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Section 139 of Income Tax Act 1961 - Late ITR Filing

Updated on: 10 Jul, 2024 11:17 AM

The Income Tax Department of India has classified the income of an Indian citizen into five broad categories based on income sources. These five categories are mainly salary, house property, business, capital gains, and other sources. Every person whose income falls within tax bracket is supposed to pay an income tax to the government and file their tax returns within a fixed deadline. The section is divided into several categories to deal with different types of returns, and every Indian citizen is advised to follow these guidelines.

Section 139 of the Income Tax Act of 1961 has several subsections defining norms and regulations as per different cases and circumstances. Keep reading this guide to learn more about Section 139.

What is Section 139(1)?

Section 139 (1)of the Income Tax Act acts as a framework that allows taxpayers to file late returns, in case they miss the prescribed deadline. There are various sub-sections under section 139(1) of the income tax act. The section 139(1) offers means to rectify the non-submission of Income Tax Returns within the timeline.


Section 139(1) - Mandatory and Voluntary Returns

Section 139(1) of the Income Tax Act deals with the mandatory return policies while filing the Income Tax Return. The following entities are to file their tax return:

  • Every person with a total income that exceeds the exemption limit has to furnish the income tax return within the defined due date.
  • Any private, public, domestic, or foreign entity located in India or doing business in India.
  • Firms, including LLP (Limited Liability Partnership) or ULP (Unlimited Liability Partnership).
  • Residents who have assets located outside of India or any entity that retains authority for an account based outside India.
  • Every HUF (Hindu Undivided Family), AOP (Association of Persons), and BOI (Body of Individuals) has to file an Income Tax Return if their income exceeds the prescribed exception limit.
  • Under Section 139(1c), certain classes of people who fulfill a certain condition are exempt from filing the tax return. The issued notice should be placed before each House of Parliament for 30 days when sessions are held immediately following the notification. Only upon agreement by both the houses the notification shall be effective.

Voluntary Returns: If someone files an income tax return even though their income falls below the mandatory filing threshold, that return is considered voluntary. These voluntary returns are still valid for tax purposes.


Section 139(3) - Return of Loss

Section 139(3) deals with filing income tax returns in the case of a loss. It is usually quite useful to file for the return in the case of losses, as the loss is allowed to be carried forward, reducing the tax liability in subsequent years. The following are specifically defined cases-

  • In the case of an Individual Taxpayer, the tax return is not mandatory if the loss was incurred in the previous financial year. However, in the cases of loss in companies and firms, the tax return for a loss is mandatory.
  • If the loss for a company arises under the head “Profits and Gains of Business and Profession” or “Capital Gains,” filing the tax return shall be mandatory in the case that the company wants to carry ahead the loss and offset it with the future income. The option is only available if the tax return is filed by the due date.
  • In the case of loss occurring in “House or residential property,” the loss can be carried forward even if the tax return is filed beyond the due date.
  • Except for "House and Property," other losses filed under Section 142(1) cannot be carried forward, leaving out the unabsorbed depreciation value.
  • In the alternative case of loss being offset against some income in another category for the same year, an offset is permitted even if the return is filed beyond the due date.
  • Losses incurred in previous years can be carried forward if the return is filed by the due dates and the losses are assessed .
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Section 139(4) - Belated Income Tax Return

It is advisable for a taxpayer (whether an individual or any other entity) to furnish the tax return before the due date as per Section 139(1) of the Income Tax Act. However, if the return file is still delayed, there is still the possibility of filing the belated return for prior years until the expiry date of the current applicable year of assessment or before the financial year is concluded. Nonetheless, if the taxpayer fails yet again, a penalty of 5,000 rupees is charged under Section 271F of the IT Act, 1961. The penalty can be escaped if the income did not require the mandatory filing as defined under Section 139(1) and the return was filed after the due date.


Section 139(5) - Revised Income Tax Return

If a person who has furnished a return under section 139(1) or section 139(4) discovers any omission or error, they may submit a revised return before the end of the relevant assessment year or before the assessment is completed, whichever is earlier. The revised return will replace the original return from the date the original return was filed. A loss return filed belatedly under section 139(4) can be revised under section 139(5), but the loss cannot be carried forward since the original return was filed late.


Section 139(4a) - Charitable Trusts

You must file an income tax return if you receive any of the following income and the total amount (before considering exemptions under sections 11 and 12) exceeds the tax-free limit:

  • Income from property held in trust (or under another legal obligation) for charitable or religious purposes, even if the trust also has other purposes.
  • Voluntary contributions made to such trusts or institutions.

The return of income must be furnished in Form No. ITR-7 and verified in the prescribed manner containing all the necessary particulars. This return must be submitted by the representative assessee within the time prescribed under section 139(1) electronically, either under digital signature or otherwise.


