Income Tax Return Filing Provisions PDF

CHAPTER a 8 PROVISIONS FOR FILING RETURN OF INCOME AND SELF ASSESSMENT LEARNING OUTCOMES After studying this chapter, you would be able to–  comprehend as to what is a “return of income...

CHAPTER a 8 PROVISIONS FOR FILING RETURN OF INCOME AND SELF ASSESSMENT LEARNING OUTCOMES After studying this chapter, you would be able to–  comprehend as to what is a “return of income”;  identify the persons who have to compulsorily file a return of income;  identify and recall the due date for filing return of income for different assessees;  examine the consequences of late filing of return;  compute the interest payable for delayed filing of return of income;  compute the fee payable for delayed filing of return of income;  appreciate when a return of income can be revised and the time limit within which a return has to be revised;  appreciate when an updated return of income can be filed;  appreciate the manner of computation of tax payable on the basis of updated return;  identify the persons who are required to apply for permanent account number; © The Institute of Chartered Accountants of India  a 8.2 INCOME TAX LAW  identify the transactions in respect of which quoting of PAN is mandatory;  appreciate who are the specified classes of persons who can file return through Tax Return Preparer;  identify the persons who are authorised to verify the return of income in the case of different assessees in various circumstances;  appreciate the requirement to pay self-assessment tax before filing return of income;  appreciate the order of adjustment of amount paid by the assessee against self-assessment tax, fee and interest. © The Institute of Chartered Accountants of India  PROVISIONS FOR FILING RETURN OF a INCOME AND SELF ASSESSMENT 8.3 a CHAPTER OVERVIEW Interest and fee for default in Filing of Return Other Provisions furnishing return of income Permanent Account Number [Section 139A] Compulsory filing of Return of Quoting of Aadhaar Income Number [Section 139(1)] Interest for default [Section 139AA] in furnishing return of income Fee for non intimation Return of Loss [Section 234A] of Aadhaar Number [Section 139(3)] [Section 234H] Submission of returns through Tax Return Preparers Belated Return [Section 139B] [Section 139(4)] Person authorised to verify return of income [Section 140] Revised Return Self-Assessment [Section 139(5)] Fee for default in [Section 140A] furnishing return of income [Section 234F] Tax on updated Updated Return return [Section 139(8A)] [Section 140B] © The Institute of Chartered Accountants of India  a 8.4 INCOME TAX LAW 1. RETURN OF INCOME The Income-tax Act, 1961 contains provisions for filing of return of income. Return of income is the format in which the assessee furnishes information, as self- declaration, regarding his total income and tax payable. The format for filing of returns by different assessees is notified by the CBDT. The particulars of income earned under different heads, gross total income, deductions from gross total income, total income and tax payable by the assessee are generally required to be furnished in a return of income. In short, a return of income is the declaration of income and the resultant tax by the assessee in the prescribed format. 2. COMPULSORY FILING OF RETURN OF INCOME [SECTION 139(1)] (1) As per section 139(1), it is compulsory for companies and firms to file a return of income or loss for every previous year on or before the due date in the prescribed form. (2) In case of a person other than a company or a firm, filing of return of income on or before the due date is mandatory, if his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year exceeds the basic exemption limit. (3) Every person, being a resident other than not ordinarily resident in India within the meaning of section 6(6), who is not required to furnish a return under section 139(1), would be required to file a return of income or loss for the previous year in the prescribed form and verified in the prescribed manner on or before the due date, if such person, at any time during the previous year, - (a) holds, as a beneficial owner or otherwise, any asset (including any financial interest in any entity) located outside India or has a signing authority in any account located outside India; or (b) is a beneficiary of any asset (including any financial interest in any entity) located outside India. However, an individual being a beneficiary of any asset (including any financial interest in any entity) located outside India would not be required to file return of income under this clause, where, income, if © The Institute of Chartered Accountants of India  PROVISIONS FOR FILING RETURN OF a INCOME AND SELF ASSESSMENT 8.5 a any, arising from such asset is includible in the income of the person referred to in (a) above in accordance with the provisions of the Income- tax Act, 1961. Meaning of “beneficial owner” and “beneficiary” in respect of an asset for the purpose of section 139: An individual who has provided, directly or indirectly, Beneficial consideration for the asset for the immediate or future Owner benefit, direct or indirect, of himself or any other person An individual who derives benefit from the asset during the Beneficiary previous year and the consideration for such asset has been provided by any person, other than such beneficiary. Requirement of filing of return of income as per the fourth and fifth proviso to section 139(1) A resident other than not ordinarily resident within the meaning of section 6(6) who is not required to furnish a return of income u/s 139(1) AND who at any time during the P.Y. A OR B is a beneficiary of any asset holds, as beneficial owner has a signing (including financial interest in or otherwise, any asset authority in any any entity) located outside India (including financial OR account located interest in any entity) outside India located outside India However, where any income arising from such asset is includible in the hands of the person specified in (A) in accordance with the provisions of the Act, an individual, being a beneficiary of such asset, is not required to file return of income under the fourth proviso. © The Institute of Chartered Accountants of India  a 8.6 INCOME TAX LAW (4) Further, every person, being an individual or a HUF or an AOP/BOI, whether incorporated or not, or an artificial juridical person - − whose total income or the total income of any other person in respect of which he is assessable under this Act during the previous year − without giving effect to the provisions of Chapter VI-A or section 54/54B/54D/54EC/54F1 − exceeded the basic exemption limit is required to file a return of his income or income of such other person on or before the due date in the prescribed form and manner and setting forth the prescribed particulars. The basic exemption limit is ` 3,00,000 for individuals/HUF/AOPs/BOIs and artificial juridical persons under default tax regime under section 115BAC. This amount denotes the level of total income, which is arrived at after claiming the admissible deductions under Chapter VI-A i.e., 80CCD(2), 80CCH(2) and 80JJAA under default tax regime and exemption under section 54/54B/54D/ 54EC or 54F in respect of capital gain. However, the level of total income to be considered for the purpose of filing return of income is the income before claiming the admissible deductions under Chapter VI-A and exemption under section 54/54B/54D/54EC or 54F. However, in case the assessee has exercised the option of shifting out of the default tax regime provided under section 115BAC(1A), the basic exemption limit would be ` 2,50,000 for individuals/HUF/AOPs/ BOIs and artificial juridical persons, ` 3,00,000 for resident individuals of the age of 60 years but less than 80 years and ` 5,00,000 for resident individuals of the age of 80 years or more at any time during the previous year. Also, the assessee would be eligible for other deductions under Chapter VI-A subject to fulfilling the stipulated conditions. (5) Any person other than a company or a firm, who is not required to furnish a return under section 139(1), is required to file income-tax return in the prescribed form and manner on or before the due date if, during the previous year, such person – 1 or 54G or 54GA. (These sections will be dealt with in detail at the Final level) © The Institute of Chartered Accountants of India  PROVISIONS FOR FILING RETURN OF a INCOME AND SELF ASSESSMENT 8.7 a (a) has deposited an amount or aggregate of the amounts exceeding ` 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 amount or aggregate of the amounts exceeding ` 2 lakh for himself or any other person for travel to a foreign country; or (c) has incurred expenditure of an amount or aggregate of the amounts exceeding ` 1 lakh towards consumption of electricity; or (d) fulfils such other prescribed conditions. Accordingly, the CBDT has, vide Notification No. 37/2022 dated 21.4.2022, inserted Rule 12AB to provide that a person, other than a company or a firm, who is not required to furnish a return under section 139(1), and who fulfils any of the following conditions during the previous year has to file their return of income on or before the due date in the