Section 139 of Income Tax Act

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Section 139 of the Income Tax Act, 1961, explains the different types of Income Tax Returns (ITRs) that taxpayers may need to file. It states that every individual, company, firm, or other entity whose total income is above the prescribed exemption limit must file an income tax return for the relevant assessment year. In some cases, even taxpayers with income below the exemption limit may be required to file an ITR if they meet certain conditions under the Income Tax Act.

Section 139 is divided into several sub-sections, including Section 139(1), Section 139(3), and Section 139(9). Each sub-section deals with a specific filing requirement, such as filing an original return, reporting losses, or correcting a defective return. Understanding these provisions can help taxpayers file their returns correctly and on time. In the following sections, we will look at the key provisions of Section 139, its important sub-sections, and the latest amendments that may affect taxpayers.

What is Section 139 of the Income Tax Act?

Section 139 of the Income Tax Act mandates that taxpayers file their income tax returns before the stipulated deadlines. It also provides provisions for:

• Filing delayed returns

  
  

  and

• Correcting errors to maintain compliance with tax regulations

Taxpayers must understand that timely and accurate filing of income tax returns is crucial to complying with legal requirements and avoiding penalties. For this purpose, Section 139 ensures that taxpayers are aware of their tax-related obligations by providing mechanisms to rectify mistakes or delays in filing.

What are the provisions of Section 139?

Every person or entity whose total income before claiming eligible deductions exceeds the basic exemption limit must file an income tax return. Companies and partnership firms are required to file an income tax return regardless of whether they have earned a profit or incurred a loss during the financial year. Filing your return on time helps you stay compliant with tax laws, maintain proper financial records, and avoid unnecessary notices, penalties, or other legal issues.

Due dates:

The due date for filing an income tax return depends on the type of taxpayer. Individuals, Hindu Undivided Families (HUFs), and taxpayers whose accounts do not require an audit generally need to file their returns by 31 July after the end of the relevant financial year. Companies and taxpayers whose accounts must be audited under Section 44AB are usually required to file their returns by 31 October. Filing before the due date helps ensure smooth processing and avoids late filing consequences.

Revised and belated returns:

Section 139(1) allows taxpayers to revise an income tax return if they later identify an omission, incorrect information, or any other mistake in the original return.

Taxpayers who miss the original due date may still be able to submit a belated return within the prescribed time limit. However, filing late may result in applicable interest, penalties, or other consequences under the Income Tax Act.

Exceptional cases:

The Income Tax Act also identifies certain situations where a person may need to file an income tax return even if their income is below the basic exemption limit.

This may apply when the taxpayer wants to claim a tax refund or carry forward eligible losses under any head of income for adjustment against future earnings, subject to the applicable provisions of the Act.

Electronic filing:

Electronic filing of income tax returns is mandatory for certain categories of taxpayers. Online filing makes the return submission process faster, more convenient, and easier to track. It also helps speed up verification, processing, and refunds, while reducing paperwork and improving the overall efficiency of tax compliance.

Subsections under Section 139 of the Income Tax Act

Section 139 of the Income Tax Act, 1961, is divided into various sub-sections. These subsections specify:

• Who must file returns
• What are the due dates for filing returns
• What conditions must be met for filing revised or belated returns
• When is return filing mandatory even if income is below taxable limits

It is worth mentioning that taxpayers must understand these subsections to remain compliant and fulfil their tax obligations. Let’s check out some key sub-sections you must be aware of:

1. Section 139(1) of the Income Tax Act: Mandatory and timely income tax return submission

Section 139(1) of the Income Tax Act, 1961, states that individuals must file an income tax return by the due date if their total income is above the basic exemption limit. However, this requirement varies based on the different types of taxpayers. Let’s see how:

For companies

• Any type of company (private, public, domestic, or foreign) operating in India must file a tax return.

For firms

• Any firm, including Limited Liability Partnerships (LLP) and Unlimited Liability Partnerships, must file a tax return.

