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

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Section 139 of the Income Tax Act 1961, contains various provisions related to late filing of various income tax returns. If any individual or non-individual tax assessee has not filed tax returns within the specified deadline, Section 139 also features the guidelines to file delayed returns. There are several sub-sections of Section 139 that are designed to deal with non-submission of tax returns within the prescribed time frame by different types of tax assesses.

Sub-Sections of Section 139 of Income Tax Act 1961

The following are the key sub-sections of Section 139 of the IT Act, 1961.

1) Section 139(1) – Mandatory and Voluntary Returns

Under Section 139(1), in the following cases the filing of Income Tax Return is Mandatory:

• Every person who has a total income that exceeds the exemption limit is liable to furnish Income Tax Return within the due date
• Any private, public, domestic or foreign country located and/or doing business in India
• Any firm including LLP (Limited Liability Partnership) or Unlimited Liability Partnership
• Any resident who has an asset located outside of India (might include financial interest in some entity as well) OR any resident who retains signing authority for an account based outside India – for all these cases Tax return needs to be filed mandatorily in the prescribed form irrespective of the amount of tax liability on those incomes
• Every HUF (Hindu Undivided Family), AOP (Association of Persons) and BOI (Body of Individuals) – if the total income of these bodies or entities exceeds the prescribed exception limit, they are liable to file the Income Tax Return in the prescribed format with required documentation

In the following cases, the filing of Income Tax Return is Voluntary :

• In certain situations individuals or entities are not under compulsory requirement to file the return. In such cases their tax filings are considered as Voluntary returns, which are seen as valid tax returns.

Note: Under Section 139(1c), certain classes of people are exempt from filing income tax. If these classes of people fulfill the prescribed conditions, central government is empowered to grant them tax exemption.
After issuing notice under Section 139(1c), it should be placed before each House of Parliament for 30 days when the sessions go on immediately following the notification. Upon agreement from both the Houses, modification will be done in the notification and will be effective. Otherwise notification will be ineffective.

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2) Section 139(3) – Filing Income Tax in case of Loss

• In case of an Individual Tax payer, if any loss was incurred in the previous financial year then filing a tax return is not mandatory
• Tax return for loss is compulsory for companies and firms and the provisions are as follows:
• If the loss arises under the head “Profits and Gains of Business and Profession” or under the head ‘Capital Gains’. Tax return filing is mandatory in case the firm wants to carry forward this loss and offset with the future income. Availability of this option is only possible if the tax return indicating the loss is filed within the due date.
• In case the loss arises under the head “House or residential Property”, the loss could be carried forward even though the tax return is filed after the due date.
• If the loss is filed for return under Section 142(1), except for the loss under “House property”, other losses could not be carried forward. However, the unabsorbed depreciation could be carried forward for such cases.
• In case the loss is to be offset against some income in other category for the same year, it is permitted to offset even though return is filed after the due date.
• Loss of the earlier years could be carried forward if the return of losses for those years were filed with due dates and those losses were assessed.

The advantage of filing the loss returns is that it allows one to carry the loss forward which reduces the tax liability for the future years. Hence, it is highly advisable to file the return for loss.

3) Section 139(4) – Late Income Tax Return

The taxpayer (an individual or an entity) have to furnish the tax return before the due date as specified under the Section 139(1), or within the allowable time by a notice that is issued under the section 142(1). If they fail to do so, they may still file the belated return for any prior years any time until the expiry of one year that started from the end of the applicable year of assessment or before conclusion of the assessment, whichever happens earlier. However, the taxpayer might be charged with a penalty of ₹5,000, under Section 271F of IT Act 1961, in case the return is submitted after the pertinent assessment year.

Again, there would be no penalty imposed in case the income did not require a mandatory filing as per the provisions under Section 139(1), even though the return was filed after the expiration of the assessment year.

4) Section 139(5) – Revised Return

In case the Income Tax Return was filed within due date but later the tax payer realises that there was some mistake or omission in the filing of the return, to correct these mistakes there is provision for revised return of Income Tax under Section 139(5). However, a late or belated return is beyond the scope of this section and could not be revised.

Revised return could be filed any time within one year after the pertinent assessment year gets over OR prior to the completion of assessment – whichever is sooner. There is no restriction on the number of times that a tax return could be revised within the specified time frame.

The revision could be done either in the same and original Income Tax Return Form or in a different return Form. Once the new return is filed under Section 139(5), the original return that was done under Section 139(1) should be considered as withdrawn and the revised return will be validated.

Revised Return is allowed for unintentional mistakes only. Section 139(5) is specifically applicable to cases of ‘Omissions and Wrong Statements’ and not meant for ‘Concealment or False Statements’. For any intentional mistakes or omissions and for any fraudulent filing, penalty will be imposed on the tax payer.

