Assessment of Persons Other than Individuals and ITR Filing
TAX UNDER
E-ENVIRONMENT
Return of Income
Every person:
a. being a
company or a firm; or
b. being a person
other than a company or a firm, if his total income or the total income of any
other person in respect of which he is assessable under this Act [income before
giving effect to sec. 54, 54B, 54D, 54EC, 54F, 54G, 54GA, 54GB and chapter VIA
(i.e., deduction u/s 80C to 80U)] during the previous year exceeded
the maximum amount which is not chargeable to income- tax, shall, on or before
the due date, furnish a return of his income or the income of such other
person during the previous year, in the prescribed form and verified in the
prescribed manner and setting forth such other particulars as may be prescribed
– [Sec. 139(1)]
Compulsory filing of
return
Any person, being
resident other than not ordinarily resident, shall furnish, a return, within
due date, in respect of his income or loss for the previous year
irrespective of the fact that his total income does not exceed basic exemption
limit or does not have any taxable income, if he:
(i) holds,
as a beneficial owner or otherwise, any asset (including any financial interest
in any entity) located outside India or has signing authority in any account
located outside India; or
(ii) is
a beneficiary of any asset (including any financial interest in any entity)
located outside India.
Exception: An individual, being a beneficiary of any asset (including any
financial interest in any entity) located outside India where, income, if any,
arising from such asset is includible in the income of the person referred
above in accordance with the provisions of this Act.
Ø “Beneficial
owner” in respect of an asset means an individual who has provided, directly or
indirectly, consideration for the asset for the immediate or future benefit,
direct or indirect, of himself or any other person.
Ø “Beneficiary”
in respect of an asset means an individual who derives benefit from the asset
during the pervious year and the consideration for such asset has
been provided by any person other than such beneficiary.
Mandatory furnishing of return in case of high value
transactions [7th Proviso to Sec. 139(1)]
A person (other than
firm and company), who is not required to furnish a return as per aforesaid
provision, and who during the previous year:
a. has
deposited an aggregate amount exceeding ₹ 1 crore in one or more current
accounts maintained with a banking company or a co-operative bank; or
b. has
incurred expenditure of an aggregate amounts exceeding ₹ 2 lakh for himself or
any other person for travel to a foreign country; or
c. has
incurred expenditure of an aggregate amount exceeding ₹ 1 lakh towards
consumption of electricity; or
d. fulfils
such other conditions as may be prescribed,
shall furnish a return
of his income on or before the due date in such form and verified in such
manner and setting forth such other particulars, as may be prescribed.
Forms –
Return of income
Rule 12 provides the
following Form for filing a return of income for different assessee:
ITR - 1 (Sahaj)
For Individuals having
Income from Salaries, one house property (does not have any brought forward
loss), other sources [Interest (does not have any loss under the head) etc. but
except winnings from lottery or income from race horses] and having total
income upto ₹ 50 lakh
However, the form is
not to be used by an individual who:
a. has
any brought forward / carry forward loss under the head ‘Income from House
Property’;
b. has
assets (including financial interest in any entity) located outside India;
c. has
signing authority in any account located outside India;
d. has
income from any source outside India;
e. has
income to be apportioned in accordance with provisions of section 5A
f. has
claimed deduction u/s 57, other than deduction from family pension;
g. is
a director in any company;
h. has
held any unlisted equity share at any time during the previous year;
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i. is
assessable for the whole or any part of the income on which tax has been
deducted at source
in the hands of a
person other than the assessee;
j. has
claimed any relief of tax u/s 90 or 90A or 91;
k. has
agricultural income, exceeding ₹ 5,000;
l. has
total income, exceeding ₹ 50 lakh;
m. has
income of the nature referred to in section 115BBE;
n. is
a person in whose case tax has been deducted u/s 194N; or
o. is
a person in whose case payment or deduction of tax has been deferred u/s
191(2) or 192(1C)
p. has
to furnish return under 7th proviso to sec. 139(1)
q. has
income under the head “Capital Gains” and / or “Profits and Gains of Business
or Profession”;
or
r. has
loss under the head “Income from Other Sources”.
