Filing of Income Tax regular return, Loss Return and Revised Return

Let's begin with a small story, there is one person named Mr. Sham residing at Pune, he is having a Raw house of around 5000 square feet, he constructed the same 5 years back, he was living there very happily, Once the officer along with JCB and other machinery comes to his house and said we have to demolish your house as you have not obtained any permission for construction. Mr. Sham was in deep fear and tensed, he requested the officer please wait for few minutes. Thereafter, Mr. Sham went into his house hurriedly, he went to his locker room and looking for the papers, after spending 20 minutes he comes out with the papers which contained the required permission for construction of his Row house, He showed the same to the officers after due verification officer said ohhh.. Sorry..!! There was a mistake, In our record, your house was not updated as legal construction, I will update the same immediately and he left the place.

From the above story, we can conclude that one needs to disclose that he has done the things as per the provision of prevailing Act then the only person is said to be legally compliant. The same thing is applicable for Income Tax compliance also; the person will be said as tax compliant only if he discloses the same through the filing of Income Tax Return and not merely by paying tax.

Let's now understand these things through questions and answers

Q1. Who is required to file the return of Income?

Answer: As per section 139(1) of the Income Tax Act: Every person*:

1. being a company [or a firm]; or
2. being a person other than a company [or a firm], if his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to income-tax,

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

* Person includes - section 2(31) :

(i) an individual
(ii) a Hindu undivided family
(iii) a company
(iv) a firm
(v) an association of persons or a body of individuals, whether incorporated or not
(vi) a local authority
(vii) every artificial juridical person, not falling within any of the preceding sub-clauses

Therefore, section 139 (1) covers almost everyone who has income exceeding the maximum amount not chargeable to income tax.

Q2. What is the time limit or due date for filing of return of income?

Answer:

Q3. Whether a Salaried person can file the return with his employer?

Answer: Yes, as per Finance Act, 2002, w.e.f.01-04-2002 sub-section 1A of 139 inserted where, any person being an individual who is in receipt of income chargeable under the head "Salaries" may, at his option, furnish a return of his income for any previous year to his employer, in accordance with such scheme as may be specified by the Board in this behalf, by notification in the Official Gazette and subject to such conditions as may be specified therein.

such employer shall furnish all returns of income received by him on or before the due date and in such case, any employee who has filed a return of his income to his employer shall be deemed to have furnished a return of income under sub-section (1) of 139, and the provisions of this Act shall apply accordingly

Presently Bulk Filing of Returns by Salaried Employees, 2002/Scheme for Filing of Returns by Salaried Employees' Through Employer, 2004 is available.

Q4. Is it Mandatory to file an online return of Income?

Answer: In some cases, Yes and in some cases No, Section 139(1B) states the persons who are required to file the return in electronic mode and who is not.

In the following cases it is mandatory to file a return of income in electronic form:

1. All company assessee
2. Other assessees who are subject to audit u\s 44AB of the Income Tax Act
3. Every individual and HUF, whose total income exceeds Rs.10 lakhs for the relevant previous year.

In respect of cases not covered above, it is optional for an assessee to file a return in electronic form.

CBDT informed that around 99% of the assessee has filed their return of income in electronic form.

Q5. Is there any exception for the filing of return of Income?

Answer: Yes, The Central Government has empowered any class or classes of persons from the requirement of furnishing a return of income having regard to such conditions as may be specified by way of notification in the official gazette.

Following are the examples:

In case of non-resident covered under sections 115A(1)(a), 115AC and 115BBA, if the following conditions are satisfied:

1. The total income comprises only of the income referred in those sections; and
2. Tax-deductible in respect of such income has been deducted.

Note: A taxpayer claiming Long Term Capital Gain (LTCG) exemption required to file a return of income within due date. (Section 10(38)).

Q6. If there is a loss in the business, do we need to file the return and whether loss can be carried forward?

Answer: Yes, As per the provision of section 139(3) :

1. Any person who 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 the loss or any part thereof should be carried forward under sub-section (1) of section 72, or sub-section (2) of section 73, [or sub-section (2) of section 73A] or sub-section (1) [or sub-section (3)] of section 74, [or sub-section (3) of section 74A], shall furnish a return of loss within a time allowed u/s 139(1) . Any return so filed shall be treated as a return filed u/s 139(1) and all the provisions of the act shall apply accordingly.
2. According to section 80, unless loss return is filed within the due date stipulated u/s 139(3) and loss is determined in pursuance of that return, such loss cannot be carried forward.
3. The above-mentioned condition does not apply to unabsorbed depreciation u/s 32(2), loss under the head “income from House Property” u/s 71B and loss from specified business u/s 73A.