Section 139(4b) - Political Parties

The chief executive officer (regardless of whether they are referred to as Secretary or by any other title) of every political party must file a return of income for the previous year if the total income, computed under this Act without considering the provisions of section 13A, exceeds the maximum amount not chargeable to income tax. The return should be submitted in the prescribed form, verified in the prescribed manner, and include all required details. All the provisions of this Act will apply to this return as if it were required to be filed under sub-section (1).


Section 139(4c) and 139(4d) - Income Tax Return for Entities Claiming Exemption under Section 10

As per Section 10 of the Income Tax Act of 1961, there are certain institutions that can claim certain benefits, and for the tax return of these institutions- Section 139(4C) and Section 139(4D) are to be referred to.

Section 139(4C) includes those institutions for which it is necessary to file a tax return if the maximum allowable limit is beyond the maximum cap of tax exemption, which shall exclude other exemption benefits enjoyed by the institution.

These institutions are mainly the following groups and agencies-

  • Associations engaged in scientific research,
  • Institutions or associations under Section 10(23A),
  • News agencies,
  • Institutions under Section 10(23B),
  • Educational and Medical Institutions, Universities, and Hospitals,

Section 139(4D) of the Income Tax Act pertains to universities, colleges, and other institutions that are not required to file tax returns of income and loss under any other provision in this section. Specifically, it applies to institutions referred to in Section 35(1)(ii) and Section 35(1)(iii). If an institution falls under this category, it must furnish its return of income or loss every previous year, similar to other taxpayers. However, if their income is unconditionally exempt under various clauses of Section 10, they may use the relevant ITR form for filing their return.


Section 139(9) - Defective Returns

A tax return can be deemed to be defective under Section 139(9) if documents are missing. The taxpayer shall make the judgment of a defective return, and the taxpayer shall be duly notified via a simple letter. A time slot of fifteen days shall be given to rectify the problem and produce the missing documents. The period might also be extended upon the request of the taxpayer providing valid reasons. Thereby, one must note the following list of documents for your file to avoid being deemed defective.

  • Statement displaying the computation of payable taxes.
  • Filed tax return in the required form.
  • Proofs of all claims of the taxes paid.
  • Before filing the return, a report is furnished. This report of the auditing done under Section 44AB is required.
  • Copies of the audit report, balance sheet, and auditor's profit and loss accounts in case the taxpayer's account is audited.
  • The relevant report in the case of Cost Audit.
  • If the taxpayer has no book maintained for accounts, then a statement is required indicating the gross receipts, turnover amount, bank balance, stocks, cash, debtors or creditors information, expenses and net profit, etc.
  • In the case that the taxpayer maintains a book of the accounts, then these mandatory copies are required:
    1. All accounts of Profit and Loss, Manufacturing accounts, Trading accounts, Balance sheets, and accounts of all income and expenses.
    2. Personal accounts of partners in the case of partnership firms
    3. For AOP/BOI, all members should produce their personal accounts.
    4. Proprietor’s personal account.

Due Dates for Section 139

Different individuals attain their income through different methods, and therefore, Section 139 has prescribed due dates for the specific demand of filing income tax returns. The dates are as follows-

  • July 31st- Several people and entities do not require the specific need for an audit report to validate the accounts. These individuals and entities are to file their income tax returns by July 31 of every assessment year. These entities mainly include – a paid employee, a self-employed or professional, a freelancer, or a consultant.
  • September 30th- Various other entities are necessarily required to undergo the auditing of the account books, and they have time upto September 30th to file their tax returns. The following entities can be included in this category- business entity, a self-employed professional, and a working partner employed with a firm or consultant who has the audit performed on their accounting books.

Form ITR 7

The Income Tax Department has released form ITR 7 for all the individuals, institutions, and entities that are required to file their returns under the first four parts of Section 139(4a), 139(4b), 139(4c), 139(4d). The taxpayers are suggested to match their tax figures of paid and deducted amounts with Form 26AS or the Tax Credit Statement.

The following methods can be employed to file the Form ITR-7 with the IT Department-

  • Paper form
  • E-Form using a digital signature
  • Electronic transmission of data followed by submission and verification of the return in Form ITR-V.
  • Barcoded return.

Section 4E of 139 is for furnishing returns for the income of other business trusts that are not provided to submit their profit and loss accounts.


