The tax payer has to communicate a statement of his income or loss during a financial year to the tax department through a document known as ‘return of income’. The process of filling the said tax return has now become digital and the filling of physical returns is mostly redundant.

The Income Tax Act 1961(hereinafter referred to as the Act) changes every year by the amendments brought about in the Act by the budget. The article intents to discuss the return filling law and practice for assessment year 2023-24 ( previous year 2022-23). The article will also address the legal and factual issue of filling return and also deal with defective returns (U/S. 139(9)) and updated returns (U/S. 139(8A)). The article will further deal with some aspects of liability to file returns by Non Residents and difficulties faced by them.

1. The general principal is that all persons earning income or incurred loss to be carried forward or seeking refund of taxes paid in India are required to file their return of income. The government has however from A Y 2020-21 onwards laid down conditions where returns have to be filed based on the criterion of expenses incurred or such other criterion as may be notified.(7th proviso to section 139(1)). The conditions prescribed are listed below
   1. has deposited an amount or aggregate of the amounts exceedin one crore rupees in one or more current accounts maintained with company or a co-operative bank; or
   2. has incurred expenditure of an amount or aggregate of the amounts exceeding two lakh rupees for himself or any other person for travel to a foreign country; or
   3. has incurred expenditure of an amount or aggregate of the amounts exceeding one lakh rupees towards consumption of electricity; or
   4. fulfils such other conditions as may be prescribed,
2. The power has also been given to Central Board of Direct Taxes(CBDT) to notify further criterion for filling return of income. The CBDT has issue of notification 37/2022 dated 21st April 2022 listing additional criterion for the purpose of filling return. These conditions in notification have been incorporated in the Income Tax Rules. The Rule 12AB is reproduced hereunder.(from 21st April 2022)

   [Conditions for furnishing return of income by persons referred to in clause (b) of sub-section(1) of section 139.

   12AB. The conditions for furnishing return of income in respect of persons referred to in clause (b) of sub-section (1) of section 139 in terms of clause (iv) of the seventh proviso to sub-section (1)of section 139 shall be the following, namely: –

   1. if his total sales, turnover or gross receipts, as the case may be, in the business exceeds sixty lakh rupees during the previous year; or
   2. if his total gross receipts in profession exceeds ten lakh rupees during the previous year; or
   3. if the aggregate of tax deducted at source and tax collected at source during the previous year, in the case of the person, is twenty-five thousand rupees or more; or
   4. the deposit in one or more savings bank account of the person, in aggregate, is rupees fifty lakh or more during the previous year:

   Provided that in the case of an individual resident in India who is of the age of sixty years or more, at any time during the relevant previous year, the provision of clause (iii) shall have effect as if for the words “twenty-five thousand”, the words “fifty thousand” had been substituted]