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ITR - 2
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For Individuals and
HUFs not carrying out business or profession under any proprietorship
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ITR - 3
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For individuals and
HUFs having income from a proprietary business or profession
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ITR - 4
(Sugam)
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In the case of a
person being an individual (ordinarily resident) or a HUF (ordinarily
resident) or a resident firm (other than LLP),
deriving income under the head “Profits or gains of business or profession”
and such income is computed in accordance sec. 44AD, 44ADA and 44AE
Taxpoint: The form is applicable to an assessee computing his business
or profession income u/s
44AD, 44ADA and 44E.
The form is not
applicable to a person who:
a. has
assets (including financial interest in any entity) located outside India;
b. has
signing authority in any account located outside India;
c. has
income from any source outside India;
d. has
income to be apportioned in accordance with provisions of sec. 5A;
e. is
a director in any company;
f. has
held any unlisted equity share at any time during the previous year;
g. has
total income, exceeding ₹ 50 lakh;
h. owns
more than one house property, the income of which is chargeable under the
head “Income
from house property”;
i. has
any brought forward loss or loss to be carried forward under any head of
income;
j. is
assessable for the whole or any part of the income on which tax has been
deducted at source
in the hands of a
person other than the assessee;
k. has
claimed any relief u/s 90 or 90A or deduction of tax u/s 91;
l. has
agricultural income, exceeding ₹ 5,000;
m. has
income of the nature referred to in sec. 115BBE;
n. has
income of the nature specified in sec. 17(2)(vi) on which tax is payable or
deductible, as the case may be, u/s 191(2) or 192(1C).
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ITR - 5
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For a person other
than (i) Individual; (ii) HUF; (iii) Company; & (iv) Person filing Form
ITR-7
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ITR - 6
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For Companies other
than companies claiming exemption u/s 11
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ITR - 7
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For persons
including companies required to furnish return u/s 139(4A) or 139(4B) or
139(4C) or 139(4D) or 139(4F)
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ITR - V
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Income Tax Return
Verification Form [Where the data of the aforesaid Return of Income has been transmitted electronically without digital
signature]
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Functionalities
available at e-Filing Portal
Few of the
functionalities available at e-filing portal are as follow:
◉ View Form
26AS
◉ View (with
download facility) e-Filed Return / Form
◉ Download
pre-filled json
◉ e-Verify Return
◉ Generate EVC
◉ Add / Disengage
CA
◉ Add / Register
as Representative
◉ Filing of
Returns
◉ Filing of return
in response of notice u/s 139(9)
◉ Aadhar linking
◉ e-Proceedings
◉ Filing of appeal
to CIT(Appeals)
◉ Registration or
updation of Digital Sign
◉ Refund reissue
request
◉ Validation of
Bank Account or Demat Account
◉ Profile updation
Time limit for filing return of income [Explanation 2 to
Sec. 139(1)]
A return should be
filed on or before the following due date (of respective assessment year):
Revised
Return [Sec. 139(5)]
If an assessee discovers any omission or
wrong statement (bonafide in nature) in the return filed, he can revise
his return u/s 139(5).
Time limit: Assessee may file the revised return -
◉ before
31st December of the relevant assessment year; or
◉ before
completion of regular assessment,
- whichever is earlier.
Notes
a. Replacement
of original return: Once a revised return is filed, it replaces the
earlier return. This signifies that
the revised return should be complete in
itself and not merely an accessory to the original return.
b. Revision
of revised return: A revised return can again be revised i.e. a second
revised return can be filed u/s 139(5) for correcting any omission or wrong
statement made in the first revised return within specified time.
c. Revision
of belated return: A belated return u/s 139(4) can be revised.
d. Revision
of loss return: A loss return can be revised
e. Return
filed pursuant to notice u/s 142(1) cannot be revised.
Defective Return [Sec. 139(9)]
When a return is termed defective
- A return of
income is said to be defective where all the following conditions are not
fulfilled:
◉ The
return is furnished without paying self-assessment tax along with interest, if any.
◉ The
annexure, statements and columns in the return of
income have been
duly filled in.
