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Introduction:

Income tax return (ITR) dates are important, and as a taxpayer, you must understand them. These yearly filing obligations must be fulfilled, and missing the deadlines has penalties similar to not filing taxes. Taxpayers could still unintentionally overlook or neglect to file their taxes even with this awareness.

        The Income Tax Act of 1961 provides solutions for such scenarios, with Section 139 outlining guidelines to assist taxpayers in late ITR filing and reduce potential consequences. Explore our comprehensive guide designed to address the queries and worries of novice taxpayer

Section 139(1) Essentials:

Section 139(1) of the Income Tax Act addresses late returns, offering a remedy for missed deadlines with various sub-sections. Before exploring these, grasp mandatory return policies; entities like [List entities] must file their ITR.

• Those with income beyond the exemption limit must fulfill certain obligations.
• Any entity, whether public, private, domestic, or foreign, engaged in business in or situated within India.
• Residents holding assets abroad or entities controlling accounts outside India.
• All types of firms, including ULP (Unlimited Liability Partnership) and LLP (Limited Liability Partnership).
• Voluntary tax returns are necessary when individuals or entities are essentially required to file the return.
• BOI (Body of Individuals), AOP (Association of Persons), and HUF (Hindu Undivided Family) must file returns if their income surpasses the specified exemption limit.

Section 139(1c) of the act exempts specific individuals who meet certain conditions from filing a return.

Consequences of Late Filing

Taxpayers can file a belated return under Section 139(4) of the IT Act if submitted within the relevant assessment year, ending on 31st March of the following year. Failing to file by this date may incur a penalty of up to Rs. 10,000 under Section 271F, but it varies depending on factors like income and filing delay. Additionally, interest under Section 234A applies if there’s any tax payable.

Crucial Dates: Managing Your Tax Calendar

Understanding the due dates for filing returns is crucial, as Section 139 specifies deadlines tailored to different income sources. These dates include:

• For individuals and entities without an audit requirement, such as paid employees, consultants, freelancers, or self-employed professionals, the due date for filing is July 31st.

• For entities subject to auditing of account books, such as business entities, self-employed professionals, consultants, and working partners, the due date for filing is September 30th.

Section 139(3): A Guide to ITR Filing During Loss Periods

Section 139(3) is applicable when filing your ITR in the case of a loss, allowing the possibility of carrying forward the loss to reduce tax liability in subsequent years. The cases covered by this section include:

• Individual taxpayers need not file a tax return for financial losses in the previous fiscal year, but companies and firms are required to report incurred losses.
• Losses from a ‘House or residential property’ can be carried forward, even if filing a tax return beyond the due date.
• Carrying forward losses from previous years is contingent on filing the ITR by the due dates.
• Losses filed under Section 142(1) (excluding ‘House and Property’) cannot be carried forward.
• To carry forward a loss under ‘Capital Gains‘ or ‘Profits and Gains of Business and Profession’ for companies, filing the return by the due date is mandatory to offset the loss against future income.
• In the case of filing the ITR beyond the due date, an offset is permitted for losses against income in another category.

Belated ITR Filing: A Guide to Section 139(4)

Taxpayers, whether individuals or entities, are advised to file their ITR by the due date as per Section 139(1). However, they can submit a belated return for previous years until the end of the current assessment year or the conclusion of the financial year. Failing to do so incurs a penalty of Rs. 5,000 under Section 271F, unless the income doesn’t mandate mandatory filing as per Section 139(1), and the ITR is filed after the due date.

ITR Filing for Charitable Trusts under Section 139(4A)

Individuals deriving income from property related to religious or charitable purposes, including voluntary contributions under subsection 2(24)(iia), file their ITR under the provisions of Section 139(4A) if the income exceeds the maximum permissible amount not considered taxable.

Political parties: Understanding ITR with Section 139(4B)

Political parties are required to file an Income Tax return under Section 139(4B) if their total income surpasses the maximum permissible tax-exempt limit, primarily sourced from voluntary public contributions. The responsibility for timely filing rests with the Chief Executive Officer or the Secretary.

