Provision for Filing of Return of Income and Self-Assessment – CA Inter Tax Study Material

Provision for Filing of Return of Income and Self-Assessment – CA Inter Taxation Study Material is designed strictly as per the latest syllabus and exam pattern.

Provision for Filing of Return of Income and Self-Assessment – CA Inter Taxation Study Material

Question 1.
Answer the following with regard to the provisions of the Income-tax Act, 1961 :

Explain with brief reason whether the return of income can be revised u/s. 139(5) of the Income-tax Act, 1961 in following cases:

1. Defective or incomplete return filed under Section 139(9).
2. Belated return filed under Section 139(4).
3. Return already revised once u/s 139(5).
4. Return of loss filed under Section 139(3). [Nov. 2008, 4 Marks]

Answer:

Section	Particulars
139(9)	When assessing officer considers that return of income furnished by the assessee is defective, he may intimate such defects to the assessee and give him an opportunity to rectify the defect within 15 days of such intimation. If assessee applies for extension of time, this time limit can be extended by assessing officer. In case defect is not rectified within such time, the return will be treated as invalid. However, if defect is rectified before assessment is made, assessing officer can done delay and treat the return valid.
139(4)	Can be filed before the end of relevant assessment year or completion of assessment, whichever is earlier. Belated Return can be revised.
139(5)	In case assessee has already filed a revised return and finds some discrepancy thereafter, he may file once again revised return at any time during relevant assessment or before date of assessment, whichever is earlier.
139(3)	In case assessee has loss under heads ‘Profits and Gains of Business or Profession’ or ‘Capital Gain’, he can file return of loss within time limit mentioned in this section and such return of loss will be treated as normal return under section 139(1). Return of loss can be revised.

Question 2.
Answer the following questions with regard to the Provisions of the Income-tax Act, 1961 :
What are the particulars required to be furnished with the return income, as per Section 139(6)? [May 2010, 4 Marks]
Answer:

Section	Particulars
139(6)	Particulars of following items are required to be furnished with the return of income as per section 139(6): – 1. Incomes exempt from tax. 2.Assets of prescribed nature with their value. 3. Details of bank account and credit card. 4. Certain expenditure in excess of prescribed limit. Other details, concerned with assessee, required.

Question 3.
Answer the following:
Specify the persons who are authorized to sign and verify under section 140, the return of income filed under Section 139 of the Income-tax Act, 1961 in the case of :
1. Political party
2. Local authority
3. Association of persons
4. Limited Liability Partnership (LLP). [May 2011, 4 Marks]
Answer:

Section

Particulars

139 and 140

The following persons are authorized to sign verify and return of income under sections 140 and 139:- 1. Political Party – The chief executive officer of party, whatever his designation is. 2. Local Authority – The Principal officer of Local Body. 3. Association of Persons – Principal/Authorized person or any member of AOP. 4. Limited Liability Partnership Firm – Authorized/Designated Partner. In its absence any partner.

Question 4.
Enumerate the circumstances in which an individual assessee is empowered to sign & verify his return of income u/s 139 by himself or otherwise by an authorized signatory. [Nov. 2012, 4 Marks]
Answer:

Section

Particulars

139

In following circumstances an individual assessee is empowered to sign and verify his return of income under section 139 by himself or  by his authorized person: 1. When assessee is present in India – Himself. 2. When assessee is outside India – By a person duly authorized by him through Power of Attorney. A copy of such Power of Attorney will be attached with return. 3. When assessee is in capable – A person legally competent to sign on his behalf. 4. In unspecified circumstances – As per position of circumstances.

Question 5.
When the Karta of a Hindu undivided family is absent from India the return of income can be signed by any male member of the family? Give reasoning for the statement to be true or false. [May 2014, 2 Marks]
Answer:
When karta of Hindu Undivided family is absent from India, return of income can be signed by any of its members (not necessarily male mem-bers). Hence the statement is false.

Question 6.
“Filing of Return of Income on or before due date is necessary for carry forward of losses.” Discuss the correctness of this statement.” [Nov. 2014, 4 Marks]
Answer:
Filing of return of income or on before due date is necessary for carry forward of following losses:-

1. Ordinary business loss u/s 72(1).
2. Speculation business loss u/s 73(2).
3. Loss under head Capital Gains u/s 74(1).
4. Loss from activity of owning and maintaining Race Horses u/s 74A(3).
5. Specified business loss u/s 73A(2).

However, following losses can be carried forward even when return of loss has not been filed on before due date for filing of return:

1. Loss under head ‘Income from House Property’ u/s 7IB.
2. Unabsorbed Depreciation u/s 32(2)

Accordingly statement in question is partly correct.