3. The filling of return of income is dependent on the status of the person (whether individual or company or partnership firm).
4. The Act provides that the return of income has to be filed by all companies or partnership firms. This will make it compulsory for all partnership firms and companies to file return of income even if there is no activity in the firm of company. The return needs to be filed till the company is closed through the process of law or the partnership firm is dissolved.
5. In the case of Individuals / HUF/AOP/ BOI / Artificial Judicial person, the return is to be filed only if the total income [(including income of any other person inrespect of which he is assessable) withoutconsidering the deductions or exemptionsunder section 10(38), 10A, 10B, 10BA54, 54B, 54D, 54EC, 54F, 54G, 54GA, or 54GB or Chapter VIA (i.e., deduction under section 80C to 80U)] exceeds the maximum amount not chargeable to tax.
6. The common error made by many small tax payers who do not require to regularly to file their return of income due to income being below maximum amount liable to tax is that they do not file their return even when they sell a property, which leads to capital gains which is allowed as deduction under section 54 or 54EC and therefore nil capital gains. The small tax payers or those earning salaries also miss out on showing the capital gains in their return sometimes. The department has a superb information collection system from various sources and the system is so full proof that not a single transaction is missed, this leads to the issue of notice under section 148 for reopening of the assessment to verify the sale of the property where it is not shown in the return of income. It is therefore important that due care is taken to show the capital gains properly in the return of income.
7. The Artificial Intelligence system(AI) or the 360 degree program used by the department is very powerful in identifying all high value transactions. This leads to a situation where even high value purchase transactions are identified. The AI system also identifies fixed deposits made by a person in any bank in India. These fixed deposits could be NRE deposits the interest from which is exempt from tax under section 10(4) or normal fixed deposits. The return of income today does not have any column where purchase of immovable property or fixed deposits can be disclosed as a separate item. This leads to a situation that the department identifies the high value transaction as per the risk management strategy and then since it is not shown in the return, the department embarks on an expedition to verify cost of purchases under 148.
8. This is a difficulty faced by even the Non Residents who do not file their return as they have no taxable income in India and the property or the NRE fixed deposits is purchased from remittance from income earned abroad. They have not filed their return of income under the understanding (which is correct) that they are not required to file their return as they do not have any taxable income.
9. The department in the last few years have reopened a lot of cases to verify these fixed deposits or purchase of immovable property under section 147. The department is of the view that the powers under the amended section 147 and 148 are very wide and they can reopen such cases to verify cost as it is as per the risk management strategy mentioned in the Act. This understanding of the department needs to be tested in a court of law and the same is not likely to happen very soon as the non- residents are really scared of taking on the department in a court of law which may take an indefinite time and substantial cost. The reassessments are monitored by PCIT and it is to be pointed out that this approach is not fruitful and is not likely to bring any revenue and only cause harassment to a genuine assessee. The verification of the details by issue of 133(6) could be used and assessment be taken up only in rare cases. The added problem in some NRI cases is the fact that the email not reaching the person and the assessment being done exparte raising huge unsubstantiated demands.
10. However, the harassment caused to the genuine investor in India is likely to dampen the spirit of the Indian Diaspora investing in India. This harassment cannot definitely be the intention of the legislature and a representation is required by associations in this matter to stop the ‘bureaucratic red tape’ from ruining
    India’s image as an investor friendly destination.
11. In case of charitable and religious trusts, the return of income is to be filed only if the total income without considering the deduction under section 11 and 12 is in excess of the maximum amount not chargeable to tax. Similarly a political party will have to file a return of income only when the if the total income without considering deduction under section 13A is above the maximum amount not chargeable to tax.
12. In case of certain associations listed below the return of income is to be filed if the amount of income without giving effect to the exemption under section 10 is above the maximum amount not chargeable to tax
    • Research association referred to in section 10(21)
    • News agency referred to in section 10(22B)
    • Association or institution referred to in section 10(23A)
    • Person referred to in clause (23AAA) of section 10.
    • Institution referred to in section 10(23B)
    • Fund/institution/trust/university/ other educational institution/any hospital/medical institution referred to in sub-clause (iiiac), (iiiab), (iiiad), (iiiae), (iv), (v), (vi) or (via) of section 10(23C)
    • Mutual Fund referred to in clause (23D) of section 10
    • Securitisation trust referred to in clause (23DA) of section 10
    • Investor Protection Fund referred to in clause (23EC) or clause (23ED) of section 10.
    • Core Settlement Guarantee Fund referred to in clause (23EE) of section 10
    • Venture capital company or venture capital fund referred to in clause (23FB) of section
      10;
    • Trade union/association referred to in sub-clause (a) or (b) of section 10(24)
    • Board or Authority referred to in clause (29A) of section 10.
    • Body/authority/Board/Trust/ Commission referred to in section 10(46)
    • Infrastructure debt fund referred to in section 10(47)

    The above list indicates cases where the income is exempt from income tax under section 10 still the association or organization is required to file return of income to the department. This list does not include the exempt income earned by a non-resident and thus the understanding of the non resident that he is not required to file his return of income is a legitimate expectation.

13. The Act provides that the Business trust or an investment fund as referred to in section 115UB are required to file the return of income irrespective of the income or loss or nil income due to no activity.
14. The Act from A Y 2015-16,( the year of introduction of Black Money Act) provides (fourth proviso to section 139(1)) that the residents not being residents not ordinary residents as per section 6(6), are required to file their return of income if they at any time during the year
    1. holds, as a beneficial owner or otherwise, any asset (including any financial interest in any entity) located outside India or has signing authority in any account located outside India; or
    2. is a beneficiary of any asset (including any financial interest in any entity) located outside India,

    However the proviso five provides that the said individual who is a beneficial owner of the asset, would not be required to file the return of income if the income arising from such asset is to be taxed in the hands of the entity referred to in (a) above. However, a word of caution, if an individual being resident and ordinary resident is having any interest in a foreign asset or is a signatory to any foreign bank account or financial asset he is required to file the return and disclose it in his return under schedule of foreign asset as otherwise there is prosecution and fine(penalty) under section 50 of the BLACK MONEY (UNDISCLOSED FOREIGN INCOME AND ASSETS) AND IMPOSITION OF TAX ACT, 2015.