Sections 139(4C) and 139(4D)

Section 10 of the IT Act provides benefits for specific institutions, and Sections 139(4C) and 139(4D) outline the guidelines for their tax returns. Section 139(4C) specifies mandatory filing if the income surpasses the maximum permissible limit for tax exemption. These include:

• Institutions or associations falling under Section 10(23A),
• Associations involved in scientific research 
• News agencies
• Institutions falling under Section 10(23B)
• Universities, hospitals, and medical and educational institutions

Section 139(4D) exempts institutions, colleges, and universities from mandatory return filing, relieving them from any specific provision.

Section 139(5) and Revised ITR Procedures

Taxpayers can correct mistakes in their ITR by revising it under Section 139(5) within the relevant assessment years or before completion of the assessment. There’s no limit to the frequency of revisions within the time frame, using the same or different return form. Once a new return is filed, the original is considered withdrawn. Section 139(5) applies only to ‘Omissions and Wrong Statements,’ not ‘Concealment or false statements,’ allowing revisions only for unintentional mistakes to avoid penalties.

Defective Returns: Section 139(9) Insights

A tax return with missing documents may be considered defective under Section 139(9). The taxpayer receives a notification, with a fifteen-day window to rectify the issue and provide the missing documents. Extension requests with valid reasons are allowed. To avoid defects initially, ensure inclusion of following documents in the ITR.

• Completed the ITR filing using the required form
• Audit report under Section 44AB
• In the absence of accounting books, a statement should outline gross receipts, turnover, stocks, cash, bank balance, expenses, net profit, and debtor or creditor information to ensure tax compliance.
• A statement showing the calculation of payable taxes.
• For taxpayers maintaining accounting books, it is essential to include profit and loss accounts, trading accounts, manufacturing accounts, all income and expense accounts, and the balance sheet. This also covers personal accounts of partners in partnerships, the proprietor’s personal account, and members’ personal accounts in AOP/BOI.
• The related report from the Cost Audit.
• Documentation providing evidence of taxes paid.

A Closer Look at Section 139(1)

The Finance (No. 2) Act, 2019 introduced the 7th Proviso to Section 139(1) of the IT Act, effective from April 1, 2020. According to this provision, individuals involved in high-value transactions during the financial year are required to file ITR, even if their total income is below the basic exemption limit. This includes individuals, HUFs, BOIs (whether incorporated or not), AOPs, and artificial juridical persons mentioned in clause (b) of section 139(1). However, companies and firms are exempt as they fall outside the purview of clause (b) of section 139(1).

The 7th Proviso to Section 139(1) of the IT Act categorizes the following transactions as high-value transactions:

• Exceeding Rs. 2 lakhs in foreign travel expenditure 
• Electricity expenditure exceeding Rs. 1 lakh 
• Exceeding Rs. 1 crore in current account deposits 

Understanding  Form ITR 7

Form ITR 7, released by the IT Department, is for individuals, entities, and institutions filing returns under Section 139(4A), 139(4B), 139(4C), and 139(4D). Taxpayers should match tax amounts with Form 26AS. Filing methods for Form ITR-7 include:

• Electronic transmission of data is required for submitting Form ITR-V.

• Submitting the E-Form requires the use of a digital signature.

• Paper form

• Barcoded return

Section 139(4E) is applicable to business trusts exempted from furnishing their profit and loss accounts.

Comprehensive Guide to Section 139 Error Codes

Presented below is a list of error codes found in Section 139, along with detailed explanations for each.

• Error Code 8 :This Code applies when ITR-4S is filed despite total presumptive income under Section 44AD not exceeding 8% of Gross turnover.

• Error Code 14: Entering a negative amount in the gross/net profits section renders the ITR defective.

• Error Code 31: This code applies to a taxpayer with income from ‘profits and gains from business/profession’ who fails to file a profit and loss statement.

• Error Code 38: This code is triggered when tax is determined as payable but remains unpaid.

For ITR filing errors, utilize Section 139 to submit a revised version. Seek expert assistance to ensure a hassle-free and error-free process.