Income Tax Return

What is Income tax Return? Why we need to file Income tax returns?

An assessment, under the Indian Income Tax Act, is primarily required to be made for determining the tax liability of an assessee or the loss incurred by him for carry forward and set-off.

Hence, it would be suffice, if these persons file the return of income, viz., those

• Who have taxable income [section 139(1)], or

• Who incur Loss [section 139(3)].

However, over a period of time, it has been found that, for better administration of tax,

• Certain categories of person who do not derive income exceeding the exempted limit, or

• Whose incomes are exempt under the Income Tax Act, India

should also file the return of income, viz., Charitable Trusts, Political Parties and certain other Associations.

These income tax returns have to be filed within a reasonable time in order to avoid the delay in the collection of tax for the Government.

However, for several unforeseen circumstances, some assessees would not be able to comply with the time limit.

Also, there could be inadvertent errors crept into the return filed. These are taken care by providing for separate legal provisions - sections 139(4), 139(5) & 139(9).

Besides, an assessee may be required, under special circumstances, to file returns in response to notices under sections 142(1) or 148(1) or 153A(a) as the case may be.

Hence, the return of income filed by an assessee, can be divided into the following categories: -

• Normal Return

• E-filing of Return

• Belated Return

• Revised Return

• Defective Return and

• Returns in Response to Notices

Belated Income Tax Return

Belated Return [Section 139(4)]

What is Belated Income tax Return? Who is eligible to file belated return?

Any person who has not furnished his return,

• Within the time allowed, or

• In response to a Notice under section 142(1)

may file tax return at any time

• Before the Expiry of One Year from the end of the relevant assessment year, or

• Completion of Assessment whichever is earlier

Effects of Late Filing of Return of Income: - (w.e.f AY 2006-07)

• Exemption u/s 10B will be denied.

• Deductions u/s 80-IA, 80-IAB, 80-IB, 80-IC, 80-ID and 80-IE will be denied.

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Revised Income Tax Return

Revised Return [Section 139(5)]

What is Revised Income tax Return? Who is eligible to file revised return?

Any person who has furnished his return,

• Within the time allowed, or

• In response to a Notice under section 142(1)

discovers any omission or any wrong statement therein, he may furnish a revised return at any time

• Before the Expiry of One Year from the end of the relevant assessment year, or

• Completion of Assessment whichever is earlier

Note: -

• A Loss Return can be revised, as a return filed under section 139(3) is treated as return filed under section 139(1).

• Belated returns filed under section 139(4), is not explicitly covered by section 139(5). Hence, they cannot be revised.

• However, A Return filed u/s 139(4A), 139(4B), 139(4C) and 139(4D) can be revised.

• Revised return filed u/s 139(5) substitutes the return filed or deemed to be filed u/s 139(1). Hence, any number of revised returns can be filed for the original return filed on time.

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Defective Income Tax Return

Defective Return [Section 139(5)]

What is Defective Income tax Return?

A defective return is a return which does not fulfil all the conditions mentioned below: -

1. • The annexures

   • Statements and columns in the Return of Income Under

     • Each Head of Income

     • Computation of Gross Total Income

     • Computation of Total Income

     have been duly filled up.

2. The return is accompanied by a statement showing the computation of tax payable on the basis of the return.

3. The return is accompanied by the audit report referred to in section 44AB, or, where the report has been furnished prior to the furnishing of the return, by a copy of such report together with the proof of furnishing the report.

4. The return is accompanied by proof of -

   • The tax deducted at source (TDS)

     Note: -

     However, the return shall not be regarded as defective -

     • Certificate of tax deducted at source was not furnished under section 203 of the Act to the person filing return of income, and

     • Such certificate is produced within a period of 2 years specified under section 155(14)

   • Advance tax, if any, claimed to have been paid.

   • Tax of self-assessment, if any, claimed to have been paid.

5. Where regular books of account are maintained by the assessee, the return is accompanied by copies of Particulars as given below.

   Person	Accounts
   Business entity	Manufacturing Account Trading Account Profit and Loss Account Income and Expenditure Account, or any other such Account and Balance Sheet
   Proprietary Business or Profession	Personal account of the Proprietor.
   Firm/AOP/BOI	Personal accounts of the Partners/Members.
   Partners/Members of firm/AOP/BOI	Personal accounts in such Entity.

6. Where the accounts of the assessee have been audited, the return is accompanied by copies of -

   • the audited profit and loss account and balance sheet, and

   • the auditor's report (including cost audit report, if any, conducted out under section 233B of the Companies Act, 1956)

7. Where regular books of accounts are not maintained by the assessee, the return is accompanied by a statement indicating -

   • Turnover or Gross Receipts, Gross Profit, Expenses and Net Profit of the business or profession and the basis on which they have been computed.

   • Total Sundry Debtors, Sundry Creditors, Stock-in-trade and Cash balance as at the end of the previous year.

Note: -

Where the assessing officer considers that the return of income furnished by the assessee is defective, he may intimate the defect to assessee and give him an opportunity to rectify the defect within 15 days from the date of intimation of the defect.

On application by the assessee, this time limit may be extended by the assessing officer.

If no rectification is carried out within the 15 days period, or within such extended period, the assessing officer shall treat the return as invalid and all the provisions of the Act shall apply as if no return has been filed by the assessee.

If the assessee rectifies the defect after the time limit of 15 days or such other extended period (if any), but before the assessment is made, then the assessing officer may condone the delay and treat the return as valid return.

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Income Tax Returns in response to Notices

When an assessee fails to furnish his income tax return within the time allowed under section 139(1), the Assessing Officer may serve a notice under section 142(1)

• Requiring the assessee to Furnish the Return of his Total Income, or

• the Total Income of any other person in respect of whom he is assessable.

Where the assessing officer is in the process of making assessment under section 147, he shall before making any assessment/reassessment serve a notice under section 148(1) requiring him to furnish a return of income.

Similarly, where a search has been initiated under section 132, or requisition under section 132A has been made on a person, before making any assessment, the assessing officer shall issue a notice under section 153A(a) requiring him to furnish the return of income.

While making an assessment under section 153C on a person, other than the person who had been searched, a similar notice is to be issued requiring such other person to furnish the return of income.

All these income tax returns are required to be furnished within the date specified on the respective notices.

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