15. The person (other than company or firm) who are not required to file return of income because of total income being lower than the maximum amount not chargeable to tax, are compulsorily required to file return of income if he or she has incurred expenses on foreign travel or electricity above the specified limit or has deposited an amount of more than Rs 1 crore in any current account or is satisfying any conditions as provided in Rule 12AB reproduced above. The deposit in to a current account is not necessarily to be in cash it can be even a deposit of account payee cheque or an electronic transfer, the condition is that the deposit of amount should be more than Rs 1 crore (It could be a gift or a loan which is not taxable). The above provisions are also applicable to non residents, so a question arises as to “whether a non resident who has come only a few days to India to visit his relatives and has spend more than Rupees 2 lakhs on his travel from his income from employment abroad is required to file a return of income?”.
16. Any person who has not filed a return of income may be served a notice by the assessing officer under section 142(1) to file a return of income for the purpose of assessment. Such person will have to file a return in the prescribed form and setting forth such particulars as may be prescribed.
17. Any person who has been served a notice under section 148, along with an order passed under section 148A(d) requiring him to file a return of income, will have to file the return of income within a period of three months from the end of the month in which notice is served or within such extended period which allowed by the assessing officer. This notice can be issued only if the assessing officer has information which suggests that the income chargeable to tax has escaped assessment and the assessing officer has taken necessary approval of the specified authority. The returns filed beyond the period provided will be treated as non- est or invalid. The department also does not provide the information collected against the assessee unless the return under section 148 is filed. It is therefore important that a return under section 148 is filed and then information sought from the assessing officer especially in cases where there is no 148A process is not initiated as per law.

18. The section provides for filling of return of income and collection of tax from any ship, belonging to or chartered by a non-resident, which carries passengers, livestock, mail or goods shipped at a port in India. The ship before departure from any port in India is required to file a return of income to Officer showing the full amount paid or payable to the owner or charterer or any person on his behalf, on account of the carriage of all passengers, livestock, mail or goods shipped at that port since the last arrival of the ship. However where the Assessing Officer is satisfied that it is not possible for the master of the ship to furnish the return required by this sub-section before the departure of the ship from the port and provided the master of the ship has made satisfactory arrangements for the filing of the return and payment of the tax by any other person on his behalf, the Assessing Officer may, if the return is filed within thirty days of the departure of the ship, deem the filing of the return by the person so authorised by the master as sufficient compliance.

19. The explanation 2 to section 139(1) provides the due date of filling return of income.
    

    Sr. No.	Status of Tax payer	Due Date of filling return
    1	Any company other than a company who is required to furnish a report in Form No. 3CEB under section 92E (i.e. other than covered in 2 below)	31st October of the assessment year.
    2	Any person (may be corporate/non- corporate) who is required to furnish a report in Form No. 3CEB under section 92E	30th November of the assessment year
    3	Any person (other than a company) whose accounts are to be audited under the Income-tax Law or under any other law	31st October of the assessment year.
    4	A working partner of a firm whose accounts are required to be audited under this Act or under any other law.	31st October of the assessment year.
    5	Any Other Assessee	31st July of the assessment year.

    Whereas the return of TDS for the fourth quarter of the year is filed by the tax deductors’ only on 15th May of the assessment year, the TDS certificates are to be issued within one month after the filling of return. Thus the actual credit of TDS is seen in the 26AS only after 1st June of the assessment year. This further gets complicated when there is an error in TDS deduction and the return has to be revised by the tax deductors. The time left for the assessee in these case is very short and the chances of error increases because of due date pressure. The time provided for filling return is extremely short for a non audit tax payer who does not have sufficient resources. There is a need to make representation about the short time provided so as to give relief to the small tax payers.

20. The loss returns are to be filed under section 139(3) of the Act within the due date of filling return, if the loss is to be carried forward and set off against the future income. It is imperative to note the recent judgment of Wipro Ltd (2022) 140 taxmann.com 223 (SC) dated 11th July 2022, by the supreme court where the supreme court has held filing a revised return under Section 139(5) of the IT Act and taking a contrary stand and/or claiming the exemption, which was specifically not claimed earlier while filing the original return of income is not permissible. A return of income under section 139(1) cannot be converted in to a loss return under section 139(3) if the original return was not filed under section 139(3)

21. From A Y 2023-24, a new modified sub- section has been introduced in section 170A to give effect to the order of tribunal or court in respect of business reorganization. There was an order of the supreme court in the case of Dalmia Power Ltd (2020) 420 ITR 339 (SC) where the Honourable Supreme court had allowed the filling of revised return even if the time for revised return had expired by an order of the tribunal/ court. The amendment intents to give effect to the said order by allowing filling of an amended return for giving effect to the order of the Tribunal/ court. If the entity to whom reorganization order applies has filed a returns of income, the successor is allowed to file an amended returns for all the assessment years in order to give effect to the order of the tribunal or court within a period of six months from the end of the month in which order is passed. Rule 12 AD has been notified from 1st November 2022.

