Section 139(4) of Income Tax Act: An Overview of Late Filing of Income Tax Returns

The Income Tax Act of 1961 lays down various provisions for the computation and payment of income tax in India. Among these provisions, Section 139(4) deals with the late filing of income tax returns. This provision is significant as it mandates that every person who has not filed their income tax return by the due date shall be liable to pay a penalty. This article will discuss the provisions of Section 139(4) in detail, including the penalties and consequences of late filing of income tax returns.

Background:

The Income Tax Act of 1961 was enacted to consolidate and amend the laws relating to the levy and collection of income tax in India. The act provides for the computation and payment of income tax, as well as the procedures for the assessment, collection, and recovery of income tax. Section 139(1) of the act mandates that every person whose total income exceeds the basic exemption limit must file an income tax return. The due date for filing income tax returns is usually July 31st of every year.

Provisions of Section 139(4):

Section 139(4) of the Income Tax Act deals with the late filing of income tax returns. It mandates that every person who has not filed their income tax return by the due date may file a belated return at any time before the end of the relevant assessment year. The assessment year is the year immediately following the financial year for which the income tax return is being filed.

Penalties for Late Filing of Income Tax Returns:

As per Section 139(4) of the Income Tax Act, a person who files their income tax return after the due date is liable to pay a penalty. The penalty for late filing of income tax returns depends on the delay in filing the return and the total income of the taxpayer. The penalties are as follows:

1. For taxpayers with a total income of up to Rs. 5 lakhs, the penalty for late filing of income tax returns is Rs. 1,000.
2. For taxpayers with a total income between Rs. 5 lakhs and Rs. 10 lakhs, the penalty for late filing of income tax returns is Rs. 5,000.
3. For taxpayers with a total income of more than Rs. 10 lakhs, the penalty for late filing of income tax returns is Rs. 10,000.

In addition to the above penalties, taxpayers with a total income of more than Rs. 10 lakhs who file their income tax return after December 31st of the relevant assessment year are liable to pay a penalty of Rs. 1,000 per day for the period of delay.

Consequences of Late Filing of Income Tax Returns:

Apart from the penalties mentioned above, late filing of income tax returns can have several other consequences. These include:

1. Loss of Interest: If a taxpayer files their income tax return after the due date, they will lose out on the interest payable to them by the Income Tax Department. The interest payable on income tax refunds is calculated from the date of filing the return, and therefore, late filing of returns can result in a loss of interest.
2. Delayed Refunds: Late filing of income tax returns can also result in delayed refunds. If a taxpayer has paid excess tax during the financial year, they are eligible for a refund of the same. However, if the return is filed after the due date, the processing of the refund may be delayed.
3. Scrutiny by the Income Tax Department: Late filing of income tax returns can also result in scrutiny by the Income Tax Department. The department may scrutinize the return to ensure that all the income has been properly declared and that the tax liability has been correctly calculated. This can result in additional tax liability, interest, and penalties.

4. Inability to Carry Forward Losses: If a taxpayer incurs a loss during the financial year and wishes to carry it forward to the next financial year, they must file their income tax return within the due date. Late filing of income tax returns may result in the loss being disallowed from being carried forward to the next financial year.

Conclusion:

Section 139(4) of the Income Tax Act is a significant provision as it mandates penalties for late filing of income tax returns. Taxpayers must file their income tax returns within the due date to avoid the penalties and consequences of late filing. The penalties for late filing of income tax returns can have a significant impact on a taxpayer’s finances, and therefore, it is essential to file income tax returns on time. Taxpayers must also ensure that they declare all their income and claim all eligible deductions and exemptions to avoid scrutiny by the Income Tax Department.

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Frequently Asked Questions: 

1. What is Section 139(4) of the Income Tax Act?

Section 139(4) of the Income Tax Act deals with the late filing of income tax returns. It mandates that every person who has not filed their income tax return by the due date may file a belated return at any time before the end of the relevant assessment year.

2. What is the due date for filing income tax returns?

The due date for filing income tax returns is usually July 31st of every year. However, for the financial year 2021-22, the due date has been extended to December 31st, 2022.

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3. What are the penalties for late filing of income tax returns?

As per Section 139(4) of the Income Tax Act, a person who files their income tax return after the due date is liable to pay a penalty. The penalty for late filing of income tax returns depends on the delay in filing the return and the total income of the taxpayer. The penalties range from Rs. 1,000 to Rs. 10,000.

4. Can I file my income tax return after the due date?

Yes, you can file your income tax return after the due date. However, you will be liable to pay a penalty as per the provisions of Section 139(4) of the Income Tax Act.

5. What are the consequences of late filing of income tax returns?

Apart from the penalties mentioned above, late filing of income tax returns can result in loss of interest, delayed refunds, scrutiny by the Income Tax Department, and inability to carry forward losses.

6. How can I avoid the penalties for late filing of income tax returns?

To avoid the penalties for late filing of income tax returns, it is essential to file your income tax returns within the due date. You can also avoid the penalties by filing a revised return if you have made a mistake in the original return.

7. Can I claim a refund if I file my income tax return after the due date?

Yes, you can claim a refund if you file your income tax return after the due date. However, the processing of the refund may be delayed, and you may lose out on the interest payable to you by the Income Tax Department.

8. Can I carry forward losses if I file my income tax return after the due date?

If you incur a loss during the financial year and wish to carry it forward to the next financial year, you must file your income tax return within the due date. Late filing of income tax returns may result in the loss being disallowed from being carried forward to the next financial year.