Filing late Return of Income u/s 139 (4) after the end of assessment year Vs. Prosecution U/s 276CC

Filing late Return of Income u/s 139 (4) after the end of assessment year Vs. Prosecution U/s 276CC 

Though, IT department has not come with the ITRs for Assessment Year 2015-16, we have geared and started preparation for filing..

In practice in spite of reminders, many of our clients do not file Return of Income within the time specified u/s 139 (1) or before the end of relevant assessment year.

Provisions of section 139 (4) allow to file Return of Income, before the expiry of one year from the end of the relevant assessment year.

Considering the provisions of section 139 (1)/139 (4), we can rule out the following possibilities of filing of Return of Income.

Situation/s.	Section	Filing time	Remarks	Remarks
1	139 (1)	Within due date of filing	It is always better to file Return of Income in time to avoid litigations.	Prosecution u/s 276CC cannot be initiated
2	139 (1)	Within the time extended by CBDT (For AY 2015-16 time extended by CBDT till 31st August 2015)	Filing of return within the extended time is a return filed as good as within the time frame u/s 139 (1) i.e. all the advantages are available such as revision u/s 139 (5). C/f of losses etc.	Prosecution u/s 276CC cannot be initiated
3	139 (4)	After the due date u/s 139 (1) but before the end of the relevant assessment year	Advantages not available i.e. C/f of losses not allowed (exceptdepreciation loss). Revision not allowed. However this return is notbarred by time and allowed as such.	Prosecution u/s 276CC cannot be initiated
4	139 (4)	After the end of the a relevant assessment year, but within the expiry of one year from the end of relevant assessment year	Section 139 (4) allows to file before the expiry of one year from the end of relevant assessment year. (For Example for AY. 2015-16 Return can be filed up to 31st March 2017 belatedly)	Prosecution can be initiated U/s 276CC
5	–	No filing of return allowed after the time specified in 4) above.	Return of Income not allowed to be filed after the expiry of one year from the end assessment year i.e. it is barred by time. (For example For AY. 2015-16, Return of Income cannot be filed after 31st March 2017. After 31st March 2017 the return will be time barred) In such case Return can be only upon notice issued u/s 142 (1).Further assessments in such cases are done u/s. 144. (Best Judgment Assessment)	Prosecution can be initiated U/s 276CC

The major cause of concern is prosecution for late filers covered in situation 4 & 5 above. As per the provisions of section 276CC, a person can be placed behind the bars for a term ranging from two months to seven years.

One may ask a question that, we have been filing late returns since a long, even after the end of the relevant assessment year. Why this time we should be more concerned about this?

The answer to above is that, now CBDT has decided to initiate prosecution (Chapter XXII provisions) against the big assessee to create deterrent effect amongst them so as to increase voluntary compliance.

Further one may also ask that, provisions of section 139 (4) allow to file return belatedly.

Reply to above is, though provisions of section 139 (4) allow filling of Return of Income even after the end of the relevant assessment year (please ref situation 4 above). However section 276CC does not grant any immunity to such late filers covered in situation 4 and non-filers covered in 5 above. (Please visit the section 276CC).

So filing Return of Income after the end of relevant assessment year though allowed u/s 134 (4) may cause prosecution u/s 276CC. To avoid this, deter your clients before Income Tax Department deter them issuing notice for prosecution.