Income tax notice: furnishing information

Tax queries 380 views 2 replies

CA Hardik Vyas

Practicing Chartered Accountant

130 Points Joined January 2010

Dear Friends,

BASIC INFORMATION TO UNDERSTAND SITUATION.

My Client, a partnership firm ( having 2 partners), recently had received an Income Tax Notice Regarding Furnishing Return & Information.

My Client had filled last Income Tax Return for A.Y. 2005-06, till today they have not filled any Returns.

They do not have any income beyond the Tax Limit, also they did not made any Bank Transactions.

Both the Partners had regularly filed their Personal Income Tax Returns without stating any income from this firm.

NOTICE RECEIVED As Under:

Department does not mentioned any section therein.

Subject: Furnishing of Information in Respect of Returns filed -reg.

Please refer to the above.

1) As per the records available with this office, your PAN is ______. However, it is seen that you have not filed any returns of Income till date.

2) You are therefore, requested to please give the reasons within 10 days from the receipt of this letter as to why the same have not been filed till date.

3) It the returns for AY 2011-12 & 2012-13 are required to be filled the same may please be filed immediately.

4) Your co-operation in this matter will be highly appreciated.

____________________________________________________________

Now Questions are:

What should be the answer for non-filing of past returns? any penalty may be imposed?

Please Give the best excuse for non-filing of return to be given

If Client files returns of AY 2011-12 & 2012-13, should it be filed or not?

Any Suggestions?

Please tell me the perfect steps to be taken in this regard.

Thank You in Advance

Replies (2)

CA MANISH AGRAWAL

Practice

539 Points Joined February 2010

Regarding the notice u should must file NIL income return for year they said.

again they should show by evidence or any documentary proved which is showing that there is no any chargable income .U should fully cooperate with deparment.

yes, they may imposed penalites if they finding any tax evasion.

AKASH GANERIWALA

Manager - Taxation

72 Points Joined August 2009

As per 3rd proviso to section 139 "Every company or a firm shall furnish on or before the due date the return in respect of its income or loss in every previous year".

Thus it is mandatory to file a return for a firm every if there is no income chargeable to tax.

Penalties are going to be levied for non filling of Returns, however to the satisfaction of AO if necesary evidence is shown that there was no income chargeable to tax, your client can prevent the AO from completing the assessment under section 144 i.e Best Judgement assessment, which can be even worse then levying penalties.