◉ The
return is accompanied by the following documents -
a. a
statement showing the computation of tax liability;
b. the
audit report u/s 44AB (where the report has been submitted prior to the
furnishing of return, a copy of audit report together with proof of furnishing
the report);
c. the
proof of tax deducted or collected at source, advance tax paid and tax paid on
self-assessment;
d. where
regular books of account are maintained by the assessee:
i. copies
of Manufacturing A/c, Trading A/c, Profit and Loss A/c or Income and
Expenditure A/c or any other similar account and Balance Sheet;
ii. in
the case of –
● A
proprietary business or profession - the personal account of the proprietor;
● A
firm, AOP or BOI - personal account of the partners or members; or
● A
partner or member of the firm, AOP or BOI - his personal account in the firm,
association of persons or body of individuals;
where regular books of account are not
maintained by the assessee –
e. where
regular books of account are not maintained by the assessee:
i. a
statement indicating the amount of turnover or gross receipts, gross profit,
expenses and net profit of the business or profession and the basis on which
such amount have been computed; and
ii. the
amount of sundry debtors, sundry creditors, stock and cash balance as at the
end of the previous year.
f. where
the accounts of the assessee have been audited, copies of the audited Profit
and Loss A/c, Balance Sheet and a copy of the Auditor’s report;
g. Cost
audit report u/s 233B of the Companies Act, 1956 (if any).
Effect: Where the Assessing Officer considers
that the return of
income furnished
by the taxpayer is defective, he
may intimate the defect to the taxpayer
and give him an opportunity to rectify the defect(s).
Time limit for rectification: The assessee must rectify the error
within a period of 15 days from the date of intimation (served on the assessee)
or within such extended time as allowed by the Assessing Officer.
Where the taxpayer rectifies the defect after the expiry of
the period of 15 days or such extended period but before the assessment is completed, the Assessing
Officer can condone such delay.
Consequence when defect is not rectified: If
defect is not rectified within the time limit, the Assessing Officer will treat
the return as an invalid return and provisions of the Act will apply as if the
taxpayer had failed to furnish the return at all.
Verification of Return [Sec. 140]
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Assessee
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Case
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Verified by
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Individual
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In general
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Individual himself
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Where the individual concerned is
absent
from India
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Individual himself or by the duly
authorized
person of such individual
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Where the individual is mentally
incapacitated
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Guardian of such individual or any other
person competent to act on his behalf
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Where by any other reason it is not
possible
for the individual to verify the
return.
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Any person duly authorised by him
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Note: When return is verified by any
authorised person in that case the return should be
accompanied with power of attorney.
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HUF
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In general
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Karta
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Where the ‘karta’ is absent from India
or is
mentally incapacitated
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Any adult member of the family.
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Firm
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In general
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Managing partner
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If due to any reason it is not
possible for managing partner to verify or where there is no managing partner
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Any adult partner
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Limited liability partnership
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In general
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Designated partner
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If due to any unavoidable reason such
designated partner is not able to verify the return, or where there is no designated
partner as such
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Any partner or any other prescribed
person
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Local authority
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Principal Officer
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Political party
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Chief Executive Officer
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Company
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In general
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Managing Director (MD)
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If due to any reason it is not
possible for
MD to verify or where there is no MD
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Any director or any other prescribed
person
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Where an application for corporate
insolvency resolution process has been admitted by the Adjudicating Authority
under Insolvency and Bankruptcy Code, 2016
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Insolvency professional appointed by
such
Adjudicating Authority
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Non-resident company
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A person holding a valid power of
attorney.
Copy of such power of attorney must be
attached with the return.
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Company in process of winding up
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Liquidator of the company
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Where the management of the company
has been taken over by the Central or State Government.
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Principal officer
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Any other association
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Any member or principal officer
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Any other person
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Such person or any other person
competent to act on its behalf.
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Faceless Assessment Scheme
Background
The Finance Minister (FM) while
presenting the Budget 2019 stated that the existing system of scrutiny
assessments in the Income-tax department involves a high level of personal
interaction between the taxpayer and the tax department, which leads to certain
undesirable practices on the part of tax officials. The FM further stated that
to eliminate such instances, and to give shape to the vision of the Prime
Minister (PM), a scheme of faceless assessment in electronic mode involving no
human interface will be launched in a phased manner.