For residents with foreign assets

• You must file a tax return if:

  • You are a resident of India and own assets or have financial interests outside India

    
    

    or

  • You have signing authority for a foreign account

Other entities

• Suppose the total income of a Hindu Undivided Family (HUF), an Association of Persons (AOP), or a Body of Individuals (BOI) exceeds the exemption limit. In that case, they must file a tax return.

Furthermore, the central government can grant exemptions to certain groups from return filing under Section 139(1c), if they meet specific conditions. Any exemption granted must be presented to both Houses of Parliament for 30 days during their sessions. If both Houses agree, the exemption becomes effective.

Also, it is important to know that if you are not required to file a tax return but choose to do so, your filing is considered voluntary. Voluntary returns are treated as valid tax returns.

2. Section 139(3): Filing ITR with loss

Under Section 139(3) of the Income Tax Act, you file income tax returns with losses. By filing returns under section 139(3), you can carry forward the losses, which reduces your tax burden in future years.

Let’s understand the different requirements of this section, which, again, varies based on the different classes of taxpayers:

For individual taxpayers

• If you are an individual and had a loss in the previous financial year, you don't have to file a tax return.

For companies and firms

• If a company or firm incurs a loss, they must file a tax return if they want to

  • Carry forward the loss

    
    

    and

  • Use it to reduce their tax liability in future years
• If the loss is under the head Profits and Gains of Business & Profession (PGBP) or capital gains, you must file the tax return by the due date to carry forward the loss.
• On the other hand, if the loss is under the head house property, you can carry it forward even if the tax return is filed after the due date.

3. Section 139(4): Belated income tax return

Sec 139(4) of the Income Tax Act allows you to file belated or delayed income tax returns. Ideally, you should file your tax return by the due date mentioned in Section 139(1) or within the time allowed by a notice issued under Section 142(1). However, if you miss the deadline, you get another chance to file a belated return under section 139(4).

The time limit for filing a belated return is:

• One year from the end of the relevant assessment year

  
  

  or

• Completion of the assessment, whichever happens first.

Also, it is worth mentioning that late filing is subject to penalties. If you file your return after the end of the relevant assessment year, you have to pay a penalty of Rs. 5,000 under Section 271F of the IT Act 1961.

4. Section 139(4C) and 139(4D): Income tax exemption under Section 10

Section 139(4C) is for certain institutions that are required to file tax returns only if their accumulated funds exceed the maximum allowable exemption limit under Section 10. These institutions are:

• Scientific research associations
• Institutions under Section 10(23A)
• Organisations involved in news dissemination
• Institutions under Section 10(23B)
• Educational and medical institutions

These institutions can claim tax exemptions under specific clauses of Section 10: Clauses 21, 22B, 23A, 23C, 23D, 23DA, 23FB, 24, 46, and 47.

Now, when it comes to Section 139(4D), it grants exemptions from return filing to institutions covered under these sections:

• Section 35(1)(ii): Related to scientific research
• Section 35(1)(iii): Pertains to research in social science or statistical research

5. Section 139(5): Filing a revised return

If you filed your return before the due date but made a mistake, you can file a revised return under section 139(5). This revised return can be filed:

• Within one year after the end of the assessment year

  
  

  or

• Before the assessment is completed, whichever is sooner.

A revised return replaces the original return, and there is no limit to the number of times you can revise within the specified timeframe. However, remember that revised returns are only for correcting unintentional mistakes.

6. Section 139(8A): Updated income tax returns

Section 139(8A) of the Income Tax Act allows taxpayers of all classes (Individuals, HUF, Firms, AOP, BOI, etc.) to file an updated income tax return. This provision allows taxpayers to amend any incorrect information or report additional income that was missed in the original return.

