Direct & Indirect Taxes, Tax Ready Reckoner, Tax Management, Tax Act. & Rules, Tax Planning & Tax Savings.

Direct & Indirect Taxes, Tax Ready Reckoner, Tax Management, Tax Act. & Rules, Tax Planning & Tax Savings.

Return of Income [Section 139 to 140]

Return of Income [Section 139 to 140]

Table of Contents

1.   [Section 139(1)]- Submission of Return of Income

According to section 139(1), the following persons are required to furnish return of income:

(1) A company or a firm

1. Every company has to file a return in respect of its income or loss in every assessment year. Hence, the following companies are also required to file return of income even if there is no income/ loss:

(a)        a company whose entire income is exempt from tax e.g., company engaged in agriculture business.

(b)   a public limited company though incorporated but has not received certificate of commencement of business.

(c)   defunct company which is not yet liquidated

(d)   a private limited company which is incorporated but is in the process of setting up the business.

(e)   a foreign company, if it has some business connection in India or is operating in India whether such company is having income or not.

2.   Similarly, it shall be obligatory for the firm to file return of income in every case.

(2)        A local authority, if its total income during the previous year exceeds the maximum amount which is not chargeable to income tax; or (3)        A person (other than a company or a firm or a local authority), if—

(i)           his total income or

(ii)          the total income of any other person in respect of which he is assessable under the Income-tax Act, during the previous year exceeds the maximum amount which is not chargeable to income-tax. shall, furnish a return of his income or the income of such other person.

Further, the Finance (No. 2) Act, 2019 has inserted seventh proviso to section 139(1) so as to provide that a person shall be mandatorily required to file his return of income, if during the previous year, he—

(i)           has deposited an amount or aggregate of the amounts exceeding ₹1 crore in one or more current account maintained with a banking company or a co-operative bank; or

(ii)          has incurred expenditure of an amount or aggregate of the amounts exceeding ₹2,00,000 for himself or any other person for travel to a foreign country; or

(iii)         has incurred expenditure of an amount or aggregate of the amounts exceeding ₹1,00,000 towards consumption of electricity; or

(iv)          fulfils such other prescribed conditions, as may be prescribed.

1.         In respect of Individual, HUF, AOP or Artificial, Juridical person, filing of return of income shall be compulsory if their total income without giving effect to provisions of section 54 or 54B or 54D or 54EC or 54F or 54G or 54GA or 54GB or Chapter VIA relating to deduction u/s 80C to 80U exceeds the maximum amount which is not chargeable to income tax.

2.         Although it is mandatory to file a return of income only when the total income exceeds the maximum exemption limit but the law does not prohibit the assessee to file a return of income even if his total income does not exceed the maximum exemption limit.

3.         Any other person for the above purpose: 

An assessee, in addition to filing return of his own total income, is under an obligation to file a return of income of another person in respect of whom he is assessable. These words are perhaps intended to cover cases of representative assesses and legal representatives who are under a liability to be assessed on income beneficially belonging to other persons under sections 159 to 168 e.g.  guardian of a minor (if minor is separately assessed) lunatic or idiot, trustee of a trust, executor of an estate of a deceased person, liquidator of a company in liquidation.

(1)   Resident person to file return of income in certain cases even though not required otherwise:

A person, being a resident other than not ordinarily resident in India within the meaning of section 6(6), who is not required to furnish a return under section 139(1) and who at any time during the previous year, —

(a)        holds, as a beneficial owner or otherwise, any asset (including any financial interest in any entity) located outside India or has signing authority in any account located outside India; or

(b)        is a beneficiary of any asset (including any financial interest in any entity) located outside India,

shall furnish, on or before the due date, a return in respect of his income or loss for the previous year in such form and verified in such manner and setting forth such other particulars as may be prescribed.

However, in case of an individual, being a beneficiary of any asset (including any financial interest in any entity) located outside India, the return of income shall not be necessary in a case where, income, if any, arising from such asset is includible in the income of the person referred to in clause (a) above.

