Income Tax Returns is mandatory for all Companies and LLPs

This content addresses the compulsion of income tax return filing under Sec 139 of Income Tax Act, 1961 for all companies and LLPs. Now the next big question that arises with the usage of the word ‘All’. Are all companies and LLPs required to file income tax returns ? The answer is surprisingly yes. Income Tax Returns is mandatory for all Companies and LLPs. Section 139(1) of the Income Tax Act,1961- A Company or Firm or LLP is required to furnish the return of income in all the following illustrative cases, a company or firm or LLP is under an obligation to file Return of income: (1)   A newly incorporated company or Firm or LLP which has not commenced business. (2)   A foreign company/foreign firm operating in India and having no incomes in India (3)   A company or firm or LLP whose entire income is exempt from Income Tax. (4)   A company or firm or LLP which is in the process of setting up the business. (5)   A company or firm or LLP which has incurred Loss. (6)   A company or firm or LLP which has closed all its activities and is in the nature of a defunct company or firm or LLP. last_date_for_tax_return   Due Dates of filing of Return :-

Type of Assessee

Due Date
1) a company (other than company, which is required to furnish report under section 92E)
2) a person (other than a company) whose accounts are required to be audited under the Income Tax Act or under any other law
3) a working partner of a firm whose accounts are required to be audited under the Income tax Act or under any other law
30th September of the Assessment Year
4) In case of a company who is required to furnish report under section 92E(Transfer Pricing related)  30th November of the Assessment Year
5) In the case of any other assessee  31st July of the Assessment Year

  E-FILING OF RETURN:- E-filing of Return is mandatory for the following assesses – (1)   All Companies (with digital signatures) (2)   Firm requiring audit under section 44AB (with digital signatures) (3)   An individual or HUF to whom provisions of section 44AB are applicable(with Digital signatures) (4)   An individual or HUF whose total income exceeds Rs. 10 Lakh (Digital Signatures are optional) SECTION 271F : PENALTY FOR NOT FILING OF RETURN OF INCOME BY STIPULATED TIME:- If a person who is required to furnish a return of his income, as required under sub-section (1) of section 139 or by the provisos to that sub-section , fails to furnish such return before the end of the relevant Assessment Year, the Assessing Officer shall direct that such person shall pay , by way of penalty , a sum of Rs.5000. And that makes it completely understandable that income tax returns is mandatory for all Companies and LLPs. SECTION 273B:- Notwithstanding anything contained in the provisions of section 271F, no penalty shall be imposable on the assessee for the failure referred to in section 271F, if he proves that there was reasonable cause for the said failure. Example: Previous Year: 31-03-2013 Assessment Year: 2013-2014 Due Date of filing of return: 30th September,2013   Case1: Return filed on 31-10-2013 : No penalty shall be levied Case2: Return filed on 31-03-2014 : No penalty shall be levied Case3: Return filed on and after 01-04-2014 : Penalty of Rs.5000 u/s 271F shall be levied. However, if the assessee proves that there is reasonable cause for the said failure , the penalty shall be dropped. POINTS TO BE NOTED–

  1. In case 1,2, & 3 above , interest u/s 234A shall be levied. No question of interest arises if the Company is into losses.
  2. In case 1 and 2 , although the assessee is not liable to penalty u/s 271F but the following consequences will follow-

(a)    such return cannot be revised (b)   Assessee is exposed to the risk of best judgement assessment u/s144 (c)    The deductions u/s 80-IA, 80-IAB, 80-IB, 80-IC, 80-ID and 80-IE shall not be allowed (d)   Interest u/s 234A shall be levied.   Following are the topics that will be reasonably viable to the readers : Private Ltd vs LLP vs Partnership Difference between partnership and LLP Create a LLP LLP ROC Filings Is LLP better than a Private Limited Company