Filing Income Tax Returns beyond one year

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Filing Income Tax Returns beyond one year

Despite so many advertisement & vast awareness created by the social media, there are still lot many tax payers who have failed to file the income tax return within due date or extended time period. Under the Income Tax Act – 1961, a person has to file the income tax return [U/s 139(1)] within due date which normally vary from July to November, depending upon the status, turnover, etc of the taxpayers. The person who has failed to file the return within due date u/s 139(1) can file the return belatedly up to one year from the relevant assessment year u/s 139(5). This is called as belated return. The belated return can be filed within one year from the end of the relevant assessment year only. For example, a return for the FY 2019-20 can be filed belatedly up to 31.03.2021 only. There is no provision which allows the taxpayers to file the return after 31.03.2021 in normal course. Earlier, there was a period of 2 years for filing belated returns which has been reduced one year now.

However, there are lot many queries by the taxpayer who want to file the return even after this period of one year & enquiring about the way of filing the return in such cases now.

Though the taxpayers are ready to pay the tax with interest & even fine thereon, still the income tax portal is not accepting the returns. Lot many queries were received seeking solutions in such cases.

The reasons for seeking delayed filing are numerous such as,

  1. Bank demanding ITR for earlier years
  2. Ignorance on the part of the taxpayers
  3. Non receipt of acknowledgment (ITR V) by CPC within allotted time frame and the rectification time frame has expired.
  4. Genuine circumstances of the taxpayers which deserves consideration.
  5. The taxpayers were short of liquidity & fund and so couldn’t file the return without payment and many more similar reasons.
  6. There was no tax liability on the taxpayer due to TDS done & they didn’t file the return assuming that no tax demand means ‘no filing requirements’.

Before coming to each and every specific issues pointed out above, let us discuss some concessions provided by the CBDT circular No. 9/2015 dated 09/06/2015 which provide some relief in two exclusive cases. The prominent feature of the circular are:

  1. Condonation power for filing income tax return even beyond 1 or 2 years is conferred to some authorities if there is (a) Refund due to the taxpayers or (b) there is a Claim for Carry Forward of Losses.
  2. Power to condone the delay is as under:
    a] Up to Rs. 10 Lakhs in any one Assessment Year: Principal Commissioner / Commissioner of Income Tax (Pr.CIT/CIT)
    b] More than Rs. 10 Lakhs but not more than Rs. 50 Lakhs in any one Assessment Year: Principal Chief Commissioner / Chief Commissioner of Income Tax (Pr. CCIT/CCIT)
    c] More than Rs. 50 Lakhs: CBDT
  3. No Condonation for claim of refund or loss can be entertained beyond six years. From the end of the assessment year for which application or claim is made.
  4. The limit of six years is uniform for all authorities considering the application or claim. However, in case where refund claim has arisen consequent to a Court Order, the period for which any such proceedings were pending before any Court of Law shall be ignored while calculating the period of six years, provided such Condonation application is filed within six months from the end of the month in which such Court Order was issued or the end of financial year, whichever is later.
  5. Application for Condonation should be disposed of within in six months from the end of the month in which the application is received by the competent authority as far possible.
  6. Authorities have been empowered to direct the jurisdictional Tax Officer to make necessary inquiry or scrutiny. Acceptance or rejection of above application would be after considering following:
    a) The claim is correct and genuine;
    b) There is a case of genuine hardship on merits;
    c) Income is not assessable in the hands of any other person under the Income-tax Act;
    d) The refund has arisen as a result of excess tax deducted or tax collected at source, advance tax or self-assessment tax.

As a result of above circular, the belated filing can be condoned by the appropriate authorities in case there is a refund or loss. The circular doesn’t conferred absolute condonation power to anyone except for two situations enumerated above.

Other situations & solutions:

  1. Bank demands the ITR for the past 2-3 years for granting the bank loan as it is relied by them in support of income proof. In most of the cases, taxpayers were filing ITR voluntarily even if the return is below the taxable limit. Since belated return filing is not permissible now under the present provision of law, an alternate in the form of affidavit or CA certificate would be the probable alternate easy options in the hands of the taxpayers. This option is possible only if there is no income exceeding the basic exemption limit.
  2. In some cases, taxpayers have not filed the income tax return as they were not having liquidity to pay the self assessment tax. Now, income tax return can be filed even if the tax is not paid till the date of filing the income tax return. In such case, the tax liability is shown as “Payable” in the ITR and the income tax portal is accepting the return with tax amount as “Payable”.  However, this option can be used by the taxpayer only for the subsequent years return where the taxpayers are short of funds even at the last date of return filing.
  3. There are the cases where the returns are filed but the same is invalidated due to non receipt of ITR V by CPC, Bnegaluru. In such case, it may be noted that the CBDT has given concessions till 30th Sepember 2020. Taxpayers can use this concessions to validate the returns of earlier years.
  4. In all other cases where the tax liability was there but the return could not be filed for reason whatsoever or returns are filed but are invalidated for the reasons mentioned above, there appears to be no legal remedy in the hands of the taxpayers as such.Only one informal solution could be making an application to the Assessing Officer incorporating the details of facts of non fling, reasons thereof, income details with a request to issue notice u/s 142(1) or u/s 148. If the AO is convinced and issues the notices. Income tax portal can accept the return after giving the references of the said notice. It may be noted that section 142(1) & 148 are the prerogative of the department and not the rights in the hands of the Assessee. Return filed under above sections will be scrutinized and may go through the assessment proceeding after filing.

There are lot many genuine problems that are faced by the taxpayers on all the issues mentioned above. It would be more appropriate if the CBDT broadens the scope of circular No. 9/2015 and empower the Assessing Officer to condone the delay in filing the returns in appropriate cases.

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