Question 7.
Is a Political party required to file return of Income? State the provisions applicable under the Income-tax Act. [Nov. 2014, 4 Marks]
Answer:
The Chief Executive Officer of Political Party is responsible for filing of return of income of party on or before due date under section 139(1), without consideration of exemptions under section 13A for exemption accounts to be audited by practicing Chartered Accountant. The return of political party must be filed in prescribed form and verified by the chief executive officer of the Political Party. Hence a Political Party is required to file return of income.

Question 8.
Explain the term “return of loss” under the Income-tax Act, 1961. Can any loss be carried forward even if return of loss has not been filed as required? [May 2015, 4 Marks]
Answer:
Return of loss means Return of Income showing loss instead of in-come. Following losses can be carried forward without filing of return or on before due date.

1. Loss under head Income from House Property u/s 7IB.
2. Unabsorbed Depreciation u/s 32(2).

Question 9.
Who are the Persons authorized to verify return of income in the case % of Individual under Section 139 of the Income-tax Act 1961. [Nov. 2015, 4 Marks]
Answer:

Section

Particulars

139

Following persons are authorized to verify return of income in case of individual u/s 139. 1. When assessee is present in India – Himself. 2. When assessee is outside India – By an authorized person through Power of Attorney, a copy of which to be filed with return of income. 3. When assessee is in capable – A person legally competent to sign on his behalf. In unspecified circumstances – As per circumstances.

Question 10.
Specify the persons who are authorized to verify u/s 140, the return of income filed u/s 139 of the Income-tax Act, 1961 in case of a company. [Nov. 2016, 2 Marks]
Answer:
The following persons are authorized to verify the return of income (filed u/s 139) u/s 140:

1. WhenManagingDirectorispresent in India	Managing Director
2. When Managing Director is not available in India or not able to act.	Any Director
3. When company is Non-Resident	A person holding Power of Attorney to act as such.
4. When company is in Liquidation	Official Liquidator
5. When management of company has been taken over by any gov­ernment	Principal officer appointed by the government
6. When corporate insolvency is under process by Adjudicating Authority	Insolvency Professional appointed by Adjudicating Authority.

Question 11.
By whom should the return of Income be signed in the case of following persons:
1. Political party
2. Company which is being wound up
3. Hindu Undivided Family, when karta is unable to sign, and
4. Scientific research association. [May 2017, 4 Marks]
Answer:
The return of income will be signed for following persons as under:

1. Political Party	Chief Executive Officer
2. Company which is wound up	Liquidator
3. Hindu Undivided family when karta is unable to sign	Any adult member of HUF whether male or female
4 Scientific Research Association	Principal Officer or such Association

Question 12.
Briefly mention the provisions of Income-tax Act where to Quoting Aadhaar Number u/s 139AA of the Act. [May 2018, 5 Marks]
Answer:
Provisions regarding quoting Aadhaar Number under section 139AA are as follows:

Category A – Every person who is eligible to obtain Aadhaar is required to quote Aadhaar Number in –

i. in application for allotment of PAN
ii. in return of Income

However, if a person has applied for Aadhaar but not received as yet, he can quote Enrolment ID of Aadhaar application form.

Category B – Every person who has been allotted PAN and eligible to obtain Aadhaar Number shall intimate to appropriate authority in prescribed form.

An sequences of non-intimate of Aadhaar
In case of failure to intimate Aadhaar number the PAN allotted shall become inoperative.

When provisions of Section 139AA shall not apply

a. Person residing in Assam, Meghalaya and Jammu & Kashmir.
b. A non-resident.
c. Person aged 80 years at any time during previous year.
d. Persons who is not Citizen of India.

Question 13.
Briefly mention the ‘concept of Self-Assessment tax u/s 140A of the Income-tax Act, 1961 and it components. [May 2018, 2 Marks]
Answer:

Section

Particulars

140A

1. Self-Assessment under section 140A means the assessee must compute his taxable income and tax-liability himself before filing return of income. While doing so, he must consider various items of income in different heads, exemptions and deductions. There after net taxable income (total). 2. Tax liability will be calculated keeping in mind some special tax rates on certain incomes (such as long term capital gains, income from winning of lottery, etc). 3. At the end out of total tax-liability TDS and Advance Tax paid ‘ will be deducted. Balance amount of still payable tax is to be de­posited before filing of return of income while doing so sections 90, 90A and 91 (if applicable) will also be considered. 4. This is concept of self-Assessment Tax under section 140A of Income-tax Act, 1961.

