Section 139

We all, as individuals, keep hearing that one must file his income tax returns within the provided due date every year to avoid serious consequences. But what exactly is the income tax return? What does it help us with? Does non –filing of the same have any disadvantages? Why do we keep filing it every year? We all have thought of the above questions at one or the other point of time. The answer to the above questions lies in Section 139 of the Income Tax Act, 1961. Section 139 of the Act provides us with various provisions relating to filing of tax returns. The first and foremost thing to know about tax return is that there is no specific definition of tax returns. It is, in general, a form to be filed with the Tax Authorities, disclosing one’s income earned during the period specified. The tax shall be calculated on the income earned. Thus, filing of return helps the government to ascertain the tax liability to be collected from the taxpayer, thereby generating revenue for the nation.

Basics of the Income Tax Act:

What is a Financial Year?

• Financial year refers to a year in which income is earned.

What is an Assessment Year?

• Assessment year refers to a year in which income is taxed.

E.g.: If a person earns salary in during the period April, 2017 to March, 2018 then his income shall be taxable in the year April, 2018 to March, 2019.

Section 139 of the Income Tax Act

The various types of income tax return to be filed under Section 139 are:

Mandatory & Voluntary Return- Section 139(1)

• As per this Section, it is mandatory for a company or a firm to file income tax return.

It means if a company or a firm does not have any income then also it will be mandatory to file ITR.

• It is mandatory for a person other than a company or a firm to file income tax return if his or her income exceeds the basic exemption limit.
• A resident individual who has an asset located outside of India (might include financial interest in some entity as well) OR any resident who retains signing authority for an account based outside India shall mandatorily file return in the prescribed form.

Note: Basic exemption limit refers to a term which means “maximum amount of income not chargeable to tax”. In simpler words, it means the highest amount of income on which tax shall not be payable.

If Mr. A earns total income of more than INR 2,50,000/- then he or she shall be liable to file ITR. So, the basic exemption limit for the current financial year is 2,50,000/-. Anything over and above 2,50,000/- shall be taxable.

Loss Return – Section 139(3)

To start with, under this Act, there are five heads under which income can be classified. These are:

• Income From Salaries
• Income from House Property
• Profits & gains from Business or Profession
• Capital gains
• Income from other sources

When a loss is incurred under the heads “Profits & Gains from Business or Profession” or “Capital gains” during the financial year (period from April to March), the taxpayer has to file a Loss Return. Such loss should be filed within the due date so as to claim maximum benefits as specified under the act.

If in the current financial year, Mr. B suffers a loss of Rs 10,000/- in his business, then he shall file his return within the due date so that he can carry forward and set off the loss in the next financial year.

Belated Return - Section 139(4)

As per this section, if a person has not furnished the income tax return as per the specified due date then he may furnish the return

• Before the end of relevant assessment year Or
• Completion of assessment; whichever is earlier.

Example: If Mr. C does not file his return for Financial Year 2017-2018 by 31st July 2018 then he shall be able to file the return by 31st March, 2019 or completion of assessment, whichever is earlier.

As per recent changes made in Sec 139, revision of a belated return can now be done.

Revised Return - Section 139(5)

A return filed can be revised if any error or mistake is noticed post filing of return. A return can be revised several times. There is no restriction on it. However, no return can be revised post the:

• End of relevant assessment year OR
• Completion of assessment; whichever is earlier.

Defective return - Section 139(9)

A return is considered as defective unless it is accompanied by all documents mentioned in the section. From 2016, return of income shall not be considered as defective even if self-assessment tax has not been paid.

As stated, the above are the types of return that a person can file. However, due to various forms of entities, the above sections do not impose mandatory filing of returns for persons such as charitable organizations, political parties, business trusts etc. To bring such entities under the eye of tax authorities, the following sections have been introduced: