31st March’ 2020: The last date for Income Tax return u/s 139(4) for Financial Year 2018-19. Many people came up with a query that what will happen if we do not file the Income Tax Return by the aforementioned deadline. There are many benefits of filing the Income Tax Return. But, here we are discussing only the adverse consequences of Non-Filing of the Income Tax Return which includes Penalty under Section 271F of Income TAx Act, 1961, Interest under Section 234A of Income Tax Act, 1961,  Non-Carry Forward of Losses, Best judgment assessment (Assessment under section 144),  Claim of Refund of Taxes, Penalty for Concealment of Income and Prosecution for Failure to Furnish Return of Income.

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1) Penalty under Section 271F of Income Tax Act, 1961:

If a person fails to furnish return before the end of the relevant assessment year, the assessing officer may levy a penalty as follows:

Date of Filing Fees Leviable
If the return is furnished after the due date of filing but on or before the 31st day of December. Five thousand rupees
In any other case  Ten thousand rupees
Note: If the total income of the person does not exceed five lakh rupees, the fee payable under this section shall not exceed one thousand rupees.

2) Interest under Section 234A of Income Tax Act, 1961

Default in the furnishing of the Income Tax Return may attract Interest u/s 234A. If there are any taxes which are unpaid, penal interest @ 1% per month or part thereof will be charged till the date of payment of taxes.

3) Non-Carry Forward of Losses

You will not be able to carry forward losses if the return of income is not filed within due date.

However, the loss under the head “Income from house property” can be carried forward even if the return of income/loss of the year in which loss is incurred is not furnished on or before the due date of furnishing the return, as prescribed under section 139(1).

4) Best judgment assessment (Assessment under section 144)

 The Assessing Officer is under an obligation to make an assessment to the best of his judgment in the following cases: –

  • If the taxpayer fails to file the return required within the due date prescribed under section 139(1) or a belated return under section 139(4) or a revised return under section 139(5).
  • If the taxpayer fails to comply with all the terms of a notice issued under section 142(1) or fails to comply with the direction issued under section 142(2A)
  • If the taxpayer fails to comply with all the terms of a notice issued under section 143(2)

Thus, Non-Filing of the Income Tax Return may result in the Best Judgement Assessment. This is an assessment carried out as per the best judgment of the Assessing Officer on the basis of all relevant material he has gathered.

5) Claim of Refund of Taxes

In case your tax payable is less than the TDS already deducted, you can claim the refund of such excess TDS by filing your Income Tax Return.

You must file your Income Tax Return to claim the refund of TDS.

Further, you are eligible for Interest @0.5% per month or part of the month on refund amount as per Section 244A.

6) Penalty for Concealment of Income

If you have taxable income and do not file the return of Income you may end up paying penalty for concealment of Income.

In such cases  Penalty u/s 270A is for under-reporting and misreporting of income will be levied.

Thus, where no return of income is furnished and later you are assessed at income higher than maximum amount not chargeable to tax you may end up paying a heavy penalty.

7) Prosecution for Failure to Furnish Return of Income

In case you fail to furnish the return of Income, don’t be surprised if you receive notice of prosecution u/s 276CC.

Section 276CC provides for rigorous imprisonment for a term up to 7 years and fine.

Don’t wait and get your Income Tax Return filed!

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Qualification: CA in Practice
Company: Tarun Harish Kumar & Co.
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Member Since: 25 Apr 2017 | Total Posts: 42
A passionate Chartered Accountant having practical exposure of working with the Start-ups and NGOs. I also do have an interest in blogging and teaching. I am active blogger and authored various blogs on Taxation matters, that have been published in the print media and leading newspapers as well as w View Full Profile

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  1. sumit diwakar says:

    if the total income is less than 2.50 Lac Rs PA, then the late fee is applicable if filling of IT return after due date of 31/08/2018 ????

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