Question 14.
Indicate the three situations where the Return of Income has to be compulsorily filed u/s 139(1) of the Income-tax Act, 1961. [May 2018, 3 Marks]
Answer:
Return of Income has to be compulsorily filed under section 139(1) in following three situations:

1. Companies and firms are required to submit return of income or loss compulsorily irrespective of quantum of income or loss,
2. A person whose total taxable income exceeds minimum exemption limit (other than an individual, HUF, AOP, BOI, Artificial Juridical person, company firm).
3. Individual, HUF, AOP, BOI, Artificial Juridical person, are required to submit return of income when it exceeds minimum exemption limit, without claiming deductions and exemptions under sections 10A, 10B, 10BA, 80C to 80U and from Assessment Year 2021-22 under sections 54, 54B, 54D, 54EC, 54G, 54GA, 54GB.

Question 15.
Explain the quantum of late fees under section 234F for delay in furnishing return of income within the prescribed time limit under section 139(1) for Assessment Year 2021-22. [Nov. 2018, 3 Marks]
Answer:
If any person who has to filed return of income under section 139 and fails to file the return within the time limit under section 139(1) then following late fee is attracted under section 234F.

Quantum of Late Fee	Circumstances
₹ 5,000	If the return is furnished on or before the 31 st December of the Assessment Year
₹ 10,000	In any other case
If the total income of the assessee does not exceed ₹ 50,000 in that case fee payable is ₹ 1,000

Question 16.
Every person is required to file a return of income on or before due date in the prescribed form and manner as per Section 139( 1). What is the meaning of due date of filing Income Tax Returns for different categories of assessee as per Section 139(1) of the Income-tax Act, 1961? [Nov. 2018, 4 Marks]
Answer:
Due date of furnishing the return of income:

1. Where the assessee (other than an assessee referred to in clause (aa) is :

1. a company, or
2. a person (other than a company) whose accounts are required to be audited under this Act or under other law for the time being in force; or
3. a working partner of a firm whose accounts are required to be audited under this Act or under other law for the time being in force.
   • due date of furnishing of return of income is 30th September of assessment year
     (aa) in the case of an assessee who is required to furnish a report referred to in section 92E (ie. international transaction or specified domestic transaction)
   • due date of furnishing of return of income is 30th November of assessment year

2. in case of a person other than company, referred to in the first proviso to section 139(1) (specially notified by central govt, who fulfil any of the certain specified conditions)

• due date of furnishing of return of income is 31st October of assessment year

3. in case of any other assessee

• due date of furnishing of return of income is 31st July of assess-ment year

Question 17.
Discuss the provisions of Section 139A(1) which provides the persons who are compulsorily required to apply for allotment of Permanent Account Number (PAN) with the assessing officer [May 2019, 4 Marks]
Answer:
Following persons are compulsorily required to apply for allotment of permanent Account Number (PAN): –

1. Every persons whose total taxable income during the previous year exceeds minimum exemption limit.
2. Every person who is carrying on business or profession, whose total turnover or gross receipts likely to exceed ₹ 5 lacs during the previous year.
3. Charitable Trust is required to obtain PAN before end of previous year.
4. Where TDS is applicable, so that tax deducted at source can be de-posited to the credit of recipient of income.
5. Every resident person (except individual) who is doing financial transaction to ₹ 2.5 lacs or more in a financial year.
6. Managing Director, director, partner, trustee, author, founder, karta, executive officer, principal officer, working on behalf of other persons (like company, trust, etc.).
7. A person who intends to enter into a prescribed transition is required to obtain PAN.

Question 18.
What is the fee for default in furnishing return of income u/s 234F? [May 2019, 4 Marks]
Answer:
Fee for default in furnishing return of income under section 234F as under:
a. ₹ 5,000/- if return is furnished on or before 31st December of assess-ment year.
b. ₹ 10,000/- if return is furnished after 31st December of assessment year.
Note : If total income of such person does not exceed ₹ 5 lacs, fee would be ₹ 1,000/-.

Question 19.
To whom the provisions of Section 139AA relating to quoting of Aadhaar Number do not apply? [May 2019, 4 Marks]
Answer:
Provisions of section 139AA shall not apply to the following, in which Aadhaar is not compulsorily required :
a. Persons residing in Assam, Meghalaya and Jammu & Kashmir.
b. A non-resident.
c. Person aged 80 years at any time during previous year.
d. Person who is not Citizen of India.