    [Return of income under section 170A.

    12AD. (1) The modified return of income to be furnished by a successor entity to a business reorganisation, as referred to in section 170A, for an assessment year, shall be in the Form ITR-A and verified in the manner specified therein.

    (2) The return of income referred to in sub- rule (1) shall be furnished electronically under digital signature.

    (3) If the assessment or reassessment proceedings for an assessment year relevant to a previous year to which the order of the business reorganisation applies have been completed or are pending on the date of furnishing of the modified return in accordance with the provisions of section 170A, the Assessing Officer shall, pass an order modifying the total income of the relevant assessment year determined in such assessment or reassessment, or proceed to complete the assessment or reassessment proceedings, as the case may be, in accordance with the order of the business reorganisation and the modified return so furnished.

    (4) The Principal Director-General of Income- tax (Systems) or Director-General of Income- tax (Systems) shall specify the procedures, formats and standards for ensuring secure capture and transmission of data and shall also be responsible for evolving and implementing appropriate security, archival and retrieval policies in relation to furnishing the return in the manner specified in sub-rule (2).]

22. The delay in filling return are as under :
    1. Loss (other than loss under the head “Income from house property”) cannot be carried forward.
    2. Levy of interest under section 234A.
    3. Levy of fees under section 234F (Fee for default in furnishing return of income shall be Rs. 5,000. However, where the total income of the person does not exceed Rs. 5,00,000, the fee payable shall not exceed Rs. 1,000.)
    4. Exemptions under section 10A and 10B are not available
    5. Deduction under Part-C of Chapter VI-A shall not be available
    6. Charitable and religious Trust will not be able to claim exemption under section 11.
23. The assessee can file a belated return if he misses the due date of filling return under section 139(4). This belated return can be filed three months before the end of assessment year. Thus the belated return can be filed only till 31t December of the assessment year. However, the carried forward of loss, deduction under Part C of Chapter VI-A, exemption under section 10A, 10B and section 11 will not be allowable by filling belated return.

24. Sometimes the taxpayer may omit to include certain information in the return or may commit any mistake at the time of filing the return of income. In such case any unintentional mistake or error or omission in the return of income filed by the taxpayer can be corrected by filing a revised return. The revised return can be filed three months before the end of the assessment year. Thus the revised return has to be filed before 31st December of the Assessment year.
25. The time for file belated and revised return has been reduced over the years and today are unrealistic short time is provided. The assessee who realizes the error in filling the return after 31st December of the assessment year is not left with much choice. If the error is in the form of payment of higher taxes then there is no option left to him. He can apply under section 264 to the Principal Commissioner but the chances of relief is unlikely. The budget 2022 provided the option of updated return, however the option was given only with an additional cost of 25% of the tax in the first year and 50% of the tax in the second year. So a genuine error in filling a return will also cost the poor assessee. It can be no one’s case that the Income Tax Act of 298 section is easy to understand and therefore every error needs to be punished.
26. Majority of the errors would be realized only in the finalization of the next years return. There is a need to make a representation for more time to file return of income. Why should the government try and benefit from the error of the poor assessee.

27. The Finance Act 2022, has inserted subsection (8A) in section 139 to enable the filing of an updated return. The section provides that an updated return can be filed by any person irrespective of the fact whether such person has already filed the original, belated or revised return for the relevant assessment year or not.
28. An updated return can be filed at any time within 24 months from the end of the relevant assessment year. However, an updated return cannot be filed in the following three situations:
    1. An updated return cannot be filed if such updated return:
       1. is a return of a loss; or
       2. results in lower tax liability determined on the basis of original, revised or belated return filed by assessee; or
       3. results in or increasing the refund due on the basis of original, revised or belated return filed by assessee.
    2. A person cannot file updated return wherein:
       1. A search has been initiated under section 132 or books of account or other documents or any assets are requisitioned under section 132A in the case of such person; or
       2. A survey has been conducted under section 133A, other than section 133A(2A), in the case such person; or
       3. A notice has been issued to the effect that any money, bullion, jewellery or valuable article or thing, seized or requisitioned under section 132 or section 132A in the case of any other person belongs to such person; or
       4. A notice has been issued to the effect that any books of account or documents, seized or requisitioned under section 132 or section 132A in the case of any other person, pertain or pertains to, or any other information contained therein, relate to, such person.