5) Section 139(4a) – Income Tax Return of Charitable and Religious Trusts

Filing Tax Return under Section 139(4A) is needed by every individual who receives an income derived from the property held under any trust or other legal obligation, either wholly for religious or charitable purposes or partly for such purposes only, or of income being voluntary contributions referred to in sub-section 2(24)(iia), shall, in case the total income (without giving effect to the provisions of sections 11 and 12) exceeds the maximum allowable amount which is not taxable under income-tax.

6) Section 139(4b) – Political Party to Furnish the Return on Income

Section 139(4b) requires political parties to file Income Tax Return in case the total income exceeds the maximum allowable tax exempt limit. The total income computed for this specific purpose and under this act excluding the effects of provisions under Section 13A).  The Chief Executive Officer or the Secretary of all political parties are required to furnish this return as applicable.

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7) Section 139(4c) and Section 139(4d) – Income Tax Return of entities claiming Exemption under Section 10

Section 139(4c) and Section 139(4D) are intended to deal with certain institutions who are claiming benefits according to the Section 10 of the Income Tax Act 1961.
Return under Section 139(4c) includes institutions that are compulsorily required to file tax return if the amount accumulated by the institution exceeds the maximum allowable limit of exemption. This excludes other exemption benefits enjoyed by the institution.
Return under section 139(4C) is required to be filed by :

• Each and every association engaged in scientific research
• Institutions or associations mentioned under Section 10(23A)
• News agency
• Institutions mentioned under Section 10(23B)
• University, institutions, other educational and medical institutions, hospitals

The institutions that come under Section 139(4c) intend to claim tax exemptions as per the following clauses under of Section 10:
Clauses are: 21, 22B, 23A, 23C, 23D, 23DA, 23FB, 24, 46 and 47.

• Return under Section 139(4d) is applicable for all colleges, universities and institutions which do not need to file tax returns of income and loss under any other provision in this section. Section 139(4d) applies for the following sections of income tax: Section 35(1)(ii) and Section 35(1)(iii)

8) Section 139(4f)

Every investment fund referred to in section 115UB, which is not required to furnish return of income or loss under any other provisions of this section, shall furnish the return of income in respect of its income or loss in every previous year and all the provisions of this Act shall, so far as may be, apply as if it were a return required to be furnished under sub-section (1).

9) Section 139(9) – Defective Returns

As per Section 139(9), a tax return is defective if certain documents are not attached while filed the return. In case the return is considered defective by the tax officer, then tax payer will be informed by him and will be allowed to rectify the defect within 15 days starting from the day of intimation. Upon request from the tax payer through an application, the allowable period could be extended also. The assessing officer intimates the tax payer about the defect through a simple letter.
The following documents are necessary to avoid your filing to be deemed as defective:

• A duly filled tax return in the recommended form
• A statement displaying the computation of payable taxes
• Proof of all claims of paid taxes – like proof of tax deduction and collection that was done at source, payment of self-assessment tax and advance tax
• A report for the audit done u/s 44AB, where prior to filing the return, the report is furnished
• If tax payer maintains books of account then the mandatory copies are:

1. Profit and Loss A/C, Manufacturing A/C, Trading A/C, Balance Sheet, Income & Expense A/C
2. Personal A/Cs of partners in case of partnership firms
3. For AOP/BOI, personal accounts of the members
4. For proprietors, the personal account

• If the tax payer’s account is audited, then the copies of audit report, balance  sheet and audited profit and loss A/C
• In case of Cost Audit, the relevant report
• If Books of A/C for the tax payer is not maintained, then a statement indicating the gross receipts, turnover amount, expenses and net profit, bank balance, stocks, cash, debtors and creditors information and so on.

Due Dates for Section 139

Section 139 of the Income Tax Act 1961 consists of different sub-sections that deal with various kinds of returns filed by different individuals, entities and institutions as well as different kind of scenarios related to late payments and mistakes. Therefore, a few due dates are prescribed for this section for individuals or entities by which dates their income tax returns are required to file. These dates are as follows:

• July 31st – While this deadline is often extended by up to a month to August 31, this applies to all tax assessees who do not require an audit to be performed. This includes the following individuals and entities:
  • A person or employee who is paid salary
  • A person who is self-employed or professional
  • A freelancer or a consultant
• September 30th – All persons and entities who are required to or are liable to undergo an audit of their accounting books, need to file their income tax returns by 30th September of every assessment year. This date may also be extended as per the discretion of the Government. The following entities and individuals might come under this category:
  • A Business entity
  • Self-employed person or professional
  • A working partner employed with a firm or a consultant who requires to have an audit performed on his accounting book

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How is ITR Form 7 related to Section 139?

Form ITR 7, released by Income Tax Department is applicable for all individuals, institutions and entities who require to file return under Sections 139(4a), 139(4b), 139(4c) and 139(4d).
Tax payers are suggested to match the tax figures like collected, paid or deducted amounts with Form 26AS, the Tax Credit Statement.
ITR-7 could be filed with IT Department by any of the following manners:

• Filing in paper form
• Filing electronically using digital signature
• Electronically transmitting data followed by Submission of Verification of return in the Form ITR-V
• Furnishing return that is bar-coded

Section 139(4e) – This is for furnishing return for income by business trusts who are not needed to furnish return for income or loss under any other provision of this section.