(2)   Due Date of Furnishing Return of Income [Explanation 2 to Section 139(1)]:

The return of income must be filed in a prescribed form/specified computer readable media and verified in the prescribed manner, on or before the due date mentioned in Explanation 2 to section 139(1), which is as under:

(a) where the Assessee (other than an Assessee referred to in clause (b) below) is— Due date of furnishing the return of income Amendment made by the Finance Act, 2020, A.Y. 2020-21
(i) a company; or
(ii) a person (other than a company) whose accounts are required to be audited under this Act or under any other law for the time being in force; or 30th. September of the assessment year 31st October of the assessment year
(iii) a working partner of a firm whose accounts are required to be audited under this Act or under ani’ other law for the time being in force, The word working
written along with the
word partner has
been omitted. Hence,
the due date of
furnishing the return
of income for partner
(whether working or
non-working) of a firm
shall be 31st October
(b) in the case of an Assessee who is required to furnish a report referred to in section 92E (i.e., where a person has entered into an international transaction or specified domestic transaction aggregating to an amount exceeding Rs. 5 crore / Rs. 20 crores as the case may be) 30th. November of the assessment year No change in the due date of furnishing the return of income but the word “working” in case of a partner is also omitted
(c)  in case of any other Assessee, 31st. July of the assessment year No change

2.   Consequences of Not Filing the Return of Income within the Due Date or for Not Furnishing the Return of Income

1. [Section 234A (1)]- Interest for default in furnishing return of income under section 139(1) or (4) or in response to a notice under section 142(1):

The Assessee is liable to pay interest in the following cases:

(a)        where the return of income is furnished after the due date specified under section 139(1); or

(b)        where the return of income is not furnished by the Assessee.

Rate of Interest:

Simple interest calculated @ 1% p.m. or part of the month.

Period for which Interest is parable:

The interest will be payable for the period commencing on the date immediately following the due date and would end on:

–           in case of (a) above, the date of furnishing the return of income; or

–           in case of (b) above, date of completion of assessment under section 144 (Best Judgement Assessment).

Amount on which interest is parable:

Interest is payable on the amount calculated as under:

Tax determined under section 143(1) or on regular assessment under sections 143(3)1144/14711 53A
Less: (i) Advance tax, if any paid
(ii)  Tax deducted / collected at source
(iii)  Any relief of tax allowed under section 89 (Inserted by the Finance (No. 2) Act, 2019, w.e.f. 1.7.2007.
(iv)  Any relief / deduction of tax allowed under sections 90, 90A and 91
(v)  Any tax credit allowed to be set off in accordance with the provisions of section 115JAA (MAT credit) or section 115JD (AMT credit)
Amount on which Interest is payable [ – ]

3. Fee for delayed filing of return of income

In order to ensure that return is filed within due date, the Act has inserted the following new section 234F:

[Section 234F]- Fee for default in furnishing return of income.

Amount of fee payable for late filing of return of income [Section 234F (1)]:

Without prejudice to the provisions of this Act, where a person required to furnish a return of income under section 139, fails to do so within the time prescribed in section 139(1), he shall pay, by way of fee, a sum of, —

(a)        Rs. 5,000, if the return is furnished on or before the 31st day of December of the assessment year;

(b)        Rs. 10,000 in any other case:

However, the total income of the person does not exceed Rs. 5,00,000, the fee payable under this section shall not exceed Rs. 1,000.

Provision applicable for return furnished for assessment year 2018-19 and onwards [Section 234F (2)I:

The provisions of this section shall apply in respect of return of income required to be furnished for the assessment year commencing on or after the 1st day of April, 2018.

Prosecution:

Willful failure to furnish return of income may also attract prosecution under section 276CC.