However, you can file a return under this section only if:

• You did not file an income tax return previously
• There were mistakes or omissions in the originally filed return
• You need to report additional income that was not included in the original return and pay any additional taxes due

7. Section 139(9): Defective income tax returns

Section 139(9) of the Income Tax Act, 1961, outlines the concept of defective tax returns. A tax return is deemed defective if certain essential documents are missing when it is filed.

Usually, if the tax officer finds a return to be defective, they will notify you (the taxpayer). After this, you have 15 days from the date of notification to fix the defect. If required, you can even request more time to rectify the defect.

Now, let’s check out a list of all the necessary documents required to avoid a defective return:

How to file defective returns under Section 139(9)?

A defective return notice is issued when your income tax return is incomplete or does not include the required information or supporting documents. If the Income Tax Department finds any errors or missing details, it sends a notice under Section 139(9) of the Income Tax Act. After receiving the notice, you usually get 15 days to correct the defects and submit the updated return. Responding within the given time helps you avoid further action and ensures your return is processed smoothly. Below is the step-by-step process to file a defective return under Section 139(9).

Mentioned below is the detailed process of filing Defective Return u/s 139(9)

Step 1: Visit the Income Tax e-filing website and log in using your User ID, password, and date of birth or date of incorporation.

Step 2: Go to the E-File section and select the option to respond to a notice under Section 139(9).

Step 3: After successful validation, if a defective return notice has been issued by the CPC or Assessing Officer (AO), it will be displayed on the screen.

Step 4: Click the "Submit" button under the Response column to submit your reply.

Step 5: If the defective return notice has been issued by the AO, a different screen will appear after selecting the option to respond to the notice under Section 139(9).

Step 6: Select the relevant ITR form from the drop-down list, upload the XML file, and click the "Submit" button. A confirmation message will appear on the screen.

Step 7: If the defective return notice has been issued by the CPC, a different screen will appear after selecting the option to respond to the notice under Section 139(9).

Step 8: Select "Yes" under the "Do you agree with the defect?" column if you agree with the defect. Then choose the relevant ITR form and upload the required XML file. If you do not agree, select "No" and provide the reason in the Assessee Remarks column.

Step 9: If the Error Code is "31" and you have selected "No" under "Do you agree with the defect?", provide the additional details requested on the screen and click "Submit".

Step 10: If the company is an FII or FPI and the assessee selects "Yes" or "No" under the "Details for Error Code 31" section, enter the additional information requested and click "Submit".

Step 11: Once the response is submitted successfully, a confirmation screen will be displayed.

Step 12: You can view the submitted response by clicking "View" under the Response column.

Step 13: Click on the "Transaction ID" to see the details of the response you have submitted.

Due dates for Section 139

Section 139 of the Income Tax Act, 1961 includes different sub-sections that explain the various types of income tax returns, the taxpayers who need to file them, and situations such as delayed filing or correcting errors. It also specifies the due dates for filing income tax returns under different circumstances. The important due dates are:

• 31st July – This is the due date for taxpayers whose accounts do not require an audit. The Government may extend this deadline if required. It generally applies to:
  • Salaried individuals
  • Self-employed individuals and professionals
  • Freelancers and consultants
• 30th September – This due date applies to taxpayers whose accounts must be audited. The Government may extend this deadline if necessary. It generally includes:
  • Business entities
  • Self-employed individuals and professionals requiring an audit
  • Working partners in firms and consultants whose accounts are subject to audit

How is ITR Form 7 related to Section 139?

Form ITR-7 is a specific income tax return used by certain individuals, institutions, and entities who need to file returns under specific sub-sections of Section 139. Let’s check out its applicability and filing methods:

Applicability

Form ITR-7 is used by individuals, institutions, and entities required to file returns under:

• Section 139(4a)
  • For persons including companies required to furnish returns under Sections 139(4a) to 139(4c)
• Section 139(4b)
  • For political parties are required to furnish returns under Section 139(4b).
• Section 139(4c)
  • For institutions claiming exemption under Section 10, such as scientific research associations, news agencies, universities, etc.
• Section 139(4d)

  • For colleges, universities, and institutions not required to furnish return under any other provision of this section.