Subsequently, in order to impart greater
efficiency, transparency and accountability to the assessment process, a new faceless assessment scheme was introduced in 2019.
Accordingly, most of the functions of the tax department starting from the
filing of returns, processing of returns, issuance of refunds and assessments
are performed in the electronic mode without any human interface. In order to
take the reforms initiated by the tax department to the next level and to
eliminate human interface, the FM in her Budget 2020 speech proposed an
amendment so as to enable faceless appeals on the lines of faceless
assessments.
On 12 September 2019, the Central Board
of Direct Taxes (CBDT) had notified1 E-assessment Scheme, 2019 under Section 143(3A)2 of
the Income-tax Act, 1961 (the Act). Further in exercise of the powers conferred
by Section 143(3B)3 to give effect to the Scheme, CBDT had also
notified4 the relevant directions.
On 13 August 2020, the PM launched
‘Transparent Taxation’ platform encompassing faceless assessments, faceless
appeals, etc. The PM stated that the faceless assessments/appeals will have
technology driven interface (e.g. in case of scrutiny
assessments, there will be random
selection of cases and selection will not be limited to jurisdictional
Assessing Officer). The facility of faceless appeal will be available for
citizens across the country with effect from 25 September 2020.
On the same day, CBDT issued a
Notification5 to amend the E-Assessment Scheme and to implement the Faceless Assessment Scheme under Section 143(3A).
Further in exercise of the powers conferred by Section 143(3B) to give effect
to the Scheme, CBDT also amended6 the relevant directions. The
amended Scheme shall come into force on the date of its publication in the
Official Gazette7.
Recently, CBDT has also issued various
orders/Notifications8 to implement the Faceless Assessment Scheme.
CBDT Notifications to amend the Faceless Assessment Scheme
Nomenclature of the
Scheme
Originally when the Scheme was
introduced it was named as ‘E-Assessment Scheme’. However, the Scheme has
now been renamed as ‘Faceless Assessment Scheme’.
1 Notification No. 61/2019, 12 September 2019
2The Central Government may make a scheme, by notification
in the Official Gazette, for the purposes of making assessment of total income or loss of the
taxpayer under sub-section (3) so as to impart greater efficiency, transparency
and accountability……..
3 The Central Government may, for the
purpose of giving effect to the scheme made under sub-section (3A), by
notification in the Official Gazette, direct that any of the provisions of this
Act relating to assessment of total income or loss shall not
apply or shall apply with such exceptions, modifications and adaptations as may
be specified in the notification.
4 Notification 62/2019, 12 September 2019
5 Notification No. 60/2020, dated 13 August 2020
6 Notification No. 61/2020, dated 13 August 2020
7 Notification has been published in the Official
Gazette on 13 August 2020 8 CBDT Order (F No. 187/3/2020
-ITA-I), dated 13 August 2020, Notification Nos. 62 to 66 of 2020, dated 13
August 2020
The original E-assessment Scheme covered assessments only
with respect to total income or loss of the taxpayer under Section 143(3).
However, the amended Scheme covers the best judgement assessment under Section 144 also.
The procedure for e-assessment has been amended as follows:
· The
present scope of the Scheme was restricted to regular assessment proceedings for a limited class of
taxpayers to whom statutory notice was issued under the said Scheme. The
amended Scheme extends it to all ongoing assessment/reassessment proceedings which are
being carried on by the jurisdictional tax authority. Such migration to the
Scheme can be effective upon intimation to the taxpayer. Thereupon, those
proceedings will be concluded in a faceless manner as per the Scheme.
· Under
the E-assessment Scheme there was no option to file
response to the notice issued by National e-Assessment Centre9 (NEC) for
obtaining the information, documents or evidence requisitioned by the assessment unit. It has been amended to
provide that the taxpayer or such other person shall file a response with NEC
within the time specified in the notice or as extended by NEC upon an
application made for the same.
· NEC
shall send the report received from the verification unit or the technical
unit, based on the request made to the concerned assessment unit.