prescribed form and manner - (i) if his total sales, turnover or gross receipts, as the case may be, in the business > ` 60 lakhs during the previous year; or (ii) if his total gross receipts in profession > ` 10 lakhs during the previous year; or (iii) if the aggregate of TDS and TCS during the previous year, in the case of the person, is ` 25,000 or more; or However, a resident individual who is of the age of 60 years or more, at any time during the relevant previous year would be required to file return of income only, if the aggregate of TDS and TCS during the previous year, in his case, is ` 50,000 or more (iv) the deposit in one or more savings bank account of the person, in aggregate, is ` 50 lakhs or more during the previous year. (6) All such persons mentioned in (1) to (5) above should, on or before the due date, furnish a return of his income or the income of such other person during the previous year in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed. © The Institute of Chartered Accountants of India  a 8.8 INCOME TAX LAW Meaning of due date: ‘Due date’ means - (i) 31st October of the assessment year, where the assessee, other than an assessee referred to in (ii) below, is - (a) a company, (b) a person (other than a company) whose accounts are required to be audited under the Income-tax Act, 1961 or any other law for the time being in force; or (c) a partner of a firm whose accounts are required to be audited under the Income-tax Act, 1961 or any other law for the time being in force2. (ii) 30th November of the assessment year, in the case of an assessee including the partners of the firm 2 being such assessee who is required to furnish a report referred to in section 92E. (iii) 31st July of the assessment year, in the case of any other assessee. Note – Section 92E is not covered within the scope of syllabus of Intermediate Paper 4A: Income-tax Law. Section 139(1) provides an extended due date, i.e., 30th November of the assessment year, for assessees who have to file a transfer pricing report i.e., accountant’s report u/s 92E (i.e. assessees who have undertaken international transactions with associated enterprises). Therefore, reference has been made to this section, i.e. section 92E, for explaining this provision in section 139(1). ILLUSTRATION 1 Paras aged 55 years is a resident of India. During the F.Y. 2023-24, interest of ` 2,88,000 was credited to his Non-resident (External) Account with SBI. ` 30,000, being interest on fixed deposit with SBI, was credited to his saving bank account during this period. He also earned ` 3,000 as interest on this saving account. Is Paras required to file return of income? What will be your answer, if he has incurred ` 3 lakhs as travel expenditure of self and spouse to US to stay with his married daughter for some time? 2 or the spouse of such partner if the provisions of section 5A applies to such spouse © The Institute of Chartered Accountants of India  PROVISIONS FOR FILING RETURN OF a INCOME AND SELF ASSESSMENT 8.9 a SOLUTION An individual is required to furnish a return of income under section 139(1) if his total income, before giving effect to the deductions under Chapter VI-A or exemption under section or section 54/54B/54D/54EC or 54F, exceeds the maximum amount not chargeable to tax i.e. ` 3,00,000 under default tax regime u/s 115BAC and ` 2,50,000 if exercises the option of shifting out of the default tax regime provided under section 115BAC(1A) (for A.Y. 2024-25). Computation of total income of Mr. Paras for A.Y. 2024-25 Particulars ` Income from other sources Interest earned from Non-resident (External) Account ` 2,88,000 NIL [Exempt under section 10(4)(ii), assuming that Mr. Paras has been permitted by RBI to maintain the aforesaid account] Interest on fixed deposit with SBI 30,000 Interest on savings bank account 3,000 Gross Total Income 33,000 Less: Deduction under Chapter VI-A (not available under the default - tax regime under section 115BAC) Total Income 33,000 In case he exercises the option of shifting out of the default tax regime provided under section 115BAC(1A), he would be eligible for deduction of ` 3,000 under section 80TTA. Accordingly, his total income would be ` 30,000. However, in both regimes, total income of ` 33,000, before giving effect to deductions under Chapter VI-A, would be considered. Since the total income of Mr. Paras for A.Y.2024-25, before giving effect to the deductions under Chapter VI-A, is less than the basic exemption limit in both regimes, he is not required to file return of income for A.Y.2024-25. Note: In the above solution, interest of ` 2,88,000 earned from Non-resident (External) account has been taken as exempt on the assumption that Mr. Paras, a resident, has been permitted by RBI to maintain the aforesaid account. However, in case he has not been so permitted, the said interest would be taxable. In such a case, his total income, before giving effect to, inter alia, the deductions under © The Institute of Chartered Accountants of India  a 8.10 INCOME TAX LAW Chapter VI-A, would be ` 3,21,000 (` 30,000 + ` 2,88,000 + ` 3,000), which is higher than the basic exemption limit of ` 3,00,000 or ` 2,50,000, as the case may be. Consequently, he would be required to file return of income for A.Y.2024-25. If he has incurred expenditure of ` 3 lakhs on foreign travel of self and spouse, he has to mandatorily file his return of income on or before the due date under section 139(1), even if his income is less than the basic exemption limit. 3. SPECIFIED CLASS OR CLASSES OF PERSONS TO BE EXEMPTED FROM FILING RETURN OF INCOME [SECTION 139(1C)] (1) Every person who falls within the ambit of the conditions mentioned under section 139 has to furnish a return of his income on or before the due date specified under section 139(1). (2) For reducing the compliance burden of small taxpayers, the Central Government has been empowered to notify the class or classes of persons who will be exempted from the requirement of filing of return of income, subject to satisfying the prescribed conditions. 4. RETURN OF LOSS [SECTION 139(3)] (1) This section requires the assessee to file a return of loss in the same manner as in the case of return of income within the time allowed u/s 139(1). (2) Section 80 requires mandatory filing of return of loss u/s 139(3) on or before the due date specified u/s 139(1) for carry forward of the following losses - (a) Business loss u/s 72(1) (b) Speculation business loss u/s 73(2) (c) Loss from specified business u/s 73A(2) [In case assesse has exercised the option of shifting out of the default tax regime provided under section 115BAC(1A)] (d) Loss under the head “Capital Gains” u/s 74(1) (e) Loss from the activity of owning and maintaining race horses u/s 74A(3) © The Institute of Chartered Accountants of India  PROVISIONS FOR FILING RETURN OF a INCOME AND SELF ASSESSMENT 8.11 a (3) Consequently, section 139(3) requires filing of return of loss mandatorily within the time allowed u/s 139(1) for claiming carry forward of losses mentioned in (2) above. (4) However, loss under the head “Income from house property” u/s 71B and unabsorbed depreciation u/s 32 can be carried forward for set-off even though return of loss has not been filed before the due date. (5) A return of loss has to be filed by the assessee in his own interest and the non- receipt of a notice from the Assessing Officer requiring him to file the return cannot be a valid excuse under any circumstances for the non-filing of such return. 5. BELATED RETURN [SECTION 139(4)] Any person who has not furnished a return within the time allowed to him under section 139(1) may furnish the return for any previous year at any time - (i) before three months prior to the end of the relevant assessment year (i.e., 31.12.2024 for P.Y. 2023-24); or (ii) before the completion of the assessment, whichever is earlier. Hence, belated return cannot be filed after 31 st December of the relevant assessment year. 6. REVISED RETURN [SECTION 139(5)] If any person having furnished a return under section 139(1) or a belated return under section 139(4), discovers any omission or any wrong statement therein, he may furnish a revised return at any time – (i) before three months prior to the end of the relevant assessment year (i.e., 31.12.2024 for P.Y. 2023-24); or (ii) before completion of assessment, whichever is earlier. Hence, belated return cannot be filed after 31 st December of the relevant assessment year. © The Institute of Chartered Accountants of India  a 8.12 INCOME TAX LAW QUICK RECAP Mandatory filing of return of income [Section 139(1)] Person being Person who during Persons who during Resident Individual, HUF, the P.Y. - the P.Y. - other than AOPs or BOIs - has deposited > ` 1 - has total sales, RNOR, having and artificial crore in one or more turnover or gross any asset juridical persons current accounts with receipts in the located having total bank or a co- business > ` 60 lakhs outside India income operative bank; or Company - has total gross or signing exceeding basic - has incurred exp. of receipts in profession and authority in exemption limit > ` 2 lakh for himself > ` 10 lakhs any account before giving Firm or any other person located effect to the - has aggregate TDS