       In the above situation the an updated return cannot be filed for the assessment year relevant to the previous year in which such search is initiated or survey is conducted or requisition is made and any assessment year preceding such assessment year.

    3. An updated return cannot be filed for the relevant assessment year wherein:
       1. An updated return has been filed by him.
       2. Any proceeding for assessment or reassessment or re-computation or revision of income is pending or has been completed;
       3. the Assessing Officer has information in respect of such person for the relevant assessment year in his possession under the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 (13 of 1976) or the Prohibition of Benami Property Transactions Act, 1988 (45 of 1988) or the Prevention of Money- laundering Act, 2002 (15 of 2003) or the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (22 of 2015) and the same has been communicated to him, prior to the date of furnishing of return under this sub- section;
       4. Information has been received under an agreement referred to in section 90 or section 90A in respect of such person and the same has been communicated to him, prior to the date of furnishing of return of updated return
       5. Any prosecution proceedings have been initiated in respect of such person, prior to the date of furnishing of updated return.
       6. he is such person or belongs to such class of persons, as may be notified by the Board in this regard:
29. However it is to be noted that, where a person has furnished a return of loss under section 139(3), he can furnish an updated return. However, such an updated return should be a return of income. In other words, the updated return should not be a return of loss.
30. Further, if as a result of furnishing of an updated return for a previous year, the following is reduced for any subsequent year, then the person shall be required to file the updated return for each such subsequent year:
    • loss or any part thereof carried forward under Chapter VI; or
    • unabsorbed depreciation carried forward under Section 32(2); or
    • tax credit carried forward under Section 115JAA; or
    • tax credit carried forward under Section 115JD.
31. Thus the updated return can only be filed for increase the income or reduction of the loss or deduction in the original return or belated related return. However, the risk of prosecution under section 276CC for non- filling of return and penalty for mis-reporting of income under section 270A is avoided.
32. It has been clarified that if a charitable or religious trust has not filed a return with in time provided under section 139(1)/139(4) and hence is not eligible for exemption under section 11. This trust will not be allowed deduction under section 11 while filling updated return under section 139(8A).

33. Section 140B provides for payment and computation of tax, interest, fee, and additional income-tax on updated return. It contains the following six provisions:
    1. Computation of tax on the updated return where no original or belated return was filed.
    2. Computation of tax on the updated return where original, revised or belated earlier (‘earlier return’) was filed.
    3. Computation of additional tax payable at the time of furnishing of updated return.
34. This provision also contains an explanation that provides for computation of interest under section 234A, section 234C and 234B interest on additional tax payable at the time of furnishing of updated return.

     

    Computation of tax, interest, and fee on the updated return where no return was filed earlier (a person has not filed the original or belated return)	Computation of tax, interest and fee on updated return where a return was filed earlier
    The tax payable on the updated return (self- assessment tax) shall be paid along with interest and fee for delay in furnishing the return of income and interest for any default or delay in payment of advance tax	Where a person has already filed the original, belated or revised return for the relevant assessment year, then the tax payable on the updated return (self-assessment tax) shall be paid along with interest for any default or delay in payment of advance tax as reduced by the amount of interest paid in an earlier return.
    The Self Assessment tax will be worked out after giving credit of following Advance tax; Tax deducted at source (TDS); Tax collected at source (TCS); Relief under section 89; Foreign tax credit; and MAT or AMT credit. (b) Interest under Section 234A for late filing of return At the time of furnishing of updated return, the interest under section 234A shall be computed on the self-assessment tax payable on updated return. The interest shall be charged for the period commencing from the date immediately following the due date for filing the original return of income and ending with the date on which the updated return is furnished. Similarly, interest under section 234B and 234C. However, this interest shall not be charged on the amount of additional income-tax payable on updated return.	The Self Assessment tax will be worked out after giving credit of following Tax or relief, the credit of which has already been taken in earlier return; and Tax or relief, the credit of which has not been claimed in earlier return. Further, the amount of tax so computed shall be increased by the amount of refund, if any, issued in respect of such an earlier return. The interest on the income in belated return under section 234B and 234C will be reduced by the interest already paid in the return filed. A person shall not be required to pay the fee at the time of furnishing of updated return if he has already filed the original, revised, or belated return for the relevant assessment year.