Note: In case of the belated filing of loss return, the assessee may seek remedy by making an application to CBDT for relaxation of time to carry forward the loss for set off-circular 8 dated 16.05.2001.

Q7. If the return is not filed as per time limit prescribed u/s 139(1) can we file a late return?

Answer: Yes, there is a provision called belated return u/s 139(4),

As per amended provision the time limit to file the belated return of income has been reduced by one year and now belated return can be furnished at any time before the end of the relevant assessment year or before completion of the assessment whichever is earlier, this amendment is effective from Ay 2017-18.

Eg. Mr. Vinod (salaried person) could not file his return of income for AY 2018-19 on 31st August 2018 (extended by one month) as required by section 139(1). Then he can file the return of income till 31st March 2019.

Q8. If the return of income is furnished with some discrepancies whether same can be rectified?

Answer: Yes, as per the provision of section 139(5), there is an option to file a revised return.

If any person furnished a return u/s139(1) or in pursuance of the notice issued u/s 142(1) can file a revised return if the assessee discovers any omission or any wrong statement in the return filed earlier.

As per Finance Act, 2016 amendment, now revised return can be filed for a return filed u/s 139(4) originally. As per the recent amendment, such revised return can be filed at any time before the expiry of the relevant assessment year or before completion of the assessment whichever is earlier w.e.f. AY 2018-19

Note: A revised return replaces the original return. Therefore, a return may be revised any number of times within the time limit u/s 139(5).

Eg. Mr. Vinod (salaried person) filed his return of income for AY 2018-19 on 24th Aug 2018 then he can revise his return of income on or before 31st March 2019.

Q9. What are the particulars to be furnished in the return of income?

Answer: As per section 139(6), the assessee shall furnish the following particulars in the prescribed form of the return whenever requires:

1. The details of exempt income
2. Nature and value of the prescribed assets belonging to him
3. Details of bank account and credit card
4. Details of expenditure exceeding the prescribed limits under prescribed heads
5. And such others outgoings as may be prescribed

In case of a person who is engaged in the business or profession following particulars need to be furnished in the prescribed form of the return whenever required:

1. Audit report u/s 44AB
2. Particulars of location and style of the principal place of business or profession and all the branches
3. The extent of the share of the assessee and
4. The names, addresses and the extent of shares of his partners of the firm or other members of the AOP or BOI, as the case may be.

Q10. If we have filed the return of income as per provision of section 139(1),(3),(4) or (5), then how will we know whether correct return or defective return?

Answer: The return filed process gets completed when it is processed by CPC, Bangalore and when we receive intimation for the same u/s 143(1).

However, in some cases return filed can be regarded as defective by the AO under the following circumstances as per section 139(9):

1. Annexure, statements, and columns in the return of income have not been duly filled;

2. Return of income has not been accompanied by:

• Statement showing the computation of tax on returned income;
• Proof of tax claimed to have been deducted or collected at source (TDS or TCS), advance tax paid and self-assessment tax paid; and
• Tax audit report u\s 44AB or if the report was furnished earlier, a copy of such report together with proof of furnishing the report.

Finance Act, 2016, amends section 139(9) and now provides that the return of income will not be regarded defective even if self-assessment tax and interest are not paid on or before the date of filing return of income. Effective from A.Y. 2017-18.

Q11. If the return of income filed was considered as defective u/s 139(9), whether we can rectify the same?

Answer: Yes, The AO may intimate the defect in the return of income to the assessee. And assessee may be called upon to rectify the same within 15 days from the date of service of such intimation or within such extended time allowed on application by the assessee.

If the defect is not so rectified then the AO shall treat the return of income as an invalid return and proceed as it the assessee had failed to file the return.

However, if the assessee rectifies the defect after the time allowed but before the assessment is made, the AO is empowered to condone the delay and treat the return as the valid return of income.

The author can also be reached at camahendra001@gmail.com