outside India provisions of for travel to a foreign and TCS credit ≥ or is Chapter VI-A or country; or ` 25,000 (` 50,000 in beneficiary of exemption u/s - has incurred exp of case of senior citizen) any asset 54/54B/54D/ > ` 1 lakh towards - has deposit in one or located 54EC or 54F electricity more savings bank outside India consumption; account ≥ ` 50 lakhs Due date of filing of return 30th November of A.Y 31st October of A.Y. 31st July of assessee, including partner of the Company A.Y. firm, being such assessee who is Person other than company, whose accounts are Any other required to furnish a report referred required to be audited assessee to in section 92E. A partner of a firm, whose accounts are required to be audited Loss Return under section 139(3) To be filed on or before the due date under section 139(1) for carry forward of Loss from Loss from Loss from the activity Business Loss under the speculation specified of owning and loss u/s head "Capital business u/s business u/s maintaning race 72(1) Gains" u/s 74(1) 73(2) 73A(2) horses u/s 74A(3) Belated Return under section 139(4) If return not filed within the time specified u/s 139(1), the assessee can file belated return u/s 139(4), at any time before Three months prior to the end of the Relevant Assessment Year OR Completion of the Assessment Whichever is earlier Revised Return under Section 139(5) Return filed u/s 139(1) or u/s 139(4) can be revised u/s 139(5), if any omission or any wrong statement is discovered by the assessee, at any time before Three months prior to the end of the OR Completion of the Assessment Relevant Assessment Year Whichever is earlier © The Institute of Chartered Accountants of India  PROVISIONS FOR FILING RETURN OF a INCOME AND SELF ASSESSMENT 8.13 a ILLUSTRATION 2 Explain with brief reasons whether the return of income can be revised under section 139(5) of the Income-tax Act, 1961 in the following cases: (i) Belated return filed under section 139(4). (ii) Return already revised once under section 139(5). (iii) Return of loss filed under section 139(3). SOLUTION Any person who has furnished a return under section 139(1) or 139(4) can file a revised return at any time before three months prior to the end of the relevant assessment year or before the completion of assessment, whichever is earlier, if he discovers any omission or any wrong statement in the return filed earlier. Accordingly, (i) A belated return filed under section 139(4) can be revised. (ii) A return revised earlier can be revised again as the first revised return replaces the original return. Therefore, if the assessee discovers any omission or wrong statement in such a revised return, he can furnish a second revised return within the prescribed time i.e. at any time before three months prior to the end of the relevant assessment year or before the completion of assessment, whichever is earlier. It implies that a return of income can be revised more than once within the prescribed time. (iii) A return of loss filed under section 139(3) is deemed to be return filed under section 139(1), and therefore, can be revised under section 139(5). 7. INTEREST FOR DEFAULT IN FURNISHING RETURN OF INCOME [SECTION 234A] (1) Interest under section 234A is attracted for failure to file a return of income on or before the due date under section 139(1) i.e., interest is payable where an assessee furnishes the return of income after the due date or does not furnish the return of income. © The Institute of Chartered Accountants of India  a 8.14 INCOME TAX LAW (2) Simple interest @1% per month or part of the month is payable for the period commencing from the date immediately following the due date and ending on the following dates - Circumstances Ending on the following dates Where the return is furnished the date of furnishing of the return after due date Where no return is furnished the date of completion of assessment (3) The interest has to be calculated on the amount of tax on total income as determined under section 143(1) and where a regular assessment is made, on the amount of the tax on the total income determined under regular assessment, as reduced by the advance tax paid and any tax deducted or collected at source, any relief of tax allowed under section 89 and any tax credit allowed to be set-off in accordance with section 115JD, in case the assessee has exercised the option of shifting out of the default tax regime provided under section 115BAC(1A). (4) No interest under section 234A shall be charged on self-assessment tax paid by the assessee on or before the due date of filing of return. (5) The interest payable under section 234A shall be reduced by the interest, if any, paid on self-assessment under section 140A towards interest chargeable under section 234A. (6) Tax on total income as determined under section 143(1) would not include the additional income-tax, if any, payable under section 140B or section 143. (7) Tax on total income determined under regular assessment would not include the additional income-tax payable under section 140B. Note – Section 143(1) provides that if any sum is found due on the basis of a return of income after adjustment of advance tax, relief of tax allowed under section 89, tax deducted at source, tax collection at source and self-assessment tax, an intimation would be sent to the assessee and such intimation is deemed to be a notice of demand issued under section 156. If any refund is due on the basis of the return, it shall be granted to the assessee and intimation to this effect would be sent to the assessee. Where no tax or refund is due, the acknowledgement of the return is deemed to be intimation under section 156. © The Institute of Chartered Accountants of India  PROVISIONS FOR FILING RETURN OF a INCOME AND SELF ASSESSMENT 8.15 a 8. SELF-ASSESSMENT [SECTION 140A] (1) Payment of tax, interest and fee before furnishing return of income [Section 140A(1)] Where any tax is payable on the basis of any return required to be furnished under, inter alia, section 139, after taking into account - (i) the amount of tax, already paid, under any provision of the Income-tax Act, 1961 (ii) the tax deducted or collected at source (iii) any relief of tax claimed under section 89 (iv) any tax credit claimed to set-off in accordance with the provisions of section 115JD, in case the assessee has exercised the option of shifting out of the default tax regime provided under section 115BAC(1A); and (v) any tax or interest payable as per the provisions of section 191(2), the assessee shall be liable to pay such tax together with interest and fee payable under any provision of this Act for any delay in furnishing the return or any default or delay in payment of advance tax before furnishing the return. The return has to be accompanied by the proof of payment of such tax, interest and fee. (2) Order of adjustment of amount paid by the assessee Where the amount paid by the assessee under section 140A(1) falls short of the aggregate of the tax, interest and fee as aforesaid, the amount so paid shall first be adjusted towards the fee payable and thereafter towards interest and the balance, if any, shall be adjusted towards the tax payable. (3) Interest under section 234A [Section 140A(1A)] For the above purpose, interest payable under section 234A shall be computed on the amount of tax on the total income as declared in the return, as reduced by the amount of- (i) advance tax paid, if any; (ii) any tax deducted or collected at source; (iii) any relief of tax claimed under section 89 © The Institute of Chartered Accountants of India  a 8.16 INCOME TAX LAW (iv) any tax credit claimed to be set-off in accordance with the provisions of section 115JD, in case the assessee has exercised the option of shifting out of the default tax regime provided under section 115BAC(1A). (4) Interest under section 234B [Section 140A(1B)] Interest payable under section 234B shall be computed on the assessed tax or on the amount by which the advance tax paid falls short of the assessed tax. For this purpose “assessed tax” means the tax on total income declared in the return as reduced by the amount of - tax deducted or collected at source on any income which forms part of the total income; - any relief of tax claimed under section 89 - any tax credit claimed to be set-off in accordance with the provisions of section 115JD, in case the assessee has exercised the option of shifting out of the default tax regime provided under section 115BAC(1A). (5) Consequence of failure to pay tax, interest or fee [Section 140A(3)] If any assessee fails to pay the whole or any part of such of tax or interest or fee, he shall be deemed to be an assessee in default in respect of such tax or interest or fee remaining unpaid and all the provisions of this Act shall apply accordingly. 