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Dear readers, the season of Income Tax Return filing has been started, as on date, Income Tax department has released Income tax return filing utilities of A.Y -2020-21 in FORM ITR-1, ITR-2 and ITR-4 and remaining ITR Form utilities are expected to be released by the end of this month.

In today’s topic, we will discuss the Caution & Precaution that must be taken by every Income tax assessee to avoid any notice/demand from the Income Tax department. Now, the Income-tax department has made Income Tax return filing mandatory for those persons who are covered under the Seventh proviso to Section 139 (1) of Income Tax Act, 1961.

Every Person who is filing their Income Tax turn by their own must take care of below point to avoid notices from the Income Tax Department

Hands holding documents with title tax return

Filing of Income Tax Return as per the Seventh proviso to Section 139 (1) – In Union Budget 2019, Finance Minister has announced for compulsory filing of return for persons who undertake certain high-value transactions during a financial year, like

√ Deposit of Rs. 1 crore or more in current accounts,

√ Expenditure on foreign travel for more than Rs. 2 Lakh,

√ Expenditure on the consumption of electricity for more than Rs. 1 Lakh

Are you filing return of income under Seventh proviso to section 139(1) but otherwise not require to furnish return of income ? [Note: To be filled only if a person is not require to furnish a return of income under section 139(1) but filing return of income  due to fulfilling one or more conditions mentions in the seventh proviso to section 139(1)

All assessee which are earlier not required to file an Income Tax return because their income is below exemption limit is now Mandatory to file their ITR if they have done above mentioned high-value transactions.

Bifurcation of investment made during the period from April 1, 2020, to July 31, 2020, to Claim deduction under Part –B OF Chapter – VIA

As we all know, this year due to lockdown situation, the time period to invest the amount for claiming the deduction has been extended from 31.03.2020 to 31.07.2020. A specific column has been inserted in ITR Form to capture details of all such investments which has been done during this extended period. You have to disclose that detail specifically while filing your Income Tax Return.

Whether, you have made any investment/deposit/ payment between 01.04.2020 to 31.07.2020 for the purpose of claiming any deduction undr Part B of Chapter VIA? [Yes /No](If yes, please fill schedule DI)

Income Tax Return Filing due date extension

To give relief to the Income Tax Assessee and to ensure that, all assessee will get enough time for filing Income Tax return, CBDT has extended the due date of filing ITR from 31st July/ 30th September to 30th November. So, to avoid late filing fee of Rs.1000/-or Rs.5000/-, ensure that, your ITR must be filed on or before the extended due date.

Form 26AS must be visited before Filing ITR

Now, form 26AS is like a complete profile of an assessee. It included details of high-value transactions like sale/ purchase of land/ house property/Gold etc. It shows details of TDS/TCS deducted. Sometimes, assessee forgot to include some incomes at the time of ITR Filing, which is shown in Form 26 AS, which may invite notice from the Income Tax Department.

Quoting wrong TAN Number

This is the error commonly done when we file our ITR on the last day. In a Hurry, we quote the wrong TDS number of the deductor, due to which TDS detail does not match with details available with the Income Tax department, which may lead to Demand. 

Salary from 2 or More Employers

Sometimes, an employee works with 2 or more employers but at the time of ITR Filing, they do not disclose complete details of their previous employer. If any information is available with the department to your hidden salary details, this will be added to your taxable income. It is requested to all salaried employees that, if earlier employer details are not reflected in Form 26AS due to any reason, you must disclose, that detail in your ITR.  

Disallowance under Tax Audit Report

Sometimes, our Tax Auditor disallowed some expenses which are not admissible as per Income Tax Law and they report such disallowance in their Tax Audit Report. If assesses do not consider these disallowances while filing their ITR, then the income tax department will add this disallowance and raise demand against you, so proper attention must be given to this point while filing Income Tax Return. 

TDS Deduction under Section 194N on Cash withdrawal

Section 194N is applicable in case of cash withdrawals of more than Rs 1 crore during a financial year. This section will apply to all the sum of money or an aggregate of sums withdrawn from a particular payer in a financial year. Normal TDS rate u/s 194N is @ 2%, however, it may vary in case the individual receiving the money has not filed an income tax return for three years immediately preceding the year. To avoid the deduction of TDS at a higher rate, you must file your ITR on a continuance basis.

Avoid Best Judgment Assessment under Section 144

As explained above, now Form 26AS is likes a complete profile of assessee. If an assessee who is liable to file ITR fails to do the same. Then 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. This article is written on the basis of the author’s personal experience and provision applicable as on the date of writing of this article. Adequate attention has been given to avoid any clerical/arithmetical error, however; if it still persists kindly intimate us to avoid such error for the benefits of other readers.

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

Author Bio

My Self CA. Shiv Kumar Sharma. I am a member of "The Institute of Chartered Accountants of India" since 2012. Currently, I am in Practice and dealing in Direct and Indirect taxation along with ROC Compliances. I am writing Articles for, and in the expert panel of ca View Full Profile

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  1. Sadashiv R Pai says:

    If the heads of income are performance bonus paid to a retired employee, gross income of nominal consultancy charges (received during a quarter part of the year & no books of accounts maintained), and equity capital gains (of listed companies), then which is the appropriate ITR Form No. to be used? Kindly let know. Thanks.

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April 2024