35. Payment of additional tax on updated return

    Tax on the updated return shall be paid along with interest, fee, and additional income tax. The additional tax shall be equal to 25% of the aggregate of tax and interest payable by a person on the filing of the updated return where such return is furnished after the expiry of the due date of filing of belated or revised return but before completion of a period of 12 months from the end of the relevant assessment year.

    Where the updated return is furnished after the expiry of 12 months from the end of the relevant
    assessment year but before completion of the period of 24 months from the end of the relevant
    assessment year, the additional tax payable shall be 50% of the aggregate of tax and interest
    payable.

36. The updated return shall be accompanied by the proof of tax payment, i.e., normal tax (if any), additional tax, interest and fee as required under section 140B; otherwise, it shall be treated as a defective return. It is to be noted that the current utility does not allow the full payment of the tax from TDS and advance tax already paid and some payment has to be made at the time of filling of updated return. This is not provided under the law but the utility seems to block the complete non payment at the stage of updated return.

37. It is possible to apply for assessee to apply for condonation of delay in filling of return to the PCIT in genuine cases as per the circular issued by the CBDT. However, after the introduction of the belated return the chances of a PCIT allowing the condonation of the filling of return. However, one can try the route avoid payment of additional tax for even genuine difficulty in filling returns. Example: a retired teacher suffers a brain stroke when he was at the CA’s office for filling return, he is admitted in the hospital and due to his medical condition his return is not filed till 31st December of the assessment year. Is the late fees under section 234F and the additional tax under 140B justified? 

38. Section 139(9) provides the list of situations in which the return of income filed by the taxpayer can be treated as defective return. If the Assessing Officer finds the return of income to be defective under section 139(9), then he may intimate such defect to the taxpayer and may give an opportunity to him to rectify such defect.
39. As per the current norms prescribed by CBDT vide Income-tax Rules, 1962 for filing return of income, no documents shall be attached along with the Return of Income. Hence, documents like computation of income, balance sheet and accounts, audit report, TDS certificate, tax payment challan, proof of investment, etc., are not to be attached along with the return of income. No penalty will be levied for non-submission of these documents along with the return of income and the return will not be treated as defective due to non-attachment of aforesaid documents, statements, etc.
40. The taxpayer shall rectify such defect in the return of income within a period of 15 days of such intimation or within such further period as the Assessing Officer may allow.
41. If the defect is not rectified within the period of 15 days or the further period so allowed (as the case may be), then, notwithstanding anything contained in any other provision of the Act, the return shall be treated as an invalid return and the provisions of the Act shall apply as if the taxpayer had failed to furnish the return.
42. The proviso to section provides that where the assessee rectifies the defect after the expiry of the said period of fifteen days or the further period allowed, but before the assessment is made, the Assessing Officer may condone the delay and treat the return as a valid return. However, with the online processing of returns by CPC Bangalore, this legal way out provided by the law is being blocked by CPC Bangalore and condonation are not done. The returns are held to be defective and refunds are not being blocked. A small assessee is not able to do anything about it. The application under section 264 or an application under 119(2)(a) are the way out.
43. The simple solution given in the act whereby the assessing officer can condone the delay is being blocked by the CPC Bangalore and the government is not doing anything about it. The return is simply treated as defective and the refund due is not issued. In majority of the cases the time for revised return has also passed leaving the assessee with little choice. This cannot be the intention of the legislature to block a remedy given by the Act and thereby trouble small tax payers. A representation to the government by associations to remedy this situation would bring the plight of the small tax payers to the notice of the government to rectify the situation.

44. As per section 140, the return of income is to be verified by:

    In the case of an individual :

    1. by the individual himself;
    2. where he is absent from India, by the individual himself or by some person duly authorised by him in this behalf;
    3. where he is mentally incapacitated from attending to his affairs, by his guardian or any other person competent to act on his behalf; and
    4. where, for any other reason, it is not possible for the individual to verify the return, by any person duly authorised by him in this behalf:

    It should be noted that in a case referred to in (ii) or (iv) above, the person verifying the return holds a valid power of attorney from the individual to do so and has to be registered online by the person authorizing him,( The OTP is sent to the registered mobile number/ email ID of the assessee after adding the authorized signatory details. The request is validated only after the correct OTP is entered.) The person authorized has to accept the request to become the representative (The request can be found under Worklist > Pending Actions. You can view the request and act upon it by clicking on either Accept or Reject.).