9. UPDATED RETURN OF INCOME [SECTION 139(8A)] (1) Option to furnish updated return - Any person may furnish an updated return of his income or the income of any other person in respect of which he is assessable, for the previous year relevant to the assessment year at any time within 24 months from the end of the relevant assessment year. © The Institute of Chartered Accountants of India  PROVISIONS FOR FILING RETURN OF a INCOME AND SELF ASSESSMENT 8.17 a This is irrespective of whether or not he has furnished a return under section 139(1) or belated return under section 139(4) or revised return under section 139(5) for that assessment year. For example, an updated return for A.Y. 2023-24 can be filed till 31.3.2026. (2) Non applicability of the provisions of updated return – The provisions of updated return would not apply, if the updated return of such person for that assessment year – (i) is a loss return; or (ii) has the effect of decreasing the total tax liability determined on the basis of return furnished under section 139(1) or section 139(4) or section 139(5); or (iii) results in refund or increases the refund due on the basis of return furnished under section 139(1) or section 139(4) or section 139(5). (3) Updated return can be filed if original return is a loss return and updated return is a return of income - If any person has a loss in any previous year and has furnished a return of loss on or before the due date of filing return of income under section 139(1), he shall be allowed to furnish an updated return if such updated return is a return of income. For example if Mr. X has furnished his return of loss for A.Y. 2023-24 on 31.5.2023 consisting of ` 5,00,000 as business loss, he can furnish an updated return for A.Y. 2023-24 upto 31.3.2026 if such updated return is a return of income. (4) Updated return to be furnished for subsequent previous year in case (3) above - If the 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 115JD is to be reduced for any subsequent previous year as a result of furnishing of updated return of income for a previous year, an updated return is required to be furnished for each such subsequent previous year [In case assessee has exercised the option of shifting out of the default tax regime provided under section 115BAC(1A)]. (5) Circumstances in which updated return cannot be furnished: No updated return shall be furnished in the following scenarios – © The Institute of Chartered Accountants of India  a 8.18 INCOME TAX LAW S.No. Scenarios Updated return cannot be furnished (i) Where a person has furnished an updated return under this sub-section for the relevant assessment year. (ii) Where any proceeding for assessment, for such relevant reassessment, recomputation, or revision of Assessment Year. income is pending or has been completed for the relevant assessment year in his case. (6) Updated return for the relevant assessment year cannot be furnished by such person or belongs to such class of persons, as may be notified by the Board in this regard. Note - There are other circumstances also in which updated return cannot be furnished for the relevant assessment year. For example, where prosecution proceedings are initiated under the relevant provisions of the Income-tax Act, 1961. Those circumstances will be dealt with at Final level. 10. TAX ON UPDATED RETURN [SECTION 140B] (1) Payment of tax, additional tax, interest and fee before furnishing updated return of income (a) In a case where no return is furnished earlier [Section 140B(1)] (I) Tax to be paid along with interest and fee before furnishing of updating return: Where no return of income under section 139(1) or 139(4) has been furnished by an assessee and tax is payable, on the basis of updated return to be furnished by such assessee under section 139(8A), the assessee would be liable to pay such tax together with interest and fee payable under any provision of this Act for any delay in furnishing the return or any default or delay in payment of advance tax, along with the payment of additional tax computed under section 140B(3), before furnishing the return. © The Institute of Chartered Accountants of India  PROVISIONS FOR FILING RETURN OF a INCOME AND SELF ASSESSMENT 8.19 a The updated return shall be accompanied by proof of payment of such tax, additional income-tax, interest and fee. (II) Manner of computation of tax payable on the basis of updated return The tax payable is to be computed after taking into account the following - (i) the amount of tax, if any, already paid, as advance tax; (ii) the tax deducted or collected at source; (iii) any relief of tax claimed under section 89; and (iv) any tax credit claimed to set-off in accordance with the provisions of section 115JD, in case the assessee has exercised the option of shifting out of the default tax regime provided under section 115BAC(1A). (III) Interest under section 234A if no earlier return has been furnished In a case, where no earlier return has been furnished, the interest payable under section 234A has to be computed on the amount of the tax on the total income as declared in the updated return under section 139(8A), in accordance with the provisions of section 140A(1A). (b) In a case where return is furnished earlier [Section 140B(2)] (I) Tax to be paid along with interest before furnishing updated return: Where, return of income under section 139(1) or 139(4) or 139(5) has been furnished by an assessee and tax is payable, on the basis of updated return to be furnished by such assessee under section 139(8A), the assessee would be liable to pay such tax together with interest payable under any provision of this Act for any default or delay in payment of advance tax, along with the payment of additional tax computed under section 140B(3) (as reduced by the amount of interest paid under the provisions of this Act in the earlier return) before furnishing the return. The updated return shall be accompanied by proof of payment of such tax, additional income-tax and interest. © The Institute of Chartered Accountants of India  a 8.20 INCOME TAX LAW (II) Manner of computation of tax payable on the basis of updated return: The tax payable has to be computed after taking into account the following - (i) the amount of relief or tax referred to in section 140A(1), the credit for which has been taken in the earlier return; (ii) the tax deducted or collected at source, in accordance with the provisions of Chapter XVII-B, on any income which is subject to such deduction or collection and which is taken into account in computing total income and which has not been included in the earlier return; (iii) any tax credit claimed, to set-off in accordance with the provisions of section 115JD, which has not been claimed in the earlier return, in case the assessee has exercised the option of shifting out of the default tax regime provided under section 115BAC(1A); and the aforesaid tax would be increased by the amount of refund, if any, issued in respect of such earlier return. (III) Interest under section 234B where earlier return has been furnished [Section 140B(4)] In a case where an earlier return has been furnished, interest payable under section 234B has to be computed on the assessed tax. “Assessed tax” means the tax on the total income as declared in the updated return to be furnished under section 139(8A), after taking into account the following: (i) the amount of relief or tax referred to in section 140A(1), the credit for which has been taken in the earlier return, if any; (ii) the tax deducted or collected at source, in accordance with the provisions of Chapter XVII-B, on any income which is subject to such deduction or collection and which is taken into account in computing total income and which has not been included in the earlier return; © The Institute of Chartered Accountants of India  PROVISIONS FOR FILING RETURN OF a INCOME AND SELF ASSESSMENT 8.21 a (iii) any tax credit claimed, to set-off in accordance with the provisions of section 115JD, which has not been claimed in the earlier return, in case the assessee has exercised the option of shifting out of the default tax regime provided under section 115BAC(1A); and the aforesaid tax would be increased by the amount of refund, if any, issued in respect of such earlier return. (IV) Interest under section 234C if earlier return has been furnished Interest payable under section 234C, where an earlier return has been furnished, has to be computed after taking into account the total income furnished in the updated return as returned income. (2) Additional income-tax payable at the time of updated return [Section 140B(3)] The additional income-tax payable at the time of furnishing the updated return under section 139(8A) would be – S.No. Time of furnishing updated return Additional Income- tax Payable (i) If such return is furnished after expiry 25% of aggregate of of the time available under section tax and interest 139(4) or 139(5) of the assessment year payable, as determined and before completion of the period of in (1) above 12 months from the end of the relevant assessment year; (ii) If such return is furnished after the 50% of aggregate of expiry of 12 months from the end of the tax and interest relevant assessment year but before payable, as determined completion of the period of 24 months in (1) above from the end of the relevant assessment year. Computation of Additional income-tax For the purpose of computation of Additional income-tax”, - tax would include surcharge and cess, by whatever name called, on such tax. © The Institute of Chartered Accountants of India  a 8.22 INCOME TAX LAW - the interest payable would be interest chargeable under any provision of the Act, on the income as per updated return furnished under section 139(8A), as reduced by interest paid in the earlier return, if any. However, the interest paid in the earlier return would be considered to be nil, if no earlier return has been furnished. Note - An updated return furnished under section 139(8A) would be regarded as defective return as referred u/s 139(9) unless such return of income is accompanied by the proof of payment of tax as required under section 140B. (3) Power to CBDT to issue guidelines In case of any difficulty arises in giving effect to the provisions of this section, the CBDT may issue guidelines for the purpose of removing the difficulty, with the approval of the Central Government. Every guideline issued shall be laid before each House of Parliament. 