803. Where firm’s accounts are to be audited, returns are to be filed by 31-10-1989 for assessment year 1989-90

1. Under the existing provisions of section 139(1) of the Income-tax Act, as amended by the Direct Tax Laws (Amendment) Act, 1987, with effect from 1-4-1989, a partnership firm, whose accounts are required to be audited under the Income-tax Act, or under any other law, can file its return by 31st October of the relevant assessment year. However, this time limit is not available to the partners of such a firm, if their own accounts are not required to be so audited.

2. Some representations have been received to the effect that such partners would not be able to file their returns by 31st August, as they would not know their correct share income in the firm by this date. Considering this difficulty, it has been decided that such partners may also be allowed to file their returns by 31st October. The Direct Tax Laws (Second Amendment) Bill, 1989, introduced in the Parliament on 18-8-1989 during the last Monsoon Session, contains a provision to this effect propos­ing to amend section 139(1) retrospectively, with effect from 1-4-1989. The Bill will come up for consideration in the next session of Parliament. However, as an interim measure, it has been decided that partners of such firms may also be allowed to file their returns by 31-10-1989. A Press Note to this effect was issued on 24-8-1989 for the general information of the taxpayers that such partners can also file their returns for the assessment year 1989-90 by 31st October, 1989.

A Press Note is given as Annexure to this circular. The Assessing Officers are advised not to insist upon such partners to file their returns for the assessment year 1989-90 by 31-8-1989.

ANNEXURE – PRESS NOTE

1. Under the present provisions of section 139(1) of the Income-tax Act, the due date for filing the return of income in the case of an assessee, whose accounts are required to be audited under the Income-tax Act or under any other law, is 31st October of the relevant assessment year. Therefore, a partnership firm, whose accounts are required to be so audited, can file its return by 31st October. However, under the existing law, the partners of such a firm, if their own accounts are not required to be so audited, have to file their returns by 31st August.

2. Representations were received pointing out that this would cause hardship in the case of partners of such a firm as they would not know their correct share income in the firm unless the accounts of the firm have been finalised, which work may be over, in many cases, towards the end of October. Hence, it would be difficult for the partners of the firm to file their returns of income by 31st August.

3. To avoid difficulties to partners in such situations, the Government has taken a decision that the persons who are partners in the firms, whose accounts are required to be audited, can also file their returns by 31st October. The Direct Tax Laws (Second Amendment) Bill, 1989, introduced in the Parliament on 18-8-1989, during the last Monsoon Session, contains a provision by which section 139(1) is proposed to be amended retrospectively with effect from 1-4-1989. The proposed amendment provides that the partners of such firms can also file their returns by 31st October. Instructions are being issued to the Assessing Officers not to insist upon such partners to file their returns for the assessment year 1989-90 by 31-8-1989.

Circular : No. 542, dated 30-8-1989

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