Section 139 of Income Tax Act 1961: Applicability, Due Dates & Return Filing

Section 139 of the Income Tax Act, 1961 is a provision in the Indian taxation system that mandates the filing of income tax returns (ITRs) for a particular financial year by individuals, Hindu Undivided Families (HUFs), companies, and other entities that are subject to income tax.

The section outlines the due dates for filing returns, the categories of taxpayers required to file returns, and the conditions under which filing is necessary.

Under Section 139, the following key points are specified:

Mandatory Filing of Returns:

Every individual or entity whose total income before deductions exceeds the basic exemption limit of an income tax return. For companies and firms, filing is mandatory, irrespective of profit or loss during the financial year.

Due Dates:

The due dates for filing income tax returns vary depending on the category of the taxpayer. For instance, individuals, HUFs, and entities not requiring audit are typically required to file their returns by the 31st of July following the end of the financial year, while companies and taxpayers requiring audit under Section 44AB must file by the 31st of October.

Revised and Belated Returns:

Section 139 (1) ITR also accommodates provisions for revising a filed return if the taxpayer discovers any omission or wrong statement.

Additionally, taxpayers who fail to file their returns within the due date can file a belated return under certain conditions but may face penalties or interest for late filing.

Exceptional Cases:

The Act also specifies situations where individuals, even if their income is below the taxable limit, are required to file returns.

This includes cases where the assessee can seek to claim a refund or carry forward a loss under any head of income.

Electronic Filing:

For specific categories of taxpayers, electronic filing of returns is mandatory, facilitating a quicker and more efficient process of tax return submission and processing.

Different sections of Section 139 cover different provisions for tax return filing. As per the type of assessee or his business, they are eligible to file returns as required under different sections.

Section 139(1) of Income Tax Act: Mandatory and Timely Income Tax Return Submission

Section 139(1) of the Income Tax Act mandates that every individual or entity who earns income above a certain threshold in a financial year is required to submit an income tax return (ITR) within a specified deadline. The provisions for filing Section 139(1) ensure that taxpayers comply with their legal obligations in a timely manner, contributing to the nation's revenue.

Section 139(3): Filing ITR With Loss

If an individual has incurred losses in a previous year from their business activities or through selling assets at a loss (known as "Capital Gains" loss), they have the option to carry these losses forward to subsequent years. This means they can offset these losses against future profits or gains, potentially reducing their tax liability.

To do this, the individual must submit a tax return detailing these losses within the deadline set by Section 139(1) of the Income Tax Act. Once the return is filed within this timeframe, all related regulations apply as if it were a standard return.

However, it's important to note that not all types of losses can be carried forward if the return is not filed on time. These include:

Losses from business operations, whether they involve speculation or not;

Losses realised from the sale of assets, known as capital losses, and

Losses incurred from the activity of owning and maintaining racehorses.

Filing the loss return by the prescribed deadline is crucial for anyone wishing to benefit from the option to carry forward these losses. As per section 139(3) the return of loss not be filed, or if filed after the deadline, such losses cannot be carried forward to future years.

The following are things to consider for return with loss:

Unabsorbed depreciation can be carried forward regardless of the timing of the return filing, as it is governed by section 32(2), not falling under Chapter VI, which deals with the set-off or carry forward of losses.

Filing a return of loss after the due date does not prevent the set off of losses against the current year's total income as per section 139(3). However, it does restrict the ability to carry forward those losses to future years.

If a return of loss is filed in response to a notice under section 142(1), the loss cannot be carried forward except for losses from house property. Nonetheless, unabsorbed depreciation remains eligible for carry forward even in this scenario.

Section 139(4): Belated Income Tax Return

A belated return refers to the submission of an income tax return after the original deadline, which is the 31st of July, but before the extended cutoff date, the 31st of December of the assessment year. Although filing late may result in specific penalties, it serves as a preferable alternative to the potential repercussions of failing to comply with tax filing requirements.

Penalties for filing late returns are as follows:

For the earlier financial year, individuals are required to file an income tax return under section 139(4) in the following circumstances:

When an individual's total income surpasses ₹2.50 lakhs.

If more than ₹1 crore is deposited in a current account with a bank or cooperative bank during the fiscal year.

**Section 139(4A): Income Tax Return for Charitable Institution

Section 139(4A) of the Income Tax Act pertains to the filing of income tax returns by charitable institutions. This provision requires any entity that operates for charitable purposes and claims exemption under sections 11 and 12 of the Act to submit an income tax return each financial year.

It applies to trusts, religious institutions, and other not-for-profit organisations that are engaged in charitable or religious activities and seek tax exemption on their income. Regardless of the income amount, these institutions must file their returns if they wish to maintain their exemption status under the Income Tax Act. The filing ensures transparency and accountability, enabling the Income Tax Department to assess whether the institution's income is indeed being used for charitable purposes as claimed.

**Section 139(4B): Income Tax Return for Political Parties

Section 139(4B) of the Income Tax Act addresses the filing of income tax returns by political parties in India. This section specifically mandates that political parties must submit their income tax returns annually to maintain their tax exemption status under the Act.

This section is applicable to all political parties registered under the Representation of the People Act, 1951, which are entitled to tax relief provided they comply with specific conditions set forth in the Income Tax Act. Additionally, there is no minimum income threshold mentioned for political parties under this section. All registered political parties are required to file their income tax returns irrespective of the amount of income or receipts.