· Where
the taxpayer fails to comply with the notice10, the NEC shall serve
upon such taxpayer a notice under Section 144 giving him an opportunity to
show-cause, on a date and time to be specified in the notice, why the assessment in his case should not be
completed to the best of its judgment.
· The
taxpayer shall, within the time specified in the notice issued under Section
144 or such time as may be extended on the basis of an application in this
regard, file his response to the NEC.
· Where
the taxpayer fails to file response to the notice under Section 144 within the
time specified in the notice or within the extended time, if any, the NEC shall
intimate such failure to the assessment unit.
· As
per the E-Assessment Scheme, mandatorily, a draft assessment order was to be passed by
the Assessment Unit11 for all
cases. Thereafter, the NAC was to decide whether said draft assessment order requires review on the basis
of certain risk parameters. If so, the draft assessment order would be transferred to the
Review Unit12 for review. If the Review Unit provides some
modifications to the draft assessment order, then the NAC was to forward
such suggestions to the concerned Assessment Unit.
It is now amended to provide that these
suggestions will be forwarded to a different Assessment Unit, other than the Assessment Unit which was involved in
draft assessment proceedings. Such assignment of
work will be undertaken through an automated allocation system. This will
introduce one more level of screening of the draft assessment order.
· Under
E-assessment Scheme, the NEC shall, after
completion of assessment, transfer all the electronic records of
the case to the AO having jurisdiction over such case for the following
actions–
Ø Imposition of penalty
Ø collection and recovery of
demand
Ø rectification of mistake
Ø giving effect to appellate
orders
Ø submission of remand
report, other report to be furnished, or any representation to be made, or any
record to be produced before the Commissioner (Appeals) [CIT(A)], Appellate
Tribunal or Courts
Ø proposal seeking sanction
for launch of prosecution and filing of complaint before the Court.
However, the new procedure removes
reference to the above actions and provides that the AO may take such actions
as may be required under the Act.
Penalty
proceedings for non-compliance
The E-Assessment Scheme provided that NEC shall
levy the penalty as per the draft order of penalty and serve a copy of the same
on the taxpayer or any other person, as the case may be. However, the amended
Scheme provides that the NEC shall along with draft order of penalty serve a
demand notice on the taxpayer or any other person, as the case may be.
Thereafter, electronic records of the penalty proceedings shall be transferred
to the AO having jurisdiction over the said case for such action as may be
required under the Act.
9 A central unit set up under the Scheme to monitor
the entire functioning of
the Scheme and single point of contact
for the taxpayer and the tax authority
10 Notice issued by NEC for obtaining the information,
documents or evidence requisitioned by the assessment unit or notice issued under
Section 142(1) or with a direction issued under Section 142(2A) of the Act
11 A unit set up under the Scheme to conduct various
functions of assessment 12 A unit set up
under the Scheme to carry out the function of review of draft assessment orders prepared by various Assessment Units at the direction of the NAC
Appellate proceedings
As per the E-Assessment Scheme, the taxpayer could file an
appeal before the jurisdictional Commissioner (Appeals) against an assessment made by the NEC. However, the
amended Scheme extends the right to make such appeal even against the penalty
orders.
Exchange of communication exclusively by electronic mode
The E-assessment Scheme provided that all
communications between NEC and the taxpayer or his authorised representative,
shall be exchanged exclusively by electronic mode. Further, all internal
communications between the units shall also be exchanged exclusively by
electronic mode.
The amended Scheme further provides that
the above provision shall not apply to the enquiry or verification conducted by
the verification unit in certain specified circumstances.
Authentication of electronic record
The E-assessment Scheme provided that an electronic
record shall be authenticated by the originator by affixing his digital
signature. However, in case of the originator, being the taxpayer or any other
person, such authentication may also be done by electronic signature or
electronic authentication technique in accordance with the Scheme.
The above provision has been amended to
provide that an electronic record shall be authenticated by -
· NEC
by affixing its digital signature; and
· the
taxpayer or any other person, by affixing his digital signature if he is
required under the Rules to furnish his return of income under digital
signature, and in any other case by affixing his digital signature or under
electronic verification code.
