued, especially when past judicial interpretation clearly deemed the ITR filing date to be automatically extended in such circumstances.

The petitions were filed by various taxpayers and associations, represented by Advocate Dhinal A. Shah, who argued that the CBDT’s actions were inconsistent with the statutory framework and judicial precedents. He submitted that the “specified date” for filing the audit report, as per Explanation (ii) to Section 44AB, must necessarily fall one month prior to the due date for filing the return of income under Section 139(1). Therefore, when the CBDT extends the audit report deadline, it logically follows that the ITR filing date should also be extended by one additional month. Failure to do so, the petitioner argued, places undue hardship on taxpayers and professionals who are already constrained by the compliance timelines.

After the petitions were filed, the CBDT issued a Circular dated September 25, 2025, extending the “specified date” for furnishing the audit report for the financial year 2024–25 (relevant to assessment year 2025–26) from September 30, 2025, to October 31, 2025. This amendment was produced before the Court as part of the proceedings. The Court acknowledged that the grievance of the petitioners regarding the extension of the audit report date had been addressed through this circular. However, the Court noted that the issue regarding the simultaneous extension of the ITR filing due date remained unresolved.

The petitioner’s counsel emphasized that in the absence of an extension of the ITR filing due date, the benefit of extending the audit report deadline becomes redundant. Since the law explicitly ties the “specified date” to the return filing date, separate extensions create confusion and unnecessary procedural complications.

The respondent, represented by Advocate Pradip D. Bhate, appeared for the CBDT and was asked to respond to the Court’s query on the rationale behind not issuing a parallel notification for the ITR extension. The Court has sought an explanation from the CBDT to clarify this inconsistency and to ensure that future extensions are issued in a coordinated manner, maintaining consistency with both the statute and judicial directions. The matter is expected to have broader implications for taxpayers, auditors, and tax practitioners across the country, as it addresses the recurring issue of mismatched compliance deadlines.