4.   [Rule 12]- Form and Manner of Furnishing Return of Income

(1)   Forms of Furnishing Return of Income [Rule 12]

As per rule 12(1), The return of income required to be furnished under section 139(I) or 139(3) or 139(4A) or 139(4B) or 139(4C) or 139(4D) or 139(4E) or 139(4F) or section 142(1)(I) or section 148(1) or section 153A relating to the assessment year commencing on the 1St day of April, 2019 shall be in the relevant Forms, —

S.No. Form of Description Form Name
1. Who can use this Form ?

This Form can be used by an individual who is a ITR-1 resident other than not ordinarily resident and whose total income includes SAHAJ income chargeable to income tax, under the head—

(a)               Salaries or income in the nature of family pension as defined in the Explanation to section 57(iia)

(ii)        Income from House Property, where Assessee does not own more than one house property and does not have any brought forward loss or loss to be carried forward under the head

(a)               Income from Other Sources except Winning from Lottery and Income from Race Horses and does not have loss under that head

Further, this Form can be used by the individual if his total income does not exceed Rs. 50,00,000.

Who cannot use this Form?

This form cannot be used by an individual whose total income includes—

(a)        Income from more than one house property; or

(b)        Income from Winnings from lottery or income from race horses; or

(c)        Income under the head “Capital gains” e.g., short-term capital gains or long-term capital gains from sale of house, plot, shares, etc.; or

(d)        Income from agriculture exceeding Rs. 5,000; or

(e)        Income from business or profession; or

(f)         Loss under the head “Income from other sources”; or

(g)        Income taxable under section 115BBDA; or

(h)        Income of the nature referred to in section 115BBE; or

(i)         Person claiming relief of foreign tax paid under section 90, 90A or 91; or

(j)         Any person who—

(I)         has assets (including financial interest in any entity) located outside India;

(Ia)       has signing authority in any account located outside India:

(Ib)       has income from any source outside India;

(Ic)       has income to be apportioned in accordance with provisions of section 5A;

(Id)       has claimed deduction under section 57, other than deduction claimed under clause (iia) thereof;

(Ie)       is a director in any company;

(If)        has held any unlisted equity share at any time during the previous year;

(Ig)       is assessable for the whole or any part of the income on which tax has been deducted at source in the hands of a person other than the Assessee;

(a)               has claimed any relief of tax under sections 90 or 90A or deduction of tax under section 91;

(a)               has agricultural income, exceeding Rs. 5,000;

(IV)       has total income, exceeding Rs. 50,00,000;

(V)        has income taxable under section 115BBDA;

(VI)       has income of the nature referred to in section 115BBE;

(VII)     owns a house property in joint-ownership with two or more persons; or

(VIII)    is required to furnish a return of income under seventh proviso to section 139(1).

ITR-1 SAHAJ
2. Who can use this Form?

This Form can be used by a person being an individual [not being an individual to whom serial number 1 applies] or a Hindu undivided family whose total income does not include income under the head business or profession.

Who cannot use this Form?

This return form should not be used by an individual or HUF whose total income includes income from business or profession.

ITR-2
3. Who can use this Form?

This Form can be used by an Individual & IIUF other than those covered under (1) or (2) above or (4) below and having income under the head business or profession.

ITR-3
4. Who can use this Form?

This Return Form can be used by a person being an individual or a Hindu undivided family, who is a resident other than not ordinarily resident, or a firm, other than limited liability partnership firm, which is a resident deriving “income under the head Profits or gains of business or profession” and such income is computed in accordance with special provisions referred to in section 44AD, section 44ADA and section 44AE of the Act for computation of such income:

Note 1:

 The income computed shall be presumed to have been computed after giving full effect to every loss, allowance, depreciation or deduction under the Income-tax Act.

Note 2:

Further, in a case where the income of another person like spouse, minor child, etc. is to be clubbed with the income of the Assessee, this Return Form can be used only if the income being clubbed falls into the above income categories.

Who cannot use this Form?

