In a landmark decision, the Bombay High Court has directed the Central Board of Direct Taxes (CBDT) to extend the deadline for filing income tax returns (ITRs) from December 31, 2024, to January 15, 2025. This decision comes after a Public Interest Litigation (PIL) filed by the Chamber of Tax Consultants highlighted issues preventing taxpayers from claiming their rightful rebate under Section 87A of the Income Tax Act.
Section 87A was introduced in 2013 through the Finance Act to provide tax relief to lower-income taxpayers. Initially, it allowed a rebate of up to ₹2,000 for individuals with an income not exceeding ₹5 lakh. Over time, the rebate amount and eligibility thresholds were revised to better align with taxpayer needs.
A crucial issue arose when the tax department made changes to the e-filing utility software on July 5, 2024. This modification disabled taxpayers from claiming the Section 87A rebate if their income was taxable at special rates under the new tax regime (Section 115BAC).
The Bombay High Court noted that procedural errors, such as software updates, should not override taxpayers’ substantive rights. The Court emphasized the following:
The Chamber of Tax Consultants filed the PIL to address the arbitrary nature of the July 5 software modification. Their key arguments were:
To protect taxpayer rights, the Court has provided interim relief:
This ruling underscores the principle that procedural errors should never undermine statutory rights. It reaffirms:
By extending the filing deadline and addressing the Section 87A issue, the ruling offers relief to eligible taxpayers and sends a strong message about the importance of upholding legislative intent.
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