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  • Section 139 - Late Filing of Income Tax Returns

    Section 139 of the Income Tax Act 1961 deals with the different kinds of returns that can be filed in case the person or the entity in question has not filed tax returns before the expiry of the prescribed deadline. In general the due dates prescribed by which individuals or entities are required to file their income tax returns are as follows:

    • July 31st - All persons who are not required to have an audit performed on their books of accounts are required to file their income tax returns by the 31st of July of every assessment year. This may include the following persons and entities:
      • A salaried person or employee
      • A self-employed person or professional
      • A consultant
      • A freelancer
    • September 30th - All persons who are required to or who are liable to have an audit performed on their books of accounts are required to file their income tax returns by the 30th of September of every assessment year. This may include the following persons and entities:
      • A company
      • A self-employed person or professional
      • A working partner employed with a firm who are required to have an audit performed on their books of accounts
      • A consultant

    Different Types of Income Tax Returns To Be Filed Under Section 139 of the Income Tax Act 1961:

    While Section 139 generally deals with late filing of income tax returns, it also consists of sub sections which deal with different types of income tax returns that are required to be filed in case returns have not been filed by the prescribed deadline. These subsections are as follows:

    Section 139(1) - Mandatory Return and Voluntary Return:

    Section 139(1) of the Income Tax Act deals with two types of belated income tax returns, namely Mandatory Returns and Voluntary Returns.

    Mandatory Returns:

    The following individuals or entities are required to file a Mandatory Return:

    • Any company regardless of whether it may be public, private, foreign or domestic
    • Any firm, which also includes Limited Liability Partnerships (LLP) as well as Unlimited Liability Partnerships
    • Any person provided that the sum of his or her taxable income for the financial year of relevance is more than the exemption limit allowed

    Voluntary Returns:

    If a person or entity has filed income tax returns should an event arise wherein the individual or the entity is not under any compulsion to file a Mandatory Return, then the income tax returns filed by the person or the entity in question will be deemed to be a Voluntary Return. Voluntary Returns are also considered to be valid returns.

    Section 139(3) - Return of Loss:

    Section 139(3) of the Income Tax Act states the following:

    • Any assessee or entity who has acquired or earned any income that falls under the heading ‘Profits and Gains of Business or Profession’ or under the heading ‘Capital Gains’, then the assessee or the entity in question will mandatorily be required to file income tax returns of such income at any time prior to the expiration of the due date as mentioned under Section 139(1)
    • Should the assessee or the entity in question not file income tax returns before the expiration of the due date mentioned under Section 139(1), then the assessee or entity will lose the right to carry forward any losses incurred to subsequent years.
    • However, the late filing of income tax returns will still not affect the assessee’s or the entity’s right to set-off these losses. Any losses incurred under the following headings will not be affected by late filing of income tax returns:
      • Losses incurred through house or residential property
      • Losses or expenses that have been unabsorbed as mentioned in Section 32(2)

    Section 139(4) - Belated or Late Return of Income:

    Section 139(4) of the Income Tax Act states the following:

    • If an assessee or an entity is unable to file income tax returns prior to the expiration of the due date as mentioned under Section 139(1), then
      • The assessee or the entity can still file late or belated income tax returns within a period of one year from the end of the assessment year of relevance or prior to the completion or conclusion of the assessment as per Section 144, depending on which takes place sooner.
    • Assessee’s or entities with belated or late filing of income tax returns may incur a penalty of Rs 5,000 as prescribed under Section 271F of the Income Tax Act 1961. However, no penalty shall be levied on those income returns that were not required to be mandatority filed as per the provisions outlined under Section 139(1) even in the event the returns were filed following the expiration of the year of assessment.

    Section 139(5) - Revised Return:

    Section 139(5) of the Income Tax Act states the following:

    • An assessee or entity has the right to file a revised income tax return within a period of one year following the expiration of the assessment year of relevance or prior to the completion or conclusion of assessment, depending on which takes place sooner, if the original or initial income tax return that was filed by the assessee or entity as per Section 139(1) or Section 142(1)(i) contains a particular or specific ‘omission’ or ‘wrong or invalid statement’ within it.
    • A belated or late income tax return cannot be revised. However, any loss return that was filed within the prescribed due date as mentioned in Section 139(1) can be eligible for revision.