This Form cannot be used by a person who, —

has assets (including financial interest in any entity) located outside India

(Ia)         has signing authority in any account located outside India;

(Ib)         has income from any source outside India

(Ic)          has income to be apportioned in accordance with provisions of section 5A;

(Id)         is a director in any company;

(Ie)         has held any unlisted equity share at any time during the previous year,

(If)          has total income, exceeding fifty lakh rupees;

(Ig)         owns more than one house property, the income of which is chargeable under the head “Income from house property”;

(Ih)         has any brought forward loss or loss to be carried forward under any head of income;

(Ij)          is assessable for the whole or any part of the income on which tax has been deducted at source in the hands of a person other than the assessee,

(a)                    has claimed any relief of tax under section 90 or 90A or deduction of tax under section 91;

has agricultural income, exceeding five thousand rupees:

(IV)         has income taxable under section I I5BBDA:

(V)          has income of the nature referred to in section 1 15BBE; or

(V)          owns a house property in joint-ownership with two or more persons.

SUGAM
(ITR-4)
5. Who can use this Form?

This form can be used by any person not being an individual or a Hindu undivided family or a company or a person covered under serial number 7 below (i.e., this Form is meant for a firm, local authority, co-operative bank, other co-operative societies. LLP, any other AOP / BOI or artificial juridical person)

ITR-5
6. Who can use this Form?

This form can be used by a company not being a company to which serial number 7 applies.

ITR-6
7. Who can use this Form?

This form can be used by any person including a company whether or not registered U/s 25 of the Companies Act, 1956, who is required to file a Return U/s 139(4A) or Section 139(4B) or Section 139(4C) or Section 139(4D).

ITR-7

(2)   [Rule 12(3)]- Types of Person, Condition and Manner of Furnishing Return of Income

As per Rule 12(3), the Return of Income shall be furnished by a person mentioned in column (ii) of the table below to whom the conditions specified in column number (iii) apply, in the manner specified in column (iii) thereof;

SL Person Conditions Manner of Furnishing Return of Income
(i) (ii) (iii) (iii)
1. Individual or
Hindu undivided family
(a)        Accounts are required to be audited under section 44AB of the Act ; Electronically under digital signature;
(b)        Where total income assessable under the Act during the previous year of a person, being an individual of the age of 80 years or more at any time during the previous year; or and who furnishes the return in Form No. SAHAJ ITR-1 or Form No. SUGAM (ITR-4) (A)       Electronically under digital signature; or

(B)        Transmitting the data in the return electronically under electronic verification code; or

(C)          Transmitting the data in the return electronically and thereafter submitting the verification of the return in Form ITR-V; or

(D)         Paper form;

(c)          In any other case. (A)       Electronically under digital signature; or

(B)        Transmitting the data in the return electronically under electronic verification code; or

(C)          Transmitting the data in the return electronically and thereafter submitting the verification of the return in Form ITR-V ;

2. Company In all cases. Electronically under digital signature.
3. A person required to furnish the return in Form ITR-7 (a) In case of a political party; Electronically under digital signature
(b) In any other case (A)       Electronically under – digital signature; or

(B)        Transmitting the data in the return electronically under electronic verification code; or

(C)          Transmitting the data in the return electronically and thereafter submitting the verification of the return in Form ITR-V.

4. Firm or limited liability partnership or any person (other than a person mentioned in Sl. 1 to 3 above) who is required to file return in Form ITR-5 (a) Accounts are required to be audited under section 44AB of the Act; Electronically under digital signature;
(b) In any other case. (A)       Electronically under digital signature; or

(B)        Transmitting the data in the return electronically under electronic verification code; or

(C)        Transmitting the data in the return electronically and thereafter submitting the verification of the return in Form ITR-V.

(3)   [Rule 12A]- Preparation of Return by Authorised Representative

Every authorised representative of an assessee, being an authorised representative specified in section 288(2)(iii), (iv), (v), (vi) or (vii), who has prepared the return of income furnished by the assessee shall, either before making an appearance before the Assessing Officer having jurisdiction to assess that assessee, or immediately after making such appearance, furnish to that officer—

(a)           particulars of accounts, statements or other documents supplied to him by the assessee for the preparation of the return of income; and

(b)          where the authorised representative has for the purpose of preparation of the return of income carried out any examination of such accounts, statements or documents, a report on the scope and results of such examination.

