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Tax Audit 2026 Crisis Reaches Parliament & High Court

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Tax Audit 2026 Crisis Reaches Parliament & High Court: Extension Demands Peak & ITAT Delhi Delivers Vital Foreign Tax Credit Relief

By CA Shivam Gupta | Published: September 26, 2026

EXECUTIVE SUMMARY

With the statutory September 30 deadline for Tax Audit Reports under Section 44AB and Trust Audits under Section 12A/10(23C) less than 96 hours away, the professional accounting community across India is facing acute operational pressure. The escalating compliance strain has transcended tax bar memorandums to become a matter of formal parliamentary advocacy, with Members of Parliament directly petitioning Union Finance Minister Nirmala Sitharaman and a writ petition being instituted before the Madhya Pradesh High Court for judicial intervention. Meanwhile, in international taxation, the Income Tax Appellate Tribunal (ITAT) Delhi Bench has delivered a crucial taxpayer-friendly decision, holding that late filing of Form 67 cannot extinguish an assessee's statutory entitlement to Foreign Tax Credit (FTC) under Section 90 of the Income-tax Act, 1961.

1. THE TAX AUDIT BOTTLENECK: PARLIAMENTARY & JUDICIAL ACTION

  • MPs Appeal to FM: Lok Sabha MPs P.C. Gaddigoudar and P.P. Chaudhary have formally requested an extension to October 31, 2026.
  • MP High Court Writ: Writ petition filed under Article 226 citing schema updates, ICAI non-corporate standardized reporting norms, and Section 43B(h) MSME aging.


2. ITAT DELHI ON FORM 67 & FOREIGN TAX CREDIT (RULE 128)

  • Rule 128 Is Directory: Procedural delays in filing Form 67 cannot extinguish substantive relief under Section 90 and DTAA treaties.
  • Treaty Rights Prevail: Double taxation avoidance relief is a statutory and treaty right that cannot be defeated by non-mandatory filing timelines.
  • Customs Circular 18/2026: Additional product qualifiers mandated for textile exports from November 1, 2026.

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