    Section 139(4A) - Return of Income of a Charity or Religious Institution:

    Section 139(4A) of the Income Tax Act states the following:

    • Any public charity or religious institutions that are looking to claim tax exemptions as per Section 11 and Section 12 of the Income Tax Act are mandatorily required to file their income tax returns provided that the sum of the income accumulated prior to the provisions outlined in Section 11 and Section 12 is beyond the basic limit allowed for exemption.

    Section 139(4B) - Return of Income of a Political Party:

    Section 139(4B) of the Income Tax Act states the following:

    • Any political party or party with political affiliations will be required to mandatorily file its income tax returns provided that the sum of the income accumulated by the party is beyond the basic limit allowed for exemption without taking into consideration any benefits outlined in Section 13A of the Income Tax Act 1961

    Section 139(4C) and Section 139(4D):

    Section 139(4C) and Section 139(4D) of the Income Tax Act deal with specific or certain institutions who claim benefits as per Section 10 of the Income Tax Act 1961. These sections state the following:

    • An institution is mandatorily required to file its income tax returns provided that the sum of the income accumulated by the institution in question is beyond the basic limit allowed for exemption, without taking into consideration any other exemption benefits.
    • This applies to those institutions who are looking to claim tax exemptions under the following clauses of Section 10
      • Clause (21)
      • Clause (22B)
      • Clause (23A)
      • Clause (23C)
      • Clause (23D)
      • Clause (23DA)
      • Clause (23FB)
      • Clause (24)
      • Clause (46)
      • Clause (47)
    • Section 139(4D) also applies to those institutions that are mentioned in the following sections of the Income Tax Act
      • Section 35(1)(ii)
      • Section 35(1)(iii)

    Section 139(9) - Defective Returns:

    Section 139(9) of the Income Tax Act deals with defective returns of income. Defective returns are those income tax returns that are deemed to contain specific defects as outlined in the provisions of Section 139(9).

    An income tax return that has been filed shall be deemed to be defective if the conditions mentioned below are not satisfied:

    • The columns, annexures and statements contained in the tax return are completely and correctly filled in
    • The tax along with the interest if applicable was:
      • Paid on the due date prescribed for submitting the income tax return
      • Prior to the due date prescribed for submitting the income tax return
      • Paid in accordance with the provisions of Section 140A

    Section 139(9) of the Income Tax Act also states the following

    • In the event the Assessing Officer deems that the income tax return that has been submitted by the assessee is found to contain defects, he or she may notify the assessee in question about the defects contained within the return, and offer him or her the chance to correct the defects.
    • Should the assessee in question correct the defects found in the income tax return within the time frame or period of extension that has been allowed to him or her, then the return will be deemed to be valid.
    • If the assessee in question is found to have not corrected or rectified the defects found in the income tax return within the time frame or period of extension that has been allowed to him or her, then the return will be deemed to be invalid.

    Frequently Asked Questions:

    1. Is there any interest charged if income tax returns are filed after the prescribed due date?

      In case tax returns are filed following the expiration of the due date prescribed, then the assessee will be required to pay his or her tax in tandem with an interest charge of 1% per month as per the provisions outlined in Section 234A. If the assessee is not required to pay any tax then no interest will be charged for the late filing of tax returns, provided the tax returns are filed prior to the end of the assessment year of relevance.

    2. What happens if advance tax liability is not paid?

      Any advance tax liability that has not been paid will result in the income tax return to be considered defective. In such cases the tax returns filed will be rejected.

    3. If a company was not operational during the financial year, will it still be required to file income tax returns?

      A firm or a company that did not conduct any business or operations during the course of the relevant financial year has the option to decide whether it should file its income tax returns or not.   

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