How many previous years Income Tax returns can be filed after due date?

Karneeti Part 81

How many previous years’ Income Tax returns can be filed after due date? Let’s remove confusion.

Arjuna (Fictional Character): Krishna, just a few days are left for the end of financial year 2014-15. Some lethargic tax payers are in hurry for filing their Income tax return for Financial Year 2012-13 and 2013-14, but the due date of filing the return is July or September. How many previous years’ Income Tax returns can be filed?

Krishna (Fictional Character): Arjuna, for the Financial Year 2013-14 the due date for filing for a salaried person or other tax payers is 31st July 2014 and for any company and other tax payers is 30th September 2014 and for transfer pricing applicable assesse it is 30th November. However, there are certain provisions under Income Tax Act, applicable for tax payers for filing their return after the due date. But please note that they come with restrictions.

Arjuna: Krishna, if the tax payer has not filed the return before the due date then how should the tax payer file the return later?

Krishna: Arjuna, if the return is not filed as per section 139(1) of The Income Act then the tax payer can file the return within 1 year from the end of assessment year. For e.g. return for Financial Year 2012-13 can be filed till 31st March 2015 and for the Financial Year 2013-14 return can be filed up to 31st March 2016. But please note that, the return filed after the due date i.e. 31st July or 30th September is considered as Late Return of section 139(4).

Arjuna: Krishna, if the tax payer wants to file the return of preceding to previous years then what?

Krishna: Arjuna, as per income tax act return of the preceding years e.g. for F.Y. 2011-12 filed now, is generally called “time bared”. Further many tax payers manually submit the preceding 2 or 3 previous years return to complete their remaining responsibilities. However, whether to consider these returns or not is the discretion of the department. Income tax department may decide whether a penalty is to be imposed or not for such type of return. So tax payer should avoid filing a late return.

Arjuna: Krishna, what would happen if the tax payer has not filed the return?

Krishna: Arjuna, it is the responsibility of the tax payer to file the return. If the tax payer receives the notice of enquiry under section 142(1) or notice of Escaping income under section 148 then tax payer may file the return before the date as mentioned in notice or before completion of Assessment. This means the department gives one more chance but penalty can be levied by the department in such conditions.

Arjuna: Krishna, what can be the consequences if the tax payer has filed the return after due date i.e Late return?

Krishna: Arjuna, for maintaining discipline and for planning, the department decides a certain due date for filing the return. If this is not followed then the tax payer has to bear the consequences. The following can be the consequences for filing late return:-

1. If late return is filed then it cannot be revised

2. If loss is shown in the return then it cannot be carried forward

3. Penalty of Rs. 5,000 can be imposed if the tax payer does not file the return of 2013-14 before 31st March 2015

4. If a tax liability arose to the taxpayer then an interest will be imposed

5. If there is refund to the tax payer then after the due date he will not get the amount of interest.

Arjuna: Krishna, if tax payer has not filed return within due dates then should he file the return or what is the remedy?

Krishna: Arjuna, even though it is late the tax payer should file the return. All tax payers who have not filed the return for 2012-13 and 2013-14 then they should file the return before 31st March 2015.  For e.g. If taxpayer is having tax liability for preceding to 2012-13 year then the tax payer should pay tax and submit the Computation of Income, copy of challan along with the application to the department.  It’s a voluntary compliance form the tax payer hence, lesser interest and penalty may be levied otherwise tax payer will have to face the consequences. If there is refund of previous years then taxpayer may make application to the commissioner for claiming refund.

Arjuna: Krishna, what should the tax payer learn from this?

Krishna: Arjuna, Tax payer should file the return before due date because due to computerization it is easy to find the defaulter. Further if there are entries in form 26AS of TDS and if the return is not filed then it can be problematic for the tax payer. Further if return is not filed within the due date then banks may not consider return for Loan purpose, etc.  Please note that, while driving a vehicle on the route of laws, return should be filed before due date, as there is no U turn and in future Toll needs to be paid i.e. penalty would be imposed.