11. DEFECTIVE RETURN [SECTION 139(9)] (1) Under this section, the Assessing Officer has the power to call upon the assessee to rectify a defective return. (2) Where the Assessing Officer considers that the return of income furnished by the assessee is defective, he may intimate the defect to the assessee and give him an opportunity to rectify the defect within 15 days from the date of intimation. The Assessing Officer has the discretion to extend the time period beyond 15 days, on an application made by the assessee in this behalf. The period of 15 days will have to be reckoned from the date on which the communication is served upon the assessee. (3) If the defect is not rectified within the period of 15 days or such further extended period, the return would be treated as an invalid return. The consequential effect would be the same as if the assessee had failed to furnish the return. (4) Where, however, the assessee rectifies the defect after the expiry of 15 days or the further extended period, but before the assessment is made, the Assessing Officer may condone the delay and treat the return as a valid return. © The Institute of Chartered Accountants of India  PROVISIONS FOR FILING RETURN OF a INCOME AND SELF ASSESSMENT 8.23 a (5) A return of income would be regarded as defective unless the annexures, statements and columns therein relating to computation of income chargeable under each head of income, gross total income and total income have been duly filled in. (6) A return of income u/s 139 would also be regarded as defective if it is not accompanied by proof of payment of taxes, whether by way of advance tax or self-assessment tax. 12. FEE FOR DEFAULT IN FURNISHING RETURN OF INCOME [SECTION 234F] Where a person, who is required to furnish a return of income under section 139, fails to do so within the prescribed time limit under section 139(1), he shall pay, by way of fee, a sum of ` 5,000. However, if the total income of the person does not exceed ` 5 lakhs, the fees payable shall not exceed ` 1,000. 13. PERMANENT ACCOUNT NUMBER (PAN) [SECTION 139A] (1) Sub-section (1) requires the following persons mentioned in column (2), who have not been allotted a permanent account number (PAN), to apply to the Assessing Officer within the time specified in column (3) for the allotment of a PAN – (1) (2) (3) Persons required to apply for PAN Time limit for making such application (Rule 114) (i) Every person, if his total income or the On or before 31st May of the total income of any other person in assessment year for which respect of which he is assessable under such income is assessable the Act during any previous year exceeds the maximum amount which is not chargeable to income-tax © The Institute of Chartered Accountants of India  a 8.24 INCOME TAX LAW (ii) Every person carrying on any business or Before the end of that profession whose total sales, turnover or financial year. gross receipts are or is likely to exceed ` 5 lakhs in any previous year (iii) Every person being a resident, other than On or before 31st May of the an individual, which enters into a immediately following financial transaction of an amount financial year aggregating to ` 2,50,000 or more in a financial year (iv) Every person who is a managing director, On or before 31st May of the director, partner, trustee, author, immediately following founder, karta, chief executive officer, financial year in which the principal officer or office bearer of any person referred in (iii) enters person referred in (iii) above or any into financial transaction person competent to act on behalf of specified therein. such person referred in (iii) above Further, every person who has not been allotted a PAN and intends to enter into such transaction as prescribed by the CBDT is also required to apply for PAN to the Assessing Officer. Accordingly, Rule 114BA has been inserted to prescribe the following transactions: Person required to apply for Time limit for making PAN [Rule 114BA] application for PAN [Rule 114] (i) Every person, who intends to deposit At least 7 days before the date on cash in his one or more accounts which he intends to deposit cash with a banking company, co- over the specified limit, i.e., ` 20 operative bank or post office, if the lakh or more. cash deposit or the aggregate amount of cash deposit in such accounts during a financial year is ` 20 lakh or more (ii) Every person, who intends to At least 7 days before the date on withdraw cash from his one or more which he intends to withdraw accounts with a banking company, cash over the specified limit, i.e., co-operative bank or post office, if ` 20 lakh or more. the cash withdrawal or the aggregate amount of cash © The Institute of Chartered Accountants of India  PROVISIONS FOR FILING RETURN OF a INCOME AND SELF ASSESSMENT 8.25 a withdrawal from such accounts during a financial year is ` 20 lakh or more (iii) Any person, who intends to open a At least 7 days before the date on current account or cash credit which he intends to open such account with a banking company or a account. co-operative bank, or a post Office (2) The Central Government is empowered to specify, by notification in the Official Gazette, any class or classes of persons by whom tax is payable under the Act or any tax or duty is payable under any other law for the time being is force. Such persons are required to apply within such time as may be mentioned in that notification to the Assessing Officer for the allotment of a PAN [Sub-section (1A)]. (3) For the purpose of collecting any information which may be useful for or relevant to the purposes of the Act, the Central Government may notify any class or classes of persons, and such persons shall within the prescribed time, apply to the Assessing Officer for allotment of a PAN [Sub-section (1B)]. (4) The Assessing Officer, having regard to the nature of transactions as may be prescribed, may also allot a PAN to any other person (whether any tax is payable by him or not) in the manner and in accordance with the procedure as may be prescribed [Sub-section (2)]. (5) Any person, other than the persons mentioned in (1) or (4) above, may apply to the Assessing Officer for the allotment of a PAN and the Assessing Officer shall allot a PAN to such person immediately. (6) Such PAN comprises of 10 alphanumeric characters. (7) Quoting of PAN is mandatory in all documents pertaining to the following prescribed transactions [Section 139A(5)]: (a) in all returns to, or correspondence with, any income-tax authority; (b) in all challans for the payment of any sum due under the Act; (c) in all documents pertaining to such transactions entered into by him, as may be prescribed by the CBDT in the interests of revenue. In this connection, CBDT has notified the following transactions vide Rule 114B, namely: © The Institute of Chartered Accountants of India  a 8.26 INCOME TAX LAW S. No. Nature of transaction Value of transaction 1. Sale or purchase of a motor vehicle All such transactions or vehicle, as defined in the Motor Vehicles Act, 1988 which requires registration by a registering authority under that Act, other than two wheeled vehicles. 2. Opening an account [other than a All such transactions time-deposit referred to at Sl. No.12 and a Basic Savings Bank Deposit Account] with a banking company or a co-operative bank to which the Banking Regulation Act, 1949 applies (including any bank or banking institution referred to in section 51 of that Act). 3. Making an application to any banking All such transactions company or a co-operative bank to which the Banking Regulation Act, 1949, applies (including any bank or banking institution referred to in section 51 of that Act) or to any other company or institution, for issue of a credit or debit card. 4. Opening of a demat account with a All such transactions depository, participant, custodian of securities or any other person registered under section 12(1A) of the SEBI Act, 1992. 5. Payment to a hotel or restaurant Payment in cash of an against a bill or bills at any one time. amount exceeding ` 50,000. 