Recent Amendments in Section 139 of Income Tax Act

Section 139 of the Income-tax Act has undergone recent amendments, which are as follows:

  • (I) In subsection (1), the sixth provision has been modified. The words, figures, and letter "provisions of section 10A" have been replaced with "provisions of clause (38) of section 10 or section 10A" with effect from the 1st day of April 2017.
  • (ii) In subsection (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" have been added.
  • (iii) Effective from the 1st day of April, 2017:
    • (a) Subsection (4) has been replaced with the following: "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) Subsection (5) has been replaced with the following: "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 subsection (9), clause (aa) in the Explanation has been omitted.

Error Codes in Section 139 of Income Tax Act

Error Code 14 - ITR is considered defective if the assessee fills in a negative amount in the gross profits or net profits section

Error Code 8 - When the assessee files ITR-4S, even if the total presumptive income u/s 44AD is lesser than 8% of Gross turnover.

Error Code 31 - When the taxpayer has income from the head profits and gains from business/profession but does not file a profit and loss statement.

Error Code 38 - When tax is determined as payable in the ITR but not paid.

If you've made a mistake while ITR filing, don't worry. Section 139 allows you to modify your ITR and file a revised return. But why go through all this hassle when you can avoid making mistakes altogether? You heard it right! Tax2win’s CA-assisted ITR filing services are the perfect solution for your needs. Hire CA for tax filing and take advantage of our online CA services, including online CA consultation, to ensure accurate income tax return filing. Book eCA now!


Frequently Asked Questions

Q- How does the government collect Income Tax?

The government collects taxes through three different means:

  • Through voluntary payment by taxpayers into various designated Banks. For example, Advanced Tax and Self Assessment Tax paid by taxpayers.
  • Taxes deducted at source [TDS] from the income of the receiver.
  • Taxes collected at source [TCS].

It is the constitutional obligation of every individual earning to compute his income and pay all the taxes correctly and on time to avoid any legal action.


Q- Where should the books of account of business be kept, and for how long?

All the books of account and related documents should be kept at the principal place of business, which means that generally where the business or profession is generally carried on. All the necessary documents shall be preserved for at least six years from the end of the relevant Assessment year, i.e., for a total of seven financial years from the end of the relevant year. When the assessment has been reopened, all the books of account and other documents that were kept and maintained at the time of reopening of the assessment should continue to be so kept and maintained till the assessment which has been reopened gets completed.


Q- Income-tax is levied on the income of every person. As per the Income-tax Law, what constitutes income?

Under the Income-tax Law, the word income has a very broad and inclusive meaning. In the case of a salaried person, all that is received from an employer in cash, kind, or as a facility is considered as income. For a businessman, his net profit will constitute his income. Income may also flow from investments in the form of Interest, Dividends, Commission, etc. Further, income may be earned on account of the sale of capital assets like buildings, gold, etc.

Income shall be computed as per the relevant provision of the Income-tax Act, 1961, which lays down detailed conditions for the computation of income chargeable to tax under various heads of income.


Q- What is a tax on regular assessment and how is it paid?

Under the Income-tax Act, every person has the responsibility to correctly compute and pay his due taxes. Where the Department finds that there has been an understatement of income and resultant tax due, it takes measures to compute the actual tax amount that ought to have been paid. This demand raised on the person is called Tax on regular assessment. The tax on regular assessment-400 has to be paid within 30 days of receipt of the notice of demand.


Q- What is the administrative framework of Income Tax?

The revenue functions of the Government of India are managed by the Ministry of Finance. The Finance Ministry has entrusted the task of administration of direct taxes like Income-tax, Wealth tax, etc, to the Central Board of Direct Taxes (CBDT). The CBDT is a part of the Department of Revenue in the Ministry of Finance.

CBDT provides essential inputs for policy framing and planning of direct taxes and also administers the direct tax laws through the Income-tax Department. Thus, Income-tax Law is administered by the Income-tax Department under the control and supervision of the CBDT.


Q- What does completion of assessment mean?

Completion of assessment means assessment proceedings of the assessee are completed and closed.


Q- What are the various forms through which income tax returns can be filed?

There are various forms, Like ITR 1/2/3/4/5.


Q- Where are these forms available?

Forms are easily available on the Income Tax site.


Q- Can income tax returns be filed manually?

Yes, ITR1 and ITR4 can be filed manually. It is specially done for senior citizens.


Q- What are the consequences of not filing tax returns?

Taxpayers may get a notice from the Income Tax Department for not filing Income Tax Returns.


CA Abhishek Soni
CA Abhishek Soni

Abhishek Soni is a Chartered Accountant by profession & entrepreneur by passion. He is the co-founder & CEO of Tax2Win.in. Tax2win is amongst the top 25 emerging startups of Asia and authorized ERI by the Income Tax Department. In the past, he worked in EY and comes with wide industry experience from telecom, retail to manufacturing to entertainment where he has handled various national and international assignments.

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