45. Similarly, when a person has expired the legal heir has to register himself before he can file the return on behalf of the deceased person. When a person dies, his / her legal heir can register as legal representative. Copies of the following documents are required to be submitted on the portal. The application takes generally 7 to 15 days to get approved. There are chances if the documents are not submitted properly that the application be rejected.
    1. PAN card of the deceased
    2. PAN card of the legal heir
    3. Death Certificate
    4. Legal Heir proof
    5. Order passed in the name of the deceased if applicable
46. Who can register as a Representative Assessee on the e-Filing portal? What are the documents required to be furnished? (from the income tax website)

    The below table lists the cases where one can register as Representative Assessee along with the documents to be furnished:

Category of Person being represented	Who shall Register as Representative	Copy of documents required to register as Representative Assessee.
Mentally Incapacitated	Guardian / Manager who is managing the affairs of such person	PAN of mentally incapacitated PAN of Representative Assessee Medical Certificate certifying mental incapacitation
Legal Heir	Legal heir of the deceased person	PAN of deceased PAN of legal heir Death Certificate Legal Heir Certificate / Surviving Member Certificate / Pension Order / Registered Will
Minor	Guardian /Manager who is managing the affairs of such person	PAN of Minor PAN of Gaurdian / Manager Proof of Gaurdianship.
Lunatic or Idiot	Guardian /Manager who is managing the affairs of such person	PAN of lunatic or idiot PAN of Gaurdian / Manager Certificate issued by medical Authourity
Court of Wards	Administrator General / Official Trustee / Receiver / Manager who manages the property	PAN of ward PAN of receiver / manager Court Order
Trust in Writing	Trustee	PAN of beneficiary PAN of trustee Attested declaration by trustee
Oral Trust	Trustee	PAN of beneficiary PAN of trustee Attested declaration by trustee

47. In the case of a Hindu undivided family, by the karta, and, where the karta is absent from India or is mentally incapacitated from attending to his affairs, by any other adult member of such family.
48. In the case of a company, by the managing director thereof, or where for any unavoidable reason such managing director is not able to verify the return, or where there is no managing director, by any director thereof.
49. It should be noted that where the company is not resident in India, the return may be verified by a person who holds a valid power of attorney from such company to do so, which shall be attached to the return. Following points should be noted in this regard.
50. Where the company is being wound up, whether under the orders of a court or otherwise, or where any person has been appointed as the receiver of any assets of the company, the return shall be verified by the liquidator referred to in section 178(1).
51. Where the management of the company has been taken over by the Central Government or any State Government under any law, the return of the company shall be verified by the principal officer thereof.
52. With effect from Assessment Year 2018- 19, where an application for corporate insolvency resolution process has been admitted by the Adjudicating Authority under Section 7 or 9 or 10 of the Insolvency and Bankruptcy Code, 2016, the return shall be verified by the insolvency professional appointed by such adjudicating authority.
53. In the case of a firm, by the managing partner thereof, or where for any unavoidable reason such managing partner is not able to verify the return, or where there is no managing partner as such, by any partner thereof, not being a minor.
54. In the case of a limited liability partnership, by the designated partner thereof, or where for any unavoidable reason such designated partner is not able to verify the return, or where there is no designated partner as such, by any partner thereof.
55. In the case of a local authority, by the principal officer thereof. In the case of a religious or charitable trust or a private trust by the trustee authourised by the board of trustees with this respect.
56. In the case of a political party referred to in section 139(4B), by the chief executive officer of such party (whether such chief executive officer is known as secretary or by any other designation);
57. In the case of any other association, by any member of the association or the principal officer thereof; and
58. In the case of any other person, by that person or by some person competent to act on his behalf.

59. The income tax return have to be filed online on the income tax website. The website is now running smoothly after a period of more than year of teething problems. The filling of return online first requires the selection of the return to be filed by the assessee.
60. There are 7 returns notified by the government on 10th February 2023. However, the return cannot be filed till the utility is issued online. The ITR 1 to 6 have been launched online by 28th April 2023. Thus the returns can now be filed. The ITR 7 utility is still to be issued on the website.
61. The assessee would find it difficult to file his return of income on his own unless he puts up effort to understand the different returns and the relevant provisions. The salaried employees find it easy to file the return if they do not have any other substantial income besides interest as the feature of auto fill of basic details is a great help to the assessee.
62. The different types of returns are applicable to different types of assessee’s. The below table would give a bird eye view of the return of incomes
    