6. Payment in connection with travel to Payment in cash of an any foreign country or payment for amount exceeding purchase of any foreign currency at ` 50,000. any one time. 7. Payment to a Mutual Fund for Amount exceeding purchase of its units ` 50,000 © The Institute of Chartered Accountants of India  PROVISIONS FOR FILING RETURN OF a INCOME AND SELF ASSESSMENT 8.27 a 8. Payment to a company or an Amount exceeding institution for acquiring debentures ` 50,000 or bonds issued by it. 9. Payment to the Reserve Bank of India Amount exceeding for acquiring bonds issued by it. ` 50,000 10. Deposit with a banking company or Cash deposits exceeding a co-operative bank to which the ` 50,000 during any one Banking Regulation Act, 1949, day. applies (including any bank or banking institution referred to in section 51 of that Act); or post office 11. Purchase of bank drafts or pay orders Payment in cash of an or banker’s cheques from a banking amount exceeding ` 50,000 company or a co-operative bank to during any one day. which the Banking Regulation Act, 1949 applies (including any bank or banking institution referred to in section 51 of that Act). 12. A time deposit with, - Amount exceeding (i) a banking company or a co- ` 50,000 or aggregating to operative bank to which the more than ` 5 lakh during a Banking Regulation Act, 1949 financial year. applies (including any bank or banking institution referred to in section 51 of that Act); (ii) a Post Office; (iii) a Nidhi referred to in section 406 of the Companies Act, 2013; or (iv) a non-banking financial company which holds a certificate of registration under section 45-IA of the Reserve Bank of India Act, 1934, to hold or accept deposit from public. © The Institute of Chartered Accountants of India  a 8.28 INCOME TAX LAW 13. Payment for one or more pre-paid Payment in cash or by way payment instruments, as defined in of a bank draft or pay order the policy guidelines for issuance or banker’s cheque of an and operation of pre-paid payment amount aggregating to instruments issued by Reserve Bank more than ` 50,000 in a of India under the Payment and financial year. Settlement Systems Act, 2007, to a banking company or a co-operative bank to which the Banking Regulation Act, 1949, applies (including any bank or banking institution referred to in section 51 of that Act) or to any other company or institution. 14. Payment as life insurance premium Amount aggregating to to an insurer as defined in the more than ` 50,000 in a Insurance Act, 1938. financial year. 15. A contract for sale or purchase of Amount exceeding ` 1 lakh securities (other than shares) as per transaction. defined in section 2(h) of the Securities Contracts (Regulation) Act, 1956. 16. Sale or purchase, by any person, of Amount exceeding ` 1 lakh shares of a company not listed in a per transaction. recognised stock exchange. 17. Sale or purchase of any immovable Amount exceeding ` 10 property. lakh or valued by stamp valuation authority referred to in section 50C at an amount exceeding ` 10 lakh 18. Sale or purchase, by any person, of Amount exceeding ` 2 lakh goods or services of any nature per transaction other than those specified at Sl. No. 1 to 17 of this Table, if any. © The Institute of Chartered Accountants of India  PROVISIONS FOR FILING RETURN OF a INCOME AND SELF ASSESSMENT 8.29 a Minor to quote PAN of parent or guardian Where a person, entering into any transaction referred to in this rule, is a minor and who does not have any income chargeable to income-tax, he shall quote the PAN of his father or mother or guardian, as the case may be, in the document pertaining to the said transaction. Declaration by a person not having PAN Further, any person who does not have a PAN and who enters into any transaction specified in this rule, shall make a declaration in Form No.60 giving therein the particulars of such transaction either in paper form or electronically under the electronic verification code in accordance with the procedures, data structures, and standards specified by the Principal Director General of Income-tax (Systems) or Director General of Income-tax (Systems). Non-applicability of Rule 114B The provisions of this rule shall not apply to the following class or classes of persons, namely:- (i) the Central Government, the State Governments and the Consular Offices; (ii) the non-residents referred to in section 2(30) in respect of the transactions other than a transaction referred to at Sl. No. 1 or 2 or 4 or 7 or 8 or 10 or 12 or 14 or 15 or 16 or 17 of the Table. Meaning of certain phrases: Phrase Inclusion (1) Payment in Payment towards fare, or to a travel agent or a tour connection operator, or to an authorized person as defined in with travel section 2(c) of the FEMA, 1999 (2) Travel agent A person who makes arrangements for air, surface or or tour maritime travel or provides services relating to operator accommodation, tours, entertainment, passport, visa, foreign exchange, travel related insurance or other travel related services either severally or in package (3) Time deposit Any deposit which is repayable on the expiry of a fixed period. © The Institute of Chartered Accountants of India  a 8.30 INCOME TAX LAW (8) If there is a change in the address or in the name and nature of the business of a person, on the basis of which PAN was allotted to him, he should intimate such change to the Assessing Officer [Section 139A (5)(d)]. (9) Every person who receives any document relating to any transaction cited above shall ensure that the PAN or the Aadhaar number is duly quoted in the document. (10) Intimation of PAN to person deducting or collecting tax at source Every person who receives any amount from which tax has been deducted at source shall intimate his PAN to the person responsible for deducting such tax [Section 139A(5A)]. Similarly, every buyer or licensee or lessee referred to in section 206C shall intimate his PAN to the person responsible for collecting such tax [Section 139A(5C)] (11) Quoting of PAN in certain documents Where any amount has been paid after deducting tax at source, the person deducting tax shall quote the PAN of the person to whom the amount was paid in the following documents: (i) in the statement furnished under section 192(2C) giving particulars of perquisites or profits in lieu of salary provided to any employee; (ii) in all certificates for tax deducted issued to the person to whom payment is made; (iii) in all returns prepared and delivered or caused to be delivered to any income-tax authority in accordance with the provisions of section 206; (iv) in all statements prepared and delivered or caused to be delivered in accordance with the provisions of section 200(3) [Section 139A(5B)]. Also, every person collecting tax in accordance with the provisions of section 206C shall quote PAN of every buyer or licensee or lessee in the following documents: (i) in all certificates issued for tax collected in accordance with the provisions of section 206C(5); © The Institute of Chartered Accountants of India  PROVISIONS FOR FILING RETURN OF a INCOME AND SELF ASSESSMENT 8.31 a (ii) in all returns prepared and delivered or caused to be delivered to any income-tax authority in accordance with the provisions of section 206C(5A)/(5B); (iii) in all statements prepared and delivered or caused to be delivered in accordance with the provisions of section 206C(3) [Sub-section (5D)]. (12) Requirement to intimate PAN and quote PAN not to apply to certain persons Section 139A(5A)/(5B) shall not apply to a person who – (i) does not have taxable income or (ii) who is not required to obtain PAN if such person furnishes a declaration under section 197A in the prescribed form and manner that the tax on his estimated total income for that previous year will be Nil. (13) Inter-changeability of PAN with the Aadhaar number Every person who is required to furnish or intimate or quote his PAN may furnish or intimate or quote his Aadhaar Number in lieu of the PAN, if he - has not been allotted a PAN but possesses the Aadhaar number - has been allotted a PAN and has intimated his Aadhaar number to prescribed authority in accordance with the requirement contained in section 139AA(2). PAN would be allotted in prescribed manner to a person who has not been allotted a PAN but possesses Aadhaar number. Accordingly, the CBDT has, vide Notification No. 59/2019, dated 30.8.2019, provide that any person, who has not been allotted a PAN but possesses the Aadhaar number and has furnished or intimated or quoted his Aadhaar number in lieu of the PAN, shall be deemed to have applied for allotment of PAN and he shall not be required to apply or submit any documents. Further, any person, who has not been allotted a PAN but possesses the Aadhaar number may apply for allotment of the PAN under section 139A(1)/(1A)/(3) by intimating his Aadhaar number and he shall not be required to apply or submit any documents. © The Institute of Chartered Accountants of India  a 8.32 INCOME TAX LAW (14) Quoting and authentication of PAN or Aadhaar number (a) Every person entering into such prescribed transactions is required to quote his PAN or Aadhaar number, as the case may be, in the documents pertaining to such transactions and also authenticate such PAN or Aadhaar number in the prescribed manner [Section 139A(6A)]. (b) Every person receiving such document relating to transactions referred to in (a) has to ensure that PAN or Aadhaar number has been duly quoted in such document and also ensure that such PAN or Aadhaar number is so authenticated [Section 139A(6B)]. Accordingly, Rule 114BB has been inserted to prescribe that every person has to, at the time of entering into a transaction specified in column (2) of the Table below, quote his permanent account number or Aadhaar number, as the case may be, in documents pertaining to such transaction, and every person specified in column (3) of the said Table, who receives such document, has to ensure that the said number has been duly quoted and authenticated: (1) (2) (3) S. No. Nature of transaction Person 1. Cash deposit or deposits aggregating A bank or a co-operative to ` 20 lakhs or more in a financial bank or Post Master year, in one or more account of a General of a Post Office. person with a bank or a co-operative bank or Post Office. 