Question 20.
Elaborate the conditions, non-fulfilment of which would render a return of income filed by an assessee not maintaining regular books of account, defective. [Nov. 2019, 4 Marks]
Answer:
A return of income filed by the assessee regarded as defective in following cases:

1. When return of income has not been filled properly and completely by using appropriate Form among ITR-1 to ITR-7. No column has been left blank, without writing not applicable.
2. When return of income has been filed without depositing amount of balance tax payable, if any under Self-Assessment along with applicable interest amount if any.
3. When annexures, statements, accounts, etc. were not submitted along with return of income, as proof of items mentioned in the return such as certificates, reports, computation of tax details, final accounts, pre-paid taxes (as advance tax), TDS details, etc.

Question 21.
State with reasons whether you agree or disagree with the following statements:
(a) Return of income of Limited Liability Partnership (LLP) could be signed by any partner.
(b) Time limit for filing return under Section 139(1) in the case of Mr. A having total turnover of ₹ 45 lakhs for the year ended 31.03.2021, whether or not opting to offer presumptive income under section 44AD is 30th September 2021. [Alov. 2011, 4 Marks]
Answer:
(a) Return of Income of limited liability partnership can be signed by the designator partner only. However when there is no designated partner or under unavoidable circumstances any other partner can sign.

(b)

1. In case Mr. A opts for presumptive taxation under section 44AD, then due date for filing of return shall be 31st July, 2021.
2. In case Mr. A does not opt for presumptive taxation u/s 44AD, he is required to maintain books of account under section 44AA and get the accounts audited under section 44AB. In such case due date for filing of return shall be 30th September, 2021.

Question 22.
Paras is resident of India. During the Financial Year 2020-2021 interest of ₹ 1,88,000 was credited to his Non-resident (External) Account with State Bank of India. ₹ 30,000 being interest on fixed deposit with State Bank of India was credited to his saving bank account during this period. He also earn interest on this saving account. Is Paras required to file the return of income? What will be your answer, if he owns one shop in Kerala having area of 150 sq. ft ? [May 2012, 4 Marks]
Answer:
Computation of Taxable Income of Mr. Paras

Particulars	Amount (₹)
Income from other Sources :
Interest in Non-resident (external) Account is exempt u/s 10(4)07)	Nil
Interest on Fixed Deposit in SBI	30,000
Interest on Saving Bank A/c in SBI	3,000
Gross Total Income	33,000
Deduction U/s 80TTA (Interest on S.B. A/c)	3,000
Total Income	30,000

Since Total Income of Mr. Paras is less than minimum exemption limit, he is not required to file return of income. One shop of 150 sq. ft. is immaterial.

Question 23.
Mr. Sachin filed return on 30th September, 2021 related to Assessment Year 2021 -22. In the month of October 2021, his tax consultant found that the interest on fixed deposit was omitted in the tax return.

1. What is the time for filing a belated return?
2. Can Mr. Sachin file a revised return?

Justify the above with the relevant provisions under Section 139.

Assume that the due date for furnishing return of income was 31st July, 2020 and the assessment was not completed till the month of October 2020. [Nov. 2017, 5 Marks]
Answer:

1. As per section 139(4), belated return of income can be filed before end of relevant assessment year or before completion of assessment, whichever is earlier.
2. As per section 139(5) revised return of income can be furnished before expiry of one year from end of relevant assessment year or before completion of assessment, whichever is earlier. Mr. Sachin can file a revised return.

Question 24.
State whether quoting of PAN in the following transactions is mandatory or not, as per the provisions of Income-tax Act, 1961 for Assessment Year 2021-22:

1. Mr. A makes cash payment to a hotel Radisson Blu, Ahmedabad of ₹ 50 000 against the bill raised by the hotel.
2. Mr. Abhishek, in a single transaction, makes contract of 1,20,000 for sale/purchase of securities (other than shares) as defined in section 2(h) of the Securities Contacts (Regulation) Act, 1956.
3. Payment to Mutual Funds of ₹ 70,000 for purchase of units. Your answers must be supported with reasons. [May 2018, 3 Marks]

Answer:

1. Cash payment to a Hotel exceeding ₹ 50,000/-requires quoting of PAN compulsorily. But in the instant case the amount is ₹ 50,000/- only, Hence quoting of PAN is not mandatory.
2. In Sale/purchase of securities (other than shares/M. funds), quoting of PAN is mandatory, if consideration exceeds ₹ One lac per transac-tion. In the instant case value of one transaction is ₹ 1,20,000. Hence quoting of PAN is mandatory.
3. Payment to Mutual Fund for purchase of its units exceeding ₹ 50,000/ -, quoting of PAN is mandatory. Hence in the instant case payment of ₹ 70,000/- for purchase of mutual fund units requires quoting of PAN.