Filing of Return of Income

Return of Income: Return of income is the format prescribed containing

particulars of income earned under different heads, gross total income
deduction under chapter VI A, total income & tax payable by the assessee.
Return of income is a self declaration by the assessee regarding the
aforesaid information which has to be submitted by the due date.

Compulsory filing of return of income

• Companies and firms should file a return of income or loss [P/L] for
every previous year in a prescribed form
• Person other than company and firm [HUF, individual, AOP, BOI, local
authorities, AJP] if total income of that person or any other person in
respect of which he is assessable exceeds basic exemption limit
• Every person being resident other than Non Resident
1) holds as a beneficial owner or otherwise any asset located outside India or has a
signing authority in any account located outside India
2) is a beneficiary of any asset located outside India
Exception: -
➢ Individual beneficiary of any asset located outside India where income of that asset
is includible as per sub point 1 of point 3 above is not required to file the return

• Person being individual HUF, AOP, BOI or AJP whose total income without giving
effect to provision of chapter VI A or exemptions in capital gains exceeds the basic
exemption limit

Mandatory furnishing of return in case of high value transactions [7th proviso to sec.
139(1)]

A person (other than firm and company), who is not required to furnish a return as per
aforesaid provision, and who during the previous year:
(a) has deposited an aggregate amount exceeding Rs. 1 crore in one or more current
accounts maintained with a banking company or a co-operative bank; or
(b) has incurred expenditure of an aggregate amounts exceeding Rs. 2 lakh for himself or
any other person for travel to a foreign country; or
(c) has incurred expenditure of an aggregate amount exceeding Rs. 1 lakh towards
consumption of electricity; or
(d) fulfils such other conditions as may be prescribed,
shall furnish a return of his income on or before the due date in such form and verified in
such manner and setting forth such other particulars, as may be prescribed.

Note:-
1) Option is provided to individual who is in receipt of income chargeable under the head
salaries can furnish return of income to his employer and such employer shall furnish all
returns on or before the due date u/s 139(1A).
2) to reduce compliance burden of small tax payers the central government is empowered
to notify persons who are exempt to file return of income which shall be laid before both
houses of parliament for a period of 30 days and both houses has to approve [Sec.139(1C)].

RETURN OF LOSS [S.139 (3)]

A return of loss should be filed in the prescribed form within the time allowed under section
139(1) [due date]

The following losses cannot be carried forward if return of income is not filed within due
date
1) Business loss [speculative or otherwise]
2) Capital loss [LTCL or STCL]
3) Loss from the activity of owning and maintaining race horses.

However disentitlement to carry forward the loss comes into effect only when original
return has not been filed within due date. In case of revised returns, date of revision is
irrelevant if the original return has been filed on time
Further loss under the head loss from house property and unabsorbed depreciation under
section 32 can be carried forward or set off even though return of loss has not been filed
within due date.

Return of Income to Be Filed by Specific Person

Section 139 (4A)

Charitable Trust and Institution
Person in receipt of income derived from property held under the trust for charitable or
religious purpose or by way of voluntary contribution must furnish return of income if total
income without allowing exemption under section 11 and 12 exceeds basic exemption limit
Their return must be filed by representative assessee voluntarily within time limit

Section 139 (4B)

Political Parties:-
Chief executive officer of political party is required to furnish return of income if total
income before claiming exemption under section 13A crosses basic exemption limit
The grant of exemption to the political party under section 13A is subject to a condition that
return shall be submitted within the prescribed time limit under section 139(1).

Section 139 (4C)

Scientific research association news agency Trade union etc.
Any research association news agencies professional institutes trade unions institute of
development of khadi and village industries educational institutions mutual fund
securitisation trust venture capital company or fund whose income are exempt under
various subsection of section 10 shall file the return of income if the income without
considering exemption under section 10 exceeds maximum amount not chargeable to tax
Section 139 (4A)
Universities colleges etc
It is mandatory for every University colleges and other institutions referred in section
35 to furnish its return of income or loss in every PY [section 35 - donation for scientific
research institution]

Section 139 (4E)

Business trust
Every business trust which is not required to furnish return of income or loss under any
other provision of this section has to furnish the return of income or loss in the every PY.

SECTION 139 (4F)

Investment fund
Investment fund referred in section 115 which is not required to furnish return of
income or loss under any other provisions of this section has to file the return of income or
loss in every PY.

DUE DATE FOR FILING RETURN OF INCOME

SECTION 139 (1)

Assessee Due date

assessee other than assessee required to to furnish report as per
Section 92E is
a) Company
b) Person other than company whose accounts are required to be
audited under IT ACT 1961 or any other law for the time being in September 30 Of AY
force
c) a working partner of a firm whose amounts are required to be
audited under IT ACT 1961 are any other law for the time being
in force

Assessee who is required to furnish report refund to in section 92E.

