802. Returns of income below taxable limit – Whether such returns are to be accepted at the receipt counters
1. Attention is invited to Instruction Nos. 1744 dated 21-1-1987 and 1765 dated 25-6-1987 in which Board have clarified that returns of income for the assessment year 1986-87 and subsequent years which are below taxable limit, should not be acted upon unless covered under the exceptions contained in the proviso to sub-section (10) of section 139. The Board, vide para 2(i) of Instruction No. 1744 dated 21-1-1987, desired that suitable instructions may be issued by the Commissioners of Income-tax in this regard.
2. It has been brought to the notice of the Board that no uniform practice is followed regarding receipt of such returns at the receipt counters. While in some charges instructions have been issued by the Commissioners not to accept such returns unless covered by the exceptions, in many charges the returns are being accepted, entered into registers and then treated as ‘non est’. Clarifications have also been sought by taxpayers’ associations and Commissioners of Income-tax on this issue.
3. The matter has, therefore, been examined by the Board with a view to having uniformity of procedure. In this background, I am directed to draw your attention to the forms of returns of income prescribed under the Rules and to say that there are specific columns in the return forms clearly indicating whether the return falls under any of the exceptions contained in the proviso to section 139(10) or not. For instances, columns (iii ), (iv), (v) and (vi ), Form No. 2 correspond to the exceptions contained in clauses (a), (e), (b ) and (f) of the proviso respectively. Similarly, there are columns in all the other return forms from which the official receiving returns can ascertain whether a return which is below taxable limit falls under one of the exempted categories and is to be accepted.
4. It may be noted that all the returns filed in Form No. 3A have to be accepted as these fall under one of the exceptions contained in the said proviso. Similarly, all returns filed in Form No. 1 which pertain to companies are to be accepted. Though there is no column in the return forms to indicate that a return has been filed under section 139(2), such returns can also be identified at the receipt counters as these are normally accompanied by a covering letter or otherwise it is indicated on the return form itself by the assessee.
5. In view of these facts, identification of valid returns can be made even at the receipts counters. Therefore, returns which are not valid should not be accepted at the receipt counters. You [All Chief Commissioners and Commissioners of Income-tax] may kindly issue necessary instructions to the officers and staff working under you that the returns of income below taxable limit barring those covered under the exceptions contained in the proviso to section 139(10) are not to be received at the counter.
Circular : No. 493 [F. No. 201/64/86-IT(A-III)], dated 21-8-1987.
JUDICIAL ANALYSIS
RELIED ON IN – This circular was relied on in T.P.S. Builders (P.) Ltd. v. ACIT [1996] 59 ITD 220 (Cal.), with the following observations :
“. . . On critical analysis and judicial scrutiny of legal position we find that the return of loss so furnished does not fall under the mischief of section 139(10), which the non obstante clause, and the return so furnished is a valid return as per the Board’s circular No. 493, dated 21-9-1987. Once the return is declared valid and not non est under section 139(10), the assessment made in pursuance of that return is valid and, therefore, the departmental authorities have rightly decided the issue of business loss against the assessee . . . .” (p. 229)