2. Cash withdrawal or withdrawals A bank or a co-operative aggregating to ` 20 lakhs or more in bank or Post Master a financial year, in one or more General of a Post Office. account of a person with a bank or a co-operative bank or Post Office 3. Opening of a current account or cash A bank or a co-operative credit account by a person with a bank or Post Master bank or a co-operative bank or Post General of a Post Office. Office Note – Quoting of PAN or Aadhaar number is, however, not required in case where the person depositing money as per Sl. No.1 or withdrawing money as per Sl. No.2 or opening a current account or cash credit account as per Sl. No.3 is the Central Government, the State Government or the Consular Office. © The Institute of Chartered Accountants of India  PROVISIONS FOR FILING RETURN OF a INCOME AND SELF ASSESSMENT 8.33 a (15) Power to make rules The CBDT is empowered to make rules with regard to the following: (a) the form and manner in which an application for PAN may be made and the particulars to be given therein; (b) the categories of transactions in relation to which PAN or the Aadhaar number, as the case may be, is required to be quoted on the related documents; (c) the categories of documents pertaining to business or profession in which PAN or the Aadhaar number, as the case may be, shall be quoted by every person; (d) the class or classes of persons to whom the provisions of this section shall not apply; (e) the form and manner in which a person who has not been allotted a PAN shall make a declaration; (f) the manner in which PAN or the Aadhaar number, as the case may be, shall be quoted for transactions cited in (b) above; (g) the time and manner in which such transactions cited in (b) above shall be intimated to the prescribed authority. (16) Meaning of certain terms Term Meaning (i) Aadhaar An identification number issued to an individual by number the Authority on receipt of the demographic information and biometric information after verifying the information by the authority. It includes any alternative virtual identity generated by the Authority in the prescribed manner. (ii) Authentication The process by which the PAN or Aadhaar number along with demographic information or biometric information of an individual is submitted to the income-tax authority or such other prescribed authority or agency for its verification and such authority or agency verifies the correctness, or the lack thereof, on the basis of information available with it. © The Institute of Chartered Accountants of India  a 8.34 INCOME TAX LAW (17) Penalty for failure to comply with the provisions of section 139A [Section 272B] Section Default Penalty 272B(1) Failure to comply with the provisions of section ` 10,000 139A 272B(2) Failure to quote PAN/Aadhaar number in any ` 10,000 for document referred to in section 139A(5)(c) each such Failure to intimate PAN/Aadhaar number as default required by section 139A(5A)/(5C) Knowingly quoting or intimating a number which is false 272B(2A) Failure to quote PAN/Aadhaar Number in ` 10,000 for documents referred to in section 139A(6A) or each such authenticate such number in accordance with the default provisions contained therein 272B(2B) (i) Failure to ensure that PAN/Aadhaar Number is ` 10,000 for duly quoted in the documents relating to each such transactions referred to in section 139A(5)(c) or default section 139A(6A) (ii) Failure to ensure that PAN/Aadhaar Number has been duly authenticated in respect of transactions referred to under section 139A(6A) Note – It is necessary to give an opportunity to be heard to the person on whom the penalty under section 272B is proposed to be imposed. 14. QUOTING OF AADHAAR NUMBER [SECTION 139AA] (1) Mandatory quoting of Aadhaar Number Every person who is eligible to obtain Aadhaar Number is required to mandatorily quote Aadhaar Number: (a) in the application form for allotment of Permanent Account Number (PAN) (b) in the return of income © The Institute of Chartered Accountants of India  PROVISIONS FOR FILING RETURN OF a INCOME AND SELF ASSESSMENT 8.35 a Quoting of Aadhaar Number mandatory in returns filed on or after 1.4.2019 [Circular No. 6/2019 dated 31.03.2019] As per section 139AA(1)(ii), with effect from 01.07.2017, every person who is eligible to obtain Aadhaar number has to quote Aadhaar number in the return of income. The Apex Court in a series of judgments has upheld the validity of section 139AA. Consequently, with effect from 01.04.2019, the CBDT has clarified that it is mandatory to quote Aadhaar number while filing the return of income unless specifically exempted as per any notification issued under section 139AA(3) [detailed in point no. (5) in the next page]. Thus, returns being filed either electronically or manually on or after 1.4.2019 cannot be filed without quoting the Aadhaar number. (2) Mandatory quoting of Enrolment Id, where person does not have Aadhaar Number If a person does not have Aadhaar Number, he is required to quote Enrolment ID of Aadhaar application form issued to him at the time of enrolment in the application form for allotment of Permanent Account Number (PAN) or in the return of income furnished by him. Enrolment ID means a 28 digit Enrolment Identification Number issued to a resident at the time of enrolment (3) Intimation of Aadhaar Number to prescribed Authority Every person who has been allotted Permanent Account Number (PAN) as on 1st July, 2017, and who is eligible to obtain Aadhaar Number, shall intimate his Aadhaar Number to prescribed authority on or before 31st March, 2022. Notwithstanding the last date of intimating/linking of Aadhaar Number with PAN being 31.03.2022, it is clarified that w.e.f. 01.04.2019, it is mandatory to quote and link Aadhaar number while filing the return of income, either manually or electronically, unless specifically exempted in cases detailed in point (5) below. (4) Consequences of failure to intimate Aadhaar Number If a person fails to intimate the Aadhaar Number, the permanent account Number (PAN) allotted to such person shall be made inoperative after the date so notified in the prescribed manner. © The Institute of Chartered Accountants of India  a 8.36 INCOME TAX LAW Accordingly, Rule 114AAA specifies the manner of making permanent account number inoperative. Sub- Provision Rule (1) If a person, who has been allotted PAN as on 1st July, 2017 and is required to intimate his Aadhaar number under section 139AA(2), has failed to intimate the same on or before 31st March, 2022, the PAN of such person would become inoperative and he would be liable for payment of fee in accordance with section 234H read with Rule 114(5A) i.e., ` 1,0003. (2) Where such person who has not intimated his Aadhaar number on or before 31st March, 2022, has intimated his Aadhaar number under section 139AA(2) after 31st March, 2022, after payment of fee specified in section 234H read with Rule 114(5A), his PAN would become operative within 30 days from the date of intimation of Aadhaar number. (3) A person, whose PAN has become inoperative, would be liable for following further consequences for the period commencing from the date as specified under (4) below till the date it becomes operative – (i) no refund of any amount of tax or part thereof, due under the provisions of the Act; (ii) interest would not be payable on such refund for the period, beginning with the date specified under (4) below and ending with the date on which it becomes operative; (iii) where tax is deductible at source in case of such person, such tax shall be deducted at higher rate, in accordance with provisions of section 206AA; (iv) where tax is collectible at source in case of such person, such tax shall be collected at higher rate, in accordance with provisions of section 206CC: (4) The consequences in (3) above would be effective from the date specified by the Board i.e., 1.7.2023 [Circular No. 3/2023 dated 28th March, 2023] 3 The fee was ` 500 if Aadhaar number was intimated on or before 30.06.2022 © The Institute of Chartered Accountants of India  PROVISIONS FOR FILING RETURN OF a INCOME AND SELF ASSESSMENT 8.37 a (5) Clarification on consequences of PAN becoming inoperative These consequences would be with effect from 1.7.2023 and continue till the PAN becomes operative. A fee of ` 1,000 has to be paid to make the PAN operative by intimating the Aadhaar number. The consequences of PAN becoming inoperative would not be applicable to those persons who have been provided exemption from intimating Aadhaar number detailed in point (6) below. (6) Provision not to apply to