Section 92E:- for international and specified domestic transfer pricing

transaction furnish a report in form of 3CEB November 30 of AY
any other person July 31 of AY

FORMS FOR FILING RETURN OF INCOME

FORMS. Assessee

1)ITR-1. Individuals having income from salary, one

house property, income from Other
sources having Total income up to rupees 50
lakhs
2) ITR-2. Individual and HUF not carrying out business or
profession under any proprietorship

3)ITR-3. Individual and HUF having income from a

proprietary business or profession

4)ITR-4. Presumptive income from business or profession

5)ITR-5. Person other than individuals, HUF, Company &

other person filing return ITR-7.

6) ITR-6 Companies other than companies claiming

exemption u/s 11

7) ITR-7 Person including companies required to furnish

Returns u/s 139(4A) to 139(4F)

Belated return:- section 139(4)

Any person who has not furnished a return within the time allowed
under section 139(1) i.e. due date may furnish the return for any previous year
at any time.
➢ Before 31st December of the relevant assessment year
or
➢ before completion of assessment
Whichever is earlier

Therefore, belated return cannot be filed after the end of relevant assessment
year.

Example:- for PY 2020-21 the relevant assessment year is 2021-22. So, the last
day to file the return is end of the relevant assessment year which is 31 st March
2022. If assessing authority Complete the assessment before 31/03/2022 say
01/01/2022, then last date for filing for return shall be 01/01/2022

Consequences of Late Filing of Returns

• Assessee will be liable for interest u/s 234A & late fee as applicable
• Carry forward of losses shall be ignored in certain cases [refer loss
return]
• Deduction u/s 10AA or profit based deduction under Chapter VI A may
not be available
Revised Return Sec.139(5):-
1) If any person have filed return of income u/s 139(1) discovers any
omission or any wrong statement may furnish revised return.
Time Limit:- Any time
• Before 31st December of relevant AY or
• Before completion of assessment
Whichever is earlier
2) Return Can be revised for any number of time within the time limit
3) Latest revised return replaces all return filed earlier

Particulars to be furnished with Returns:-

The form of return requires assessee to furnish particulars of
➢ Income exempt from Tax
➢ Assets of prescribed nature or value held as beneficial owner in which
he is a beneficiary
➢ Bank accounts & Credit card debits
➢ Expenditure Exceeding prescribed Limit
➢ Any other thing as may be prescribed.

Defective Returns Sec.139(9):-

A return of income shall be regarded as defective return unless all the
following conditions are fulfilled
✓ Annexure, Statements & columns in the return of income have been
duly filled in
✓ The return of income is accompanied by
a) Statement showing computation of Tax payable on the basis of
return
b) Report of audit obtained u/s 44AB
c) Proof regarding tax if any, Claim to have been deducted or
collected advance tax paid, self assessment tax paid
d) Proof of any amount of compulsory deposit if any under
compulsory deposit scheme [Income Tax Payers Act 1974]
However the return is not regarded as defective only with a
mere fact of not specifying the TDS or TCS numbers.
✓ If regular books of accounts are maintained the following has to be
accompanied
a) A copy of manufacturing account, Trading account, profit and loss
account or income and expenditure account and balance sheet
b) Personal accounts depending upon entity
 ✓ If books of accounts are audited P&L account and balance sheet along
with auditor’s report shall be submitted.
✓ If audit has been made by a cost accountant as per section 148 of
Companies Act 2013 the return should be accompanied by such report
✓ If regular books of accounts are not maintained the following has to be
submitted
a) Statement showing amount of turnover or gross receipts, gross
profits, expenses & net profits.
b) On the basis of which the statement were prepared
c) Amount of total sundry debtors, sundry creditors, stock in hand,
cash balances at the end of PY.

Consequences of Defective Returns

✓ Assessing officer has the power to call for Assessee to rectify a defective
return
✓ Where assessing officer considers the return is defective which he may
intimate the defect and give an opportunity to rectify to the assessee
within a period of 15 days from the date of intimation
✓ If justifiable and based on application assessing officer can extend the
limit
✓ If defect is not rectified within a period of 15 days or extended period it
would be treated as an invalid return
✓ If assessee rectifies the defect after the expiry of the time limit but
before the assessment then assessing officer can condone the delay and
treat the return as valid.

Verification of return section 140:-

Verification of return of income by authorised person is very important as
not doing it will result in return of income as invalid.