    ITR 1	For individuals being a resident (other than not ordinarily resident) total income upto Rs.50 lakh having Income from Salaries, one house property, other sources (Interest etc.), and agricultural income upto Rs.5 thousand.
    ITR 2	For Individuals and HUFs (ROR or RNOR or NR) No Total Income Limit not having income from profits and gains of business or profession
    ITR 3	For individuals and HUFs (ROR or RNOR or NR) No Total Income Limit having income from profits and gains of business or profession.
    ITR 4	For Individuals, HUFs and Firms (other than LLP) being a resident having total income upto Rs.50 lakh having income from business and profession which is computed under sections 44AD, 44ADA or 44AE and agricultural income upto Rs.5 thousand.
    ITR 5	For persons other than- (i) individual, (ii) HUF, (iii) company and (iv) person filing Form ITR-7:- for AOP , FIRMS , BOI No total income restriction No Income restrictions ITR 6 For Companies other than companies claiming exemption under section 11 No total income restriction No Income restrictions
    ITR 7	For persons including companies required to furnish return under sections 139(4A) or 139(4B) or 139(4C) or 139(4D) only :-Trust claiming exemption under section 11 or political parties claiming exemption under section 13A No total Income restriction No income restriction

    It is important that the above returns are filed meticulously so as to avoid further enquiry by the department in case of any error or mismatch. It would be in the interest of the assessee to see that the income tallies with the form 26AS and AIS details.

    The procession of the return by the new portal is extremely fast and if the return is filed with all the details after cross checking with the 26AS and AIS, the return will be processed fast to issue the refund.

63. The filling of return is very important and has taken central stage for all bank financing. No loans are granted by banks in cases where returns are not filed. The assessee who have no taxable income will also have to file returns to claim refund of TDS. The assessee has very limited time for the filling of return and has to be vigilant to include all incomes and disclose all the necessary details as sought in the return as each default involves cost and penalties.
64. The non filling of return leads to liability of fees under section 271F and also prosecution under section 276CC. The department in the year 2015 to 2017 had initiated a huge number of prosecutions which lead to harassment. The delay in accepting compounding applications by the department also add to the huge uncertainty and harassment.

65. The non residents invest in Indian Bank fixed deposits “NRE Deposits” as the return from interest is exempt from tax in India under section 10(4)(ii) and the returns are higher than what they would get from their country of resident.
66. However, the department computer identifies these NRE fixed deposits under the risk management system. There are 148A issued to the non residents who are otherwise not required to file return under section 139(1). The assessment are being opened of NRI causing lot of hardship which can be avoided. Effort should be made to avoid such confrontation as the NRI contribute a huge amount of foreign exchange which is important for the overall stability in the economy. It is also to be noted that majority of such investigations are not likely to generate any revenue.
67. The section 115A(5) – Dividends, Royalty and Technical fees income of non residents and 115AC(4) – Income from Global depository receipts provide for exemption from filling return of India if the income of the nature mentioned in the section is earned and the TDS is deducted on that income at the rates under XVII B. It should be noted that the non filling of return is only if the rate at which tax is deducted either under the act or the treaty is equivalent or higher than the rate under the Act in chapter XVII-B. Thus if the deduction is at lower rate as per the DTAA treaty entered in to by India with that country then return will have to be filed by the Non residents.

68. The assessee while preparing the income tax return in certain cases listed below has to include the income of the following person
    

    64(1)(ii)	salary, commission, fees or any other form of remuneration paid to spouse from a concern which is not for the services of professional and technical knowledge or experience of the spouse.
    64(1)(iv)	Income earned by a spouse from assets transferred without adequate consideration
    64(1)(vi)	Income earned by son’s wife from assets transferred without adequate consideration.
    64(1)(vii)/(viii)	Income of any person or any association from any asset transferred for the benefit of the spouse or the son’s wife

69. The incomes of minors are to be included in the return of parent who’s income is higher . The issue arises when the TDS is deducted in the PAN of minor. (Certain banks are insisting on the PAN of the minor) In this case the TDS credit will be lost unless the minor’s return is filed and the TDS credit is transferred to the parent PAN.

    The situation is similar for private trusts where the income is distributed and to be taxed in the hands of the beneficiaries and not in the hands of the trust. In these cases also the TDS is in the PAN of the private trust and has to be transferred to the beneficiaries PAN by filling up the proper details in the TDS schedule of the trust and the beneficiaries. There can be some issues of claiming the credit as the CPC Bangalore in some cases disallows such credits.