Direct Tax Alert - CBDT clarifies on time limit for filing appeals before the First Appellate Authority
28 May 2021
With the onset of the COVID-19 pandemic in India and nationwide lockdown being declared, India’s Apex Court (SC), taking cognizance of gravity of the situation, had passed an order1 on 23 March 2020 extending the period of limitation for filing of petitions, applications, suits, appeals and all other proceedings. This order was in operation till 8 March 2021 when the SC seeing COVID-10 cases going down and expecting normalcy to return, passed an order revoking its earlier order. Through this order, it directed to exclude the period from 15 March 2020 to 14 March 2021 while computing the period of limitation. However, with the second wave of COVID-19 hitting India, the SC vide order dated 27 April 2021 restored its original order dated 23 March 2020 and in continuation of the order dated 8 March 2021 directed that the period(s) of limitation, as prescribed under any General or Special Laws in respect of all judicial or quasi-judicial proceedings, whether condonable or not, shall stand extended till further orders.
Soon thereafter, the Central Board of Direct Taxes (CBDT) had issued a circular2 on 30 April 2021 extending various deadlines. As per this circular, the deadline for filing an appeal3 before the First-Appellate Authority which fell between 1 April 2021 and 31 May 2021, is extended to 31 May 2021. Thus, this circular is in direct contrast with the SC’s order of 27 April 2021. With a view to address this matter, recently, the CBDT has issued another circular4.
We, at BDO in India, have analysed and summarized the said circular hereunder:
The CBDT have clarified that if different relaxations are available to the taxpayers for a particular compliance, the taxpayer is entitled to the relaxation which is more beneficial to him. Thus, for the purpose of counting the period(s) of limitation for filing of appeals before the First Appellate Authority under the IT Act (referred to as Commissioner of Income-tax (Appeals) in the circular), the taxpayer is entitled to a relaxation which is more beneficial to him. Hence, the said limitation stands extended till further orders as ordered by the SC in Suo Moto Writ Petition1.
This is a welcome and timely clarification from the CBDT. While the taxpayer could have taken support of SC’s order for cases where the appeals were filed post 31 May 2021 (and whose deadline fell between 1 April 2021 and 31 May 2021), it would result into protracted litigation. While this Circular specifically refers to the Commissioner of Income-tax (Appeals), it is silent when it comes to the Dispute Resolution Panel (DRP) – whether the deadline for filing an objection before the DRP also stands extended in light of the SC order?
3The due date to file an appeal before the first-appellate authority under the IT Act is within 30 days from the date of receipt of order against which is appeal is preferred.
4Circular No. 10/2021, dated 25 May 2021