Recent Amendments in Section 139 of Income Tax Act

In section 139 of the Income-tax Act,—

(I) In sub-section (1), in the sixth provision, for the words, figures and letter “provisions of section 10A”, the words, brackets, figures and letter “provisions of clause (38) of section 10 or section 10A” shall be substituted with effect from the 1st day of April, 2017;

(ii) In sub-section (3), after the words, brackets and figures “sub-section (2) of section 73”, the words, brackets, figures and letter “or sub-section (2) of section 73A” shall be inserted;

(iii) With effect from the 1st day of April, 2017,—

(a) For sub-section (4), the following sub-section shall be substituted, namely:—

“(4) Any person who has not furnished a return within the time allowed to him under sub-section (1), may furnish the return for any previous year at any time before the end of the relevant assessment year or before the completion of the assessment, whichever is earlier.”;

(b) For sub-section (5), the following sub-section shall be substituted, namely:—

“(5) If any person, having furnished a return under sub-section (1) or sub-section (4), discovers any omission or any wrong statement therein, he may furnish a revised return at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier.”;

(c) In sub-section (9), in the Explanation, clause (aa) shall be omitted.

How to file defective return u/s 139(9)?

Defective return notice is issued when the taxpayer has not filled all the necessary information or documents as required under the law for tax return. When any defect is found by the I-T department, they issue defective return notice u/s 139(9)of the Income Tax Act. Also, I-T department allows 15 days of time for taxpayers from the date of receiving notice to rectify the defect found in the return.

Mentioned below is the detailed process of filing Defective Return u/s 139(9)

Step 1: Visit the website of income tax at http://www.incometaxindiaefiling.gov.in/ and login with your UserID and Password and Date of Birth/Date of Incorporation.

Step 2: Click on E-File section in response to notice under section 139(9).

Step 3: After successful validation, if there is any defective notice raised by the CPC/AO, a new screen will be displayed.

Step 4: Click on Submit button under response column to submit your response

Step 5: If any of the defective return has been issued by AO, a different screen will be displayed once you click on the “e-file” e-file in response to notice u/s 139(9).

Step 6: After that select the relevant ITR form from the drop down list and attach the XML file and then click on submit button. A success message will appear on the screen.

Step 7: If any defective notice has been issued by CPC, a different screen will be displayed after you click on “e-file”“e-File in response to notice u/s 139(9)”.

Step 8: Select “Yes”, under the column “Do you agree with the defect?”. If you agree with the defect select ITR form  upload respective XML file. Select “NO” under the column “Do you agree with the defect” if you don’t agree with the defect. In this case you need to justify under the Assessee Remarks Column for the disagreement.

Step 9: If the value under Error Code column is “31” and you have selected “No” under the column “Do you agree with defect?”, then you need to provide some additional information as asked on the screen. Click on “Submit” to complete the process.

Step 10: If the company is FII/FPI i.e. if the assessee selects “Yes” or “NO” in the drop down list displayed under “Details for Error Code 31” table, further details needs to be provided by assessee as displayed in the screen and assessee needs to click on “Submit”.

Step 11: On successful submission of the response by the assessee, success screen is displayed.

Step 12: You can also see the submitted response by clicking “View” under the response column.

Step 13: Click on the “Transaction Id” to know the details of response submitted.

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Error Codes in Section 139 of Income Tax

Under section 139 of Income Tax Act 1961, there are different forms of error codes having list of defect for the assessee for receiving defective Return notice. Below mentioned are some of the error codes u/s 139:

1. Error Code 14: When the assessee provides negative amount in Gross Profit or Net Profit sections, ITR is treated as Defective Return.
2. Error Code 8: It is treated as Defective Return when the assessee file ITR-4S, even though the total presumptive income u/s 44AD is less than 8% of Gross turnover/ Gross Receipt.
3. Error Code 31: When taxpayer is having income under the head “Profits and Gains of Businesses and Profession”, but not filled the Balance Sheet and Profit and Loss Account.
4. Error Code 38: It is when tax is determined as payable in the return of income filed but not paid.

Section 44AA read with Section 139(9)(d)

The notice / intimation for defect contains error description such as “Taxpayer having income under the head “Profits and gains of Business or Profession” but has not filled Balance Sheet and Profit and Loss Account as required in explanation (d) under section139(9) read with section 44AA” (Error Code 31).

This error generally occurs in the cases of ITR forms like ITR 4, ITR 5 etc. (For A.Y. 2016-17) and ITR 3, ITR 5 etc. (For A.Y. 2017-18) wherein both presumptive as well as non presumptive income can be filled. However, the same may also be used where there is only presumptive business income.