Penalty / Consequence of Late Income Tax Return Filing

• Sunday, August 26, 2012, 8:12
• Income Tax
• Articles

 CMA Arif Farooqui

Due date of filing of Income Tax Return for Assessment Year 2012-13 …..

1. In case of person who are not liable to get their Accounts Audited is 31^st August 2012 (extended from 31^st July 2012)

2.   In case of person whose accounts are liable to be audited under any law is 30^th September 2012 and partner of such firms and all companies.

In first case (31^st August 2012) person who has earned income from salary, pension, interest income, capital gain, house property and person owning small business and not liable to get their accounts audited are covered.

We Indians, always wait for last date for any task whether it filling of examination form or Income Tax Return. As we all knew last date for filling of Income Tax Return for A/Y 2012/2013 was extended from 31^st July 2012 to 31^st August 2012 but still there are many who have not filled their Return and now all these persons seeking appointment with their CA/CMA.

Everybody believes that Income Tax Department will impose a heavy penalty if they not filled their return on time. But what is amount of (heavy) penalty if someone has not filed his return on time?

In fact there is no penalty as such for this fault,  absolutely no penalty, believe me, I said that there is no penalty on late filing of return as such. Specific penalty for late filing of return is prescribed u/s 271F which is briefed here under…

“If a person failure to furnish return of income as required by section 139 (1) before the end of relevant Assessment Year, the assessing officer may impose a penalty of Rs 5000/-“

So this section says end of relevant Assessment Year, its end on 31^st March 2013, means there is no liability for late filing of Income Tax Return up to 31^st March 2013 and after that Assessing Officer can impose a penalty of Rs 5000, and that is also his (Assessing Officer) power which he may or may not exercise after giving due hearing to the Assessee.

Now you would like to know why people are so much worried about the due date, the reason is that as due date has been linked with various other section of the Income Tax Act, so it is significant in that manner . Apart from this, hype created by CA/CMA and Income Tax Department too play its role, So I have given some of impact of late filing of the Income tax return and issues related to due date of Income Tax Return.

Some of the Impact of late filing of Income tax return

1. You will not be able to carry forward your Business loss (Speculation or otherwise) , capital loss , loss due to owning and maintaining of race horses.
2. Loss of Interest on refund : You may loose interest on refund u/s 244A specially in case if you are claiming a Major amount as refund.
3. You cannot revise your return.
4. Interest u/s 234 A: If there is tax due after deducting Advance Tax, TDS and Self Assessment Tax than interest will be applicable @1% per month and part thereof up to the date of filing of the return besides interest applicable u/s 234 B or 234 C. Means this interest is applicable only if there is any tax payable in your return. (online calculator is available at below link)
5.  http://taxguru.in/income-tax/section-234a-234b-234c-income-tax-act-1961.html

So if you are ambit of the above points then you should furnish your return up to 31^st August 2012 or 30^th September 2012 as the case may be.

Person who can afford to file late return

If you have

a)       Already deposited due tax or due taxes has been deducted and nothing is due or

b)       You are not claiming a Major Amount as refund or

c)        You have no losses to be Carry Forward or have loss under House Property, Unabsorbed Depreciation and Capital Expenditure on Scientific Research to Carry Forward.

Then you can fill return up to the end of the Assessment Year i.e. 31^st March 2013 without any penalty.

Person who must  file Income Tax Return on time.

If you have

         i.            Balance tax to be deposited or short fall of tax or
       ii.            Huge amount of refund due to you or
      iii.            losses to be carried forwarded as explained above

Then it is advisable for you to file your return on time.

(Author can be reached at arif_cwa@yahoo.co.in)