All political parties must adhere to the specified due date for filing their returns to avoid penalties and ensure compliance with tax laws under section 139 (4B).

Section 139(4C) and 139(4D): Income Tax Exemption Under Section 10

Section 139(4C) and Section 139(4D) of the Income Tax Act detail specific filing requirements for certain types of entities regarding their income tax returns.

**1. Section 139 (4C) of Income Tax Act

This section applies to entities such as scientific research associations, news agencies, associations or institutions involved in charitable or religious activities, funds, educational institutions, hospitals, political parties, and other not-for-profit organisations specified under various clauses of Section 10. This section is introduced to ensure these entities maintain their eligibility for tax exemptions by demonstrating their income usage aligns with their stated not-for-profit objectives. These entities must file their income tax returns annually if they wish to claim an exemption under Section 10.

**2. Section 139 (4D) of the Income Tax Act

Primarily educational institutions and universities that are not obligated to file income tax returns under other provisions of Section 139. This section explicitly addresses universities, colleges, and other institutions referred to in Section 35(1)(ii) & (iii), which are not required to furnish a return of income or loss under any other provision of this section.

Section 139(5): Filing a Revised Return

As outlined in Section 139(5) of the Income Tax Act, a revised return is a facility that enables taxpayers to amend errors or oversights in their initially filed tax return. This provision also extends to returns filed late, known as belated returns. Taxpayers have the opportunity to submit a revised return by the 31st of December of the assessment year to which the return pertains or before the tax assessment is completed, depending on which occurs first.

Filing a Revised Return becomes necessary under several circumstances:

Error Correction: When inaccuracies or omissions, such as incorrect income reporting, deductions, or other relevant details, are identified in the original Income Tax Return (ITR), a Revised Return can be filed. This process allows for the correction of errors, ensuring that tax authorities receive accurate and updated information.

Omitted Information: If certain income sources were inadvertently missed or if specific deductions or exemptions were not claimed in the original ITR, a Revised Return provides the opportunity to add these missing details. This action guarantees that the tax assessment is based on comprehensive and accurate information.

Adjustments Due to Tax Law Changes: If there are changes in tax legislation, regulations, or rates affecting your tax liability after your original ITR was submitted, a Revised Return can be filed to account for these adjustments in your tax calculations.

Assessee must file a revised return by the 31st of December of the assessment year or before the income tax authorities complete the assessment, whichever comes first.

Section 139(8A): Updated Income Tax Returns

Tax returns can be wrong due to incorrect information or changes in significant detail realised earlier. Everyone, including individuals, HUFs, firms/LLPs, companies, AOPs, and BOIs, can file Updated returns under Section 139(8A). However, to do so, taxpayers must meet certain conditions:

The Updated return can only be filed if the taxpayer either didn't file an income tax return previously or if there were mistakes or things left out in the originally filed return.

It's also applicable if the taxpayer needs to report extra income that wasn't included before and pay any additional taxes due.

Section 139(9): Defective Income Tax Returns

A defective return occurs when there is omitted or inaccurately reported information on the tax return. In such instances, the Income Tax Department issues a notice under section 139(9) to the taxpayer. This notice serves to inform the taxpayer of the discrepancies and requests corrections to the errors identified in return.

**Most Common Errors in Defective Errors

Incomplete Information: Ensure all required parts of the ITR are filled in, such as annexures and columns. For instance, when claiming a deduction under Section 80D, the specific premium must be accurately entered.

Information Mismatch: The tax paid should match the amount stated in your ITR. Any discrepancies, or if taxes are underpaid, need to be corrected.

Missing Tax Payment Details: If tax and any applicable interest have been paid before filing the return, ensure all related details, like the BSR code, challan date, and serial number, are correctly entered.

High Gross Receipts Under Section 44ADA: Filing under Section 44ADA with gross receipts over ₹ 50 lakhs without including a Balance Sheet and Profit & Loss account could result in a notice to file ITR-3 with audited documents.

Unrecorded Books of Accounts: Regular financial records like Balance Sheets and Profit & Loss statements must be maintained and included in your ITR.

Presumptive Taxation Issues: When using ITR 4 under the Presumptive Taxation Scheme, ensure your presumptive income is correctly reported as per the required percentages of your gross turnover or receipts. Incorrect filings or misreported gross receipts could necessitate filing ITR 3 instead.

Unreported Income for TDS Claims: If claiming a tax refund for Tax Deducted at Source (TDS), ensure the related income is declared in your return.

Audit Report Omissions: If your books are audited, include both the audit report and audited financial statements in your return.

Cost Audit Details: Entities required to undergo a cost audit must provide detailed information about it in their ITR.

Name Mismatch: Ensure the name on your PAN matches the name on your Income Tax Return to avoid issues.

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Understanding the intricacies of Section 139 of the Income Tax Act 1961 is vital for all taxpayers, ensuring compliance and optimising tax management. This section serves as the foundation for timely and accurate tax return filing, encompassing a broad spectrum of entities and individual circumstances.

Taxpayers should be particularly mindful of the deadlines for various types of returns, the provisions for belated and revised filings, and the unique requirements for entities like charitable institutions and political parties. It's also crucial to be aware of the penalties associated with late submissions and the conditions under which losses can be carried forward.