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Why the extension?
The court observed that recent changes 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 reduce their tax liability to zero.
The division bench, led by Chief Justice Devendra Kumar Upadhyaya and Justice Amit Borkar, highlighted that the software updates dated July 5, 2024, blocked rebate claims for certain taxpayers.
The judges emphasised that such procedural modifications undermine the legislative intent of the rebate and impose an unfair burden on taxpayers.
PIL claims procedural changes violate rights
Senior advocate Percy Pardiwala, representing the petitioner, argued that the software changes were arbitrary and deprived taxpayers of their statutory rights. The PIL stated that the Section 87A rebate is a fundamental entitlement under the Income Tax Act, which cannot be curtailed through technical updates.
The petition also urged the court to direct the CBDT to allow affected taxpayers to file revised returns
under Section 139(5) of the Act to claim the rebate retroactively.
Income tax department’s response
The Income Tax Department justified the changes, claiming they were necessary to address peculiarities in rebate claims and ensure compliance with legal provisions.
However, the court dismissed this argument, asserting that administrative adjustments should not override substantive rights guaranteed by legislation.
Interim relief granted
Acknowledging the issue, the court granted interim relief by asking the CBDT to extend the ITR filing deadline.
The court stated, “Taxpayers should not bear the consequences of administrative inefficiencies or unilateral executive actions that undermine the legislative intent.”
The case will see its final hearing on January 9, 2025.
The court will then evaluate the broader implications of the software changes and their impact on taxpayers’ rights.
For now, taxpayers have until January 15, 2025, to file their returns and claim the rebate, as per the court’s interim order.
First Published: Dec 24, 2024 9:21 AM IST