Request for personal hearing
· The
Chief Commissioner or the Director General, in charge of the Regional e-assessment Centre (RAC), under which the
concerned unit is set up, may approve the request for personal hearing if he is
of the opinion that the request is covered by the specified circumstances.
· The
E-assessment Scheme provided that any personal
hearing shall be conducted exclusively through video conferencing, including
use of any telecommunication application software which supports video
telephony, in accordance with the procedure laid down by the Board. The amended
Scheme further provides for the approval of the Chief Commissioner or the
Director General, in charge of RAC, in the cases where personal hearing
requests have been received.
CBDT Notification under Section 143(3B) to further
amend the scheme
In line with the above amendments in the
Scheme, CBDT, has also amended its earlier Notification13 which
provided for certain directions from the central government for relaxing few
provisions of the Act for smooth functioning of the Scheme. Some of the key
amendments in the Notification are as follows:
Transfer of case to
jurisdictional AO with the prior approval of CBDT
The Principal Chief Commissioner
(Pr.CCIT) or Principal Director General, in charge of the NAC, may at any stage
of the assessment, if considered necessary, transfer the
case to jurisdictional AO, with the prior approval of CBDT.
Power to specify
format, mode, procedure and processes
In the amended Scheme such powers shall
be exercised by Pr.CCIT/ Pr.DG, with the prior approval of CBDT. Further such
powers can also be exercised in the following circumstances:
· Circumstances
with respect to exchange of communication through electronic mode shall not
apply
· Circumstances
in which personal hearing has been requested with the approval of Chief
Commissioner or Director General.
CBDT order – assessment orders to be passed through the Faceless Assessment Scheme, exceptions are provided
In order to ensure that all the assessment orders are passed through the
Faceless Assessment Scheme, 2019, CBDT has issued an
Order14 directing that all the assessment orders shall henceforth be passed
by NEC through the Faceless Assessment Scheme, 2019, except:
· Assessment orders in cases assigned to
Central Charges.
· Assessment orders in cases assigned to
International Tax Charges.
Any assessment order which is not in conformity
with above, shall be treated as non-est and shall be deemed to have never been
passed. The order shall come into force with effect from 13 August 2020.
CBDT Order - Survey action under Section 133A
Section 133A gives power to the
Income-tax Authority to conduct survey proceedings. It may enter any place
13 Notification No. 62 dated 12 September 2019
14 Order (F No. 187/3/2020 -ITA-I)
of business or profession during the
hours at which such place is open for the conduct of business or profession and
in the case of any other place, only after sunrise and before sunset. The
survey action under Section 133A being an intrusive action, it is expected that
the same should be carried out with utmost responsibility and accountability.
Therefore, CBDT had directed that the
officers posted in Directorates of Investigation (Investigation Wing) and
Commissionerates of TDS, only and exclusively shall act as ‘Incometax
Authority’ for the purposes of power of survey under Section 133A.
The competent authority for approval of
such survey action under Section 133A shall henceforth be DGIT (Inv) for
investigation wing and Pr.CCIT/CCIT (TDS) for TDS charges, as the case may be.
The order shall come into force with effect from 13 August 2020.
CBDT Order/Notifications re-constituting e- assessment centres and jurisdiction of Income-tax
authorities
Recently, CBDT has issued an Order15 re-constituting
RAC with 30 headquarters spread over 20 cities, in pursuance of Faceless Assessment Scheme notified and in
supersession of earlier office order issued in October 2019. The Order also announces
composition of each RAC. The order states that Principal Commissioner of
Income-tax (RAC) (Technical Unit) will be stationed at Delhi, Mumbai, Chennai
and Kolkata respectively. However, they will be reporting to Pr.CCIT (NAC),
Delhi for administrative purpose.
Further, CBDT has also issued various
Notifications (No.62 to 66 of 2020, dated 13 August 2020) amending jurisdiction
of income-tax authorities under Section 120. CBDT directed that the Income-tax
authorities of RACs, having their specified headquarters shall exercise the
powers and functions of AOs concurrently, to facilitate the conduct of
Faceless Assessment proceedings in respect of
specified territorial areas.
15 F No. 187/3/2020 ITA-1, dated 13 August 2020