certain persons or class of persons The provisions of section 139AA relating to quoting of Aadhaar Number would, however, not apply to such person or class or classes of persons or any State or part of any State as may be notified by the Central Government. Accordingly, the Central Government has, vide Notification No. 37/2017 dated 11.05.2017 effective from 01.07.2017, notified that the provisions of section 139AA relating to quoting of Aadhaar Number would not apply to an individual who does not possess the Aadhaar number or Enrolment ID and is: (i) residing in Assam, Jammu & Kashmir and Meghalaya; (ii) a non-resident as per Income-tax Act, 1961; (iii) of the age of 80 years or more at any time during the previous year; (iv) not a citizen of India 15. SCHEME FOR SUBMISSION OF RETURNS THROUGH TAX RETURN PREPARERS [SECTION 139B] (1) This section provides that, for the purpose of enabling any specified class or classes of persons to prepare and furnish their returns of income, the CBDT may notify a scheme to provide that such persons may furnish their returns of income through a Tax Return Preparer authorised to act as such under the Scheme. (2) The Tax Return Preparer shall assist the persons furnishing the return in a manner that will be specified in the Scheme and shall also affix his signature on such return. © The Institute of Chartered Accountants of India  a 8.38 INCOME TAX LAW (3) A Tax Return Preparer means any individual, other than (i) any officer of a scheduled bank with which the assessee maintains a current account or has other regular dealings. (ii) any legal practitioner who is entitled to practice in any civil court in India. (iii) an accountant (iv) an employee of the ‘specified class or classes of persons’. who has been authorized to act as a Tax Return Preparer under the Scheme. (4) The “specified class or classes of persons” for this purpose means any person other than a company or a person whose accounts are required to be audited under section 44AB (tax audit) or under any other existing law, who is required to furnish a return of income under the Act. (5) The Scheme notified under the said section may provide for the following - (i) the manner in which and the period for which the Tax Return Preparers shall be authorised, (ii) the educational and other qualifications to be possessed, and the training and other conditions required to be fulfilled, by a person to act as a Tax Return Preparer, (ii) the code of conduct for the Tax Return Preparers, (iii) the duties and obligations of the Tax Return Preparers, (iv) the circumstances under which the authorisation given to a Tax Return Preparer may be withdrawn, and (v) any other relevant matter as may be specified by the Scheme. (6) Accordingly, the CBDT has, in exercise of the powers conferred by this section, framed the Tax Return Preparer Scheme, 2006, which came into force from 1.12.2006. Particulars Contents Applicability of The scheme is applicable to all eligible persons. the scheme Eligible person Any person being an individual or a Hindu undivided family. Tax Return Any individual who has been issued a "Tax Return Preparer Preparer Certificate" and a "unique identification © The Institute of Chartered Accountants of India  PROVISIONS FOR FILING RETURN OF a INCOME AND SELF ASSESSMENT 8.39 a number" under this Scheme by the Partner Organisation to carry on the profession of preparing the returns of income in accordance with the Scheme. However, the following person are not entitled to act as Tax Return Preparer: (i) any officer of a scheduled bank with which the assessee maintains a current account or has other regular dealings. (ii) any legal practitioner who is entitled to practice in any civil court in India. (iii) an accountant. Educational An individual, who holds a bachelor degree from a qualification for recognised Indian University or institution, or has Tax Return passed the intermediate level examination conducted Preparers by the Institute of Chartered Accountants of India or the Institute of Company Secretaries of India or the Institute of Cost Accountants of India, shall be eligible to act as Tax Return Preparer. Preparation of An eligible person may, at his option, furnish his return and furnishing of income under section 139 for any assessment year the Return of after getting it prepared through a Tax Return Income by the Preparer: Tax Return However, the following eligible person (an individual Preparer or a HUF) cannot furnish a return of income for an assessment year through a Tax Return Preparer: (i) who is carrying out business or profession during the previous year and accounts of the business or profession for that previous year are required to be audited under section 44AB or under any other law for the time being in force; or (ii) who is not a resident in India during the previous year. An eligible person cannot furnish a revised return of income for any assessment year through a Tax Return Preparer unless he has furnished the original return of income for that assessment year through such or any other Tax Return Preparer. © The Institute of Chartered Accountants of India  a 8.40 INCOME TAX LAW Note - It may be noted that as per section 139B(3), an employee of the “specified class or classes of persons” is not authorized to act as a Tax Return Preparer. Therefore, it follows that employees of companies and persons whose accounts are required to be audited under section 44AB or any other law for the time being in force (since they are not falling in the category of specified class or classes of persons), are eligible to act as Tax Return Preparers. ILLUSTRATION 3 Mrs. Hetal, an individual engaged in the business of Beauty Parlour, has got her books of account for the financial year ended on 31 st March, 2024 audited under section 44AB. Her total income for the A.Y. 2024-25 is ` 6,35,000. She wants to furnish her return of income for A.Y. 2024-25 through a tax return preparer. Can she do so? SOLUTION Section 139B provides a scheme for submission of return of income for any assessment year through a Tax Return Preparer. However, it is not applicable to persons whose books of account are required to be audited under section 44AB. Therefore, Mrs. Hetal cannot furnish her return of income for A.Y.2024-25 through a Tax Return Preparer. 16. PERSONS AUTHORISED TO VERIFY RETURN OF INCOME [SECTION 140] This section specifies the persons who are authorized to verify the return of income under section 139. Assessee Circumstance Authorised Persons 1. Individual (i) In circumstances not - the individual himself covered under (ii), (iii) & (iv) below (ii) where he is absent from - the individual himself; or India - any person duly authorised by him in this behalf holding a valid power of attorney from the individual (Such power of attorney should be © The Institute of Chartered Accountants of India  PROVISIONS FOR FILING RETURN OF a INCOME AND SELF ASSESSMENT 8.41 a attached to the return of income) (iii) where he is mentally - his guardian; or incapacitated from - any other person attending to his affairs competent to act on his behalf (iv) where, for any other - any person duly reason, it is not authorised by him in this possible for the indi- behalf holding a valid vidual to verify the power of attorney from return the individual, which should be attached to the return of income. 2. Hindu (i) in circumstances not - the karta Undivided covered under (ii) and Family (iii) below (ii) where the karta is - any other adult absent from India member of the HUF (iii) where the karta is mentally - any other adult incapacitated from member of the HUF attending to his affairs 3. Company (i) in circumstances not - the managing director covered under (i) to (vi) of the company below (ii) (a) where for any unavoidable reason any director of the such managing director company or is not able to verify the any other person as return; or may be prescribed for (b) where there is no this purpose managing director (iii) where the company is - the managing director of not resident in India the company (or) - a person who holds a valid power of attorney © The Institute of Chartered Accountants of India  a 8.42 INCOME TAX LAW from such company to do so (such power of attorney should be attached to the return). (iv) (a) Where the company is - Liquidator being wound up (whether under the orders of a court or otherwise); or (b) where any person has - Liquidator been appointed as the receiver of any assets of the company (v) Where the - the principal officer of management of the the company company has been taken over by the Central Government or any State Government under any law (vi) Where an application for - insolvency professional corporate insolvency appointed by such resolution process has Adjudicating Authority been admitted by the Adjudicating Authority under the Insolvency and Bankruptcy Code, 2016. 4. Firm (i) in circumstances not - the managing partner of covered under (ii) below the firm (ii) (a) where for any unavoidable - any partner of the firm, reason such managing not being a minor partner is not able to verify the return; or (b) where there is no - any partner of the firm, managing partner. not being a minor © The Institute of Chartered Accountants of India  PROVISIONS