Adv. Srijana Adhikari et al. v. Inland Revenue Department et al.(Writ No.: 081-WO-1090)

Background of the Case

Advocate Srijana Adhikari and Chartered Accountant Shailendra Uprety filed a writ petition before the High Court, Patan challenging the legality of a notice issued by the Inland Revenue Department on 2081/06/07 B.S. (September 23, 2024 A.D.), which imposed restrictions on the extension of deadlines for filing income tax returns.

The petitioners highlighted that Section 98 of the Income Tax Act, 2058 grants taxpayers the right to submit a written application for an extension of time, which may be granted for up to three months based on reasonable grounds. However, the impugned notice:

• Prevented taxpayers from applying for extensions in accordance with the law.
• Introduced annual turnover as the sole criterion for granting extensions, which was not provided in the statute.

The petitioners argued that the notice violated constitutional rights guaranteed under Articles 16, 17, 18, 25, and 46, particularly the rights to equality, freedom to practice profession, and access to justice. Petitioner contended that the Inland Revenue Department exceeded its authority, as an administrative notice cannot curtail statutory rights or override provisions of an Act of Parliament.

Court’s Interim order

The High Court granted an interlocutory interim order, directing the Inland Revenue Department not to immediately implement or enforce the notice.

Following the interim order, the Department rectified the notice, allowing all taxpayers to apply for deadline extensions regardless of turnover or other restrictions.

On the final hearing, the Court dismissed the writ petition, noting that the petitioners’ concerns had already been addressed through the Department’s rectification of the notice.

Significance of the Case

• Protection of Statutory Rights: The case reinforced that administrative authorities cannot override statutory provisions or curtail taxpayers’ rights guaranteed under law.
• Constitutional Safeguards: It highlighted the role of constitutional provisions in protecting equality, access to justice, and the right to practice profession from arbitrary administrative actions.
• Practical Impact: The decision ensured that all taxpayers in Nepal can apply for extensions of income tax filing deadlines based on the statutory framework, irrespective of turnover or other arbitrary conditions.
• Judicial Oversight of Administrative Action: The case demonstrated how timely judicial intervention can correct administrative overreach, safeguarding the rights of citizens.