Dear readers, as you all know, due to the COVID-19 pandemic our whole economy is moving towards a slowdown. To recover from this situation, the Government of India has announced many Economic relief packages. After the analysis of whole packages, it is summarized that the main focus area of the government is to revive the MSME Sector which is the backbone of the Indian Economy as soon as possible. During the Announcement of Economic revival packages, the Government of India has allocated a huge amount for the MSME sector which is to be granted a loan to the MSME sector so that they can survive out of Cash crunch situation.

For availing these loans, MSME Sector has to approach banks for Loan purposes. For loan granting purposes, the bank requires basic documents like PAN Card, Aadhar Card, Good CIBIL Score, GST Returns and Income Proof which is Income Tax Return, etc, on the basis of which you’re Loan Eligibility criteria will be decided by the bank. There are many entrepreneurs from the MSME Sector who are not filing Income Tax Returns due to which there is no Income Proof with them on the basis of which they can apply for MSME Loans.

This time CBDT has extended the Last date to File Income-tax Return for the F.Y -2018-19 from 31.03.2020 to 30.06.2020. After the lockdown, now the Government of India is granting permission to start business activities in a phased manner so that the Economy can move forward but now MSME Sector is starting facing cash flow issues to revive their activities. For ITR non Filers, there is a golden opportunity to File their Belated Income Tax Return for F.Y -2018-19 on or before 30/06/2020, so that they have Income proof on the basis of which they can apply for MSME Loans. In this article, I have tried to summarize the benefits which an assessee gets if they filed their Income Tax Return under Section 139 (4) –Belated Return.

1. Mandatory filing of Income Tax Return – As per Section 139 (1) of Income Tax Act, all individuals are required to file their Income Tax Return before the prescribed date if their Gross Taxable Income is more than prescribed exemption limit, which is Rs.2,50,000/- related to the relevant specified year. If an individual has missed to file their ITR due to any reason, then they have the option to file the same on or before 30 June 2020. 

2. Use ITR has Income Proof – As explained above, for availing any loan from banks you have to show your Income Proof and Income Tax Return is required to submit as Income Proof for further processing of your loan application. 

3. Claiming of Income Tax Refund – If an assessee is not mandatorily required to file Income Tax Return as per Section 139 (1) of Income Tax Return and TDS/TCS has been deducted against their PAN number, due to any reason then they have to file their ITR for claiming refund of that TDS/TCS Amount.

 As assured by the Finance Minister of India, all pending Income Tax refunds will be released as soon as possible. Now, Income Tax returns are processed within 10-15 days and the eligible refund amount will be released within a limited period of time.

4. Filing of Revised Return – As per Section 139 (5) of Income Tax Act, 1961, all ITR Filed under Section 139 (1)/139 (4) can be revised before extended due date of 30.06.2020. If any assessee wants to file revised their ITR, then they have golden opportunity to do the same.

5. Avoid Notice from Income Tax Department – As we all know, the Income Tax Department is taking proactive steps to catch Income Tax Avoiders. They are using data mining tools to detect high-value transactions. If any high-value transaction has been done against your PAN/ Aadhar then it is recommended that you should file your ITR to avoid Income Tax notice.

 6. Avoid Best Judgment Assessment under Section 144 – Section 144 of Income Tax Act, 1961 empowers Income Tax Officer to do Best Judgment assessment in case of Non-Filers of return. In this case, assessment is done on the basis of evidence/ Information available on record with Income Tax Officer which is in many cases will be very harsh for the assessee. To avoid such a situation, you should file your ITR within the prescribed time period.

Disclaimer: This article is for the purpose of information and shall not be treated as a solicitation in any manner and for any other purpose whatsoever. It shall not be used as a legal opinion and not be used for rendering any professional advice.

The Author “CA. Shiv Kumar Sharma” can be reached at mail –shivsharma786@gmail.com and Mobile/Whatsapp – 9911303737/  9716118384 

Author Bio

Qualification: CA in Practice
Company: Shiv Kumar Sharma & Associates
Location: Delhi, New Delhi, IN
Member Since: 03 Dec 2018 | Total Posts: 45
My Self CA. Shiv Kumar Sharma. I am a member of "The Institute of Chartered Accountants of India" since 2012. I have Qualified my B.Com (H) in 2010 And Cleared CS- Executive Exam in June 2013. Currently, I am in Practice and dealing in Direct and Indirect taxation along with ROC Compliances. View Full Profile

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