Person who can authorise

Assessee Authorised Person

Individual person
• Absent from India individual or any other person
duly authorised by him on his
behalf holding the valid power
of attorney

• Mentally incapacitated guardian or any other person

 competitive to act

• Any other reason any other person duly

authorised with a power of
attorney

• Cases other than above

individual himself
HUF
• Karta is absent from Any other adult from HUF
India

• Kartha is mentally
incapacitated Any other adult from HUF

• Cases other than above Karta

Company
• Managing director is not any director of the company
in India

• There is no managing any director of the company

director
person who holds valid power
• Company is non resident
of attorney

• Company is being Liquidator

wounded up

• Management of
company is taken over
Principal officer of the company
by central government
or state government

• Cases other than Above

Managing Director

Firm
• If managing partner is Any partner not being a Minor
not available
 • If there is no managing Any partner not being a Minor
partner

• Other Cases Managing Partner

LLP
• Designated partner is Any Partner
not in India

• There is no designated Any Partner

partner
Designated Partner
• Other Cases

Local Authority Principal Officer

Political Party Chief Executive Officer
Any Other Association Any member of the Association

Permanent Account Number (PAN):-

PAN is a code number issued by the Income Tax department for
every assessee. An assessee covered under IT act 1961 is identified with this
code. PAN is alpha numbered having 10 characters
The following persons are required to apply for PAN in form 49B
✓ Any person where income exceeds more than basic exemption limit
✓ Every person where turnover or gross profits have exceeded or is likely
to exceed 5,00,000 in any previous year while carrying on business or
profession.
✓ Every person who is required to furnish the return of income under
section 139(1)
✓ The central government is empowered to specify through notification
any class or classes of person to apply for PAN
✓ Any person other than person mentioned above may apply to assessing
officer for allotment of PAN voluntarily

Quoting of PAN:-
It is mandatory to quote the PAN in all documents in the following cases
➢ All returns to any IT authority
➢ All challans for payment of any sum under this act
➢ All documents pertaining so such transaction entered by assessee as
notified by CBDT.
Transaction notified by the CBDT:-

Nature Value
Sale or purchase of motor vehicle other than Any Amount
2 wheeler
Opening a bank account (other than time Any Amount
deposit mentioned in point below or is basic
saving
Bank account) with banking company is
cooperating bank

For applying to any bank to any bank or co- Any Amount

operative Bank or any other institution for
issue of credit card or Debit card
Opening of Demat Account Any Amount
Payment to a hotel or restaurant against a bill Payment in cash
or a bill at any one time exceeding Rs.
50,000
Payment in connetion with travel to any Payment in Cash
foreign country exceeding Rs.
Or payment for purchase of foreign currency 50,000
at any one time
Payment to mutual fund for purchase of its Amount exceeding
units 50,000

Payment to company or any institution for Amount exceeding

acquiring Debentures or loans 50,000
Payment to RBI for acquiring land Amount Exceeding
50,000
Purchase of bank draft or pay order or Payment in Cash
banker’s exceeding 50,000
Cheque from bank or co-operative bank during Any one
day

A time deposit with bank/ cooperative bank/ Exceeding Rs.

post office Or Nidhi referred in section 40 of 50,000 At one time
Companies Act 2013 or Nonbanking financial or Aggregate
company amount Exceeding
50,000 In the
financial year

A contract of sale or purchase of securities[ Amount Exceeding

other than shares] 1Lakh per
Transaction
Payment for one or more prepaid instrument In any mode for an
to a bank or Cooperative bank or any other amount
company or any other institution aggregating more
than 50,000
Payment of LIP to an Insurer Amount
aggregating to
more 50,000 in an
FY
Sale or purchase of shares of a company not Amount exceeding
listed on recognised Stock Exchange 1 lakh per
transaction
Sale or Purchase of immovable property Amount Exceeding
10 lakh or Valued
by Stamp
Valuation
Authority Referred
in Sec.50 C at An
amt Exceeding
10lakh.
Sale or purchase of any goods and services of Amount exceeding
any nature other than specified above 2 lakh per
transaction
Exceptions:-
▪ Where a person entering into transaction is a minor who does not have
any income chargeable to tax, he shall quote PAN pertaining to
parents/guardian as per the relevant document.
▪ Any person who does not have PAN and who enters into any
transaction mentioned above he shall submit a declaration in form
number 60 giving the required particulars
▪ Central government or state government or any other officer need not
quote PAN

Quoting of Adhar Number (Sec.139)

▪ Every person who is eligible to obtain Adhar Number is required to
mandatorily quote Adhar number on or after 1st July 2019
a) In the application form of PAN
b) In the return of income
▪ If Adhar number is not obtained then person should quote enrolment ID
▪ If this is not followed then PAN allotted to that person shall be deemed
invalid and other provisions shall apply as if person has not applied for
PAN
▪ These provisions are not applicable to classes of person or any state as
notified by central government.