    
    
    

Filing methods

Taxpayers can file Form ITR-7 by:

• Physically submitting the filled form to the Income Tax Department.
• Electronically filing the form and:

  • Authenticating it via digital signature

    
    

    or

  • Verifying the return by submitting Form ITR-V (Verification)

Recent amendments in Section 139 of the Income Tax Act

To remain compliant and effectively file income tax returns without any hassles, let’s look at some recent amendments in Sec 139:

Amendment to Sub-section (1), sixth provision

Effective from April 1, 2017, the sixth provision of sub-section (1) of Section 139 of the Income Tax Act has been amended to replace the words "provisions of section 10A" with "provisions of clause (38) of section 10 or section 10A." This change broadens the scope to include clause (38) of section 10 and section 10A for certain conditions or exemptions

Amendment to sub-section (3)

In sub-section (3) of Section 139, the reference "sub-section (2) of section 73" has been expanded to include "or sub-section (2) of section 73A". This amendment ensures that the provisions now also apply to the additional rules specified under section 73A. This extends the applicability to a wider range of loss carry-forward situations.

Amendments to sub-section (4)

This sub-section has been revised to allow any person who missed the initial deadline to file their tax return. The time limit for filing such a return is anytime before the end of the relevant assessment year or before the assessment is completed, whichever occurs first. This amendment allows more flexibility for late filings within specified limits.

Amendment to sub-section (5)

This sub-section has been updated to permit a person to file a revised return at any time before the expiry of one year from the end of the relevant assessment year or before the assessment is completed, whichever is earlier. This extension allows more time for taxpayers to correct any omissions or errors in their original returns.

Error codes in Section 139 of the Income Tax Act

Different error codes under Section 139 indicate specific issues or deficiencies found in the filed income tax returns (ITRs). These codes prompt the income tax department to issue defect notices. After the receipt of such notices, taxpayers must rectify these issues within a specified period to:

• Ensure compliance with tax regulations

  
  

  and

• Avoid penalties or further consequencesNow, let’s check out some common error codes:

Error Code 14

• This error occurs when the taxpayer enters a negative amount in either the Gross Profit or Net Profit sections of the ITR
• It must be noted that such entries are not permissible and usually render the ITR defective.
• This error code prompts the tax authority to issue a notice for rectification.

Error Code 8

• This error code is generated when:

  • A taxpayer files ITR-4S (presumptive income tax return under Section 44AD)

    
    

    and

    
    

    Declares a total presumptive income that is less than 8% of their Gross Turnover or Gross Receipts

• Such return filing violates the provisions of Sec 44AD and triggers a defect notice.

Error Code 31

• This error code is generated when:

  • A taxpayer has income under the head "Profits and Gains of Business or Profession"

    
    

    but

  • Fails to provide the Balance Sheet and Profit and Loss Account along with the return
• As per the income tax provisions, these documents are essential for assessing the accuracy of business income.
• In cases of their absence, a defective return notice is sent by the department.

Error Code 38

• This error arises when

  • The taxpayer determines tax as “payable” in the filed income tax return

    
    

    but

  • Fails to make the corresponding tax payment
• Failure to pay the tax makes the return defective, as it highlights discrepancies between tax computation and actual payment.

Conclusion

Section 139 of the Income Tax Act mandates the filing of income tax returns by individuals, companies, and firms. Individuals are compulsorily required to file their income tax returns if their total income without subtracting any deduction exceeds the basic exemption limit. On the other hand, companies and firms must file regardless of profit or loss.

Also, Section 139 provides several deadlines and allows for filing belated and revised returns to correct errors or omissions. This section is divided into various sub-sections that address different scenarios. Some common examples are carrying forward losses, mandatory filings for those with foreign assets, filing belated returns after the due date, and more.

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