5.   [Section 139B]- New Scheme to facilitate Submission of Returns through Tax Return Preparers

For the purpose of enabling any specified class or classes of persons to prepare and furnish returns of income, the Board may, by way of notification, frame a scheme providing that such persons may furnish their returns of income through a Tax Return Preparer authorised to act as such under the scheme.

This scheme is not applicable for a company or a person who is required to undergo a ‘tax audit’ or ‘audit under any other law’.

It has been further provided that the Scheme framed under the said section shall specify the manner in which the Tax Return Preparer shall assist the persons furnishing the return of income, and shall also affix his signature on such return.

It has also been provided that a Tax Return Preparer may be an individual other than a person referred to in section 288(2)(ii) or (iii) or (iv) or an employee of the specified class or classes of persons, who has been authorised to act as a Tax Return Preparer under the proposed Scheme. In other words, the following persons are not authorised to Act as Tax Return Preparer

—         any officer of a scheduled bank in which the assessee maintains a current account or has regular dealings.

—         a legal practitioner; or

—         a-chartered accountant.

The Scheme notified under the said section shall provide the manner in which a Tax Return Preparer shall be  authorised, the educational and other qualifications to be possessed, and the training and other conditions required  to be fulfilled, by a person to act as a Tax Return Preparer, the code of conduct for the Tax Return Preparer, the  duties and obligations of the Tax Return Preparer, the manner in which the authorisation may be withdrawn, and  any other matter which is required to be or may be specified.

6.   Belated Return [Section 139(4)]

Any person who has not submitted his return of income on or before the due date mentioned under section 139(1), he can still file the return of income. Such a return is called belated/late return.

Belated return can be filed at any time:

(a)          before the section 139 end of the relevant assessment year, or

(b)          before the completion of the assessment,

whichever is earlier. 

Suppose for a company assessee the last date for filing the return of income for previous year 2018-19 (assessment year 2019-20) is 30.9.2019; but a late return may be filed at any time on or before 31.3.2020 (before the end of the assessment year 2019-20) or before the assessment is completed, whichever is earlier.

7.   Revised Return [Section 139(5)]

If an assessee, after furnishing the return of income under:

(a)           section 139(1), or

(b)          section 139(4),

discovers any omission or any wrong statement in the return filed, he may furnish a revised return. Such revised return can be filed at any time:

(a)           before the end of the relevant assessment year, or

(b)          before the completion of the assessment,

whichever is earlier.

For example, if a return of income is filed by the assessee for the assessment year 2019-20 on 15.9.2019 and he afterwards discovers some mistake, he can file a revised return at any time upto 31.3.2020 or before the completion of the assessment, whichever is earlier.

8.   Defective Return [Section 139(9)]

Where the Assessing Officer considers that the return of income furnished by the assessee is defective, he  may intimate the defect to the assessee and give him an opportunity to rectify the defect within a period of 15 days from the date of such intimation or within such further period which, on an application made in this behalf,  the Assessing Officer may, in his discretion, allow; and if the defect is not rectified within the said period of 15 days or, as the case may be, the further period so allowed, then, notwithstanding anything contained in any  other provision of this Act, the return shall be treated as an invalid return and the provisions of this Act shall  apply as if the assessee had failed to furnish the return.

Where the assessee rectifies the defect after the expiry of the said period of 15 days or the further period allowed, but before the assessment is made, the Assessing Officer may condone the delay and treat the return as a valid return.

9.   [Section 140]- Return of Income by whom to be Verified

The return under section 139 shall be verified:

(a)        in the case of an individual

(i)         by the individual himself; or

(ii)        where he is absent from India, by the individual himself or by some person duly authorized by him on his behalf; or

(a)   where he is mentally incapacitated from attending to his affairs, by his guardian or any other person competent to act on his behalf and

(b)   where, for any other reason it is not possible for the individual to verify the return, by any person duly authorized by him in this behalf.

In case of (ii) and (iv) above, the person verifying the return should hold a valid power of attorney from the individual to do so, which shall be attached to the return.

Except in cases mentioned in clause (ii), (iii) or (iv) above, the return of income must be verified by individual personally and not by his agent even if the agent holds a valid power of attorney.

(b)        in the case of a Hindu Undivided Family (HUF) —

only by the Karta.

However, in the following two cases it can be verified by any other adult member of the family:

(i)          where the Karta is absent from India; or

(ii)        where the Karta is mentally incapacitated from attending to his affairs:

(c)        in the case of a Company

(i)         by the managing director thereof, or

(ii)        where for any unavoidable reason such managing director is not able to verify the return, or where there is no managing director, by any director thereof.

(d)        in the case of a Firm

(i)         by the managing partner thereof, or

(ii)        where for any unavoidable reason, such managing partner is not able to verify the return, or where there is no managing partner as such, by any partner thereof, not being a minor;

(e)         in the case of a Limited Liability Partnership (LLP)

by the designated partner thereof or where for any unavoidable reason such designated partner is not able to verify the return or where there is no designated partner as such, by any partner thereof;

(f)        in the case of a Local Authority’

by the principal officer thereof;

(g)        in the case of a Political Party

by the chief executive officer of such party (whether such Chief Executive Officer is known as Secretary or by any other designation);

(h)       in the case of any other association —

by any member of the association or the principal officer;

(I)         in the case of any other person —

(i)         by that person or

(ii)        by some person competent to act on his behalf.

10. Submission of Return of Loss [Section 139(3) read with Section 80]

If a person has sustained a loss in any previous year –

–           under the head “Profits and gains of business or profession” or

–           under the head “Capital Gains” and

–           claims that such loss or any part thereof should be carried forward under section 72(1) or section 73(2) or 73A (2) or section 74(1) and (3) or section 74A (3)

then he may furnish a return of loss within the time prescribed under section 139(1) and all the provisions of this Act shall apply as if ii were a return under section 139(1).

It is not mandatory to file a return of loss (except in case of a company or a firm) as there is no taxable income.

However, as already discussed under section 80 in the chapter on ‘Set off and carry forward of losses’, losses under the head business or profession and capital gain cannot be carried forward unless the return of loss is submitted on or before the due date’ mentioned under section 139(1) and it is duly assessed. If the return of loss is not submitted or is submitted after the due date, such losses cannot be carried forward.

Note:

1.         As already discussed, all losses are not allowed to be carried forward. Therefore, return of loss should be submitted on or before due date only in case of business loss, speculation loss, capital loss or loss on account of owning and maintaining the horses for running in horse races.

2.         It may be noted that filing a return of loss within the due date is necessary for carry forward of losses under sections 72(1), 73(2), 73A (2), 74(1), 74(3) and 74A (3). It does not cover section 71B i.e., carry forward and set off loss of house property. Therefore, loss on account of house property can be carried forward even if the return is submitted late.

3.         Unabsorbed depreciation can also be carried forward even if the return of loss is submitted after the due date, as it is not covered under Chapter VI of set off or carry forward of losses but covered under section 32(2).

4.         Section 139(3) read with section 80. Does not prohibit the set off of losses of the current year while computing the Total Income even if the return is filed after the due date. It only prohibits the carry forward of such losses.

5.         If an Assessee has submitted a return of loss in response to a notice under section 142(1), such loss cannot be carried forward unless it is a loss under the head income from house property. However. Unabsorbed depreciation can be carried forward in this case.

6.         Although the loss of the current year cannot be carried forward unless the return of loss is submitted before the due date but the loss of earlier years can be carried forward if the return of loss of that year(s) was submitted within the due date and such loss has been assessed.

See also  Appeals to Appellate Tribunal [Section 253(1) and (2)]
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