Taxes on income of a person, on income accruing or arising in India, are governed by the Income Tax Act, 1961. The income tax law in India is based upon the concept of self-assessment, wherein a person is expected to assess his total income and taxes thereon and pay it with the Income Tax Department, functioning under the Ministry of Finance, Government of India.

Income tax department assesses all income tax returns filed online. After successful assessment of tax returns, income tax department issues intimation under section 143(1). Such intimation is an auto-generated letter by the computers of the Income Tax Department without any human interference. Intimation under section 143(1) should be treated as completion of assessment of income tax returns for the year, with respect to mathematical calculations relating of total income and Tax computations and payments, unless there is tax due from the tax payer. An advice of income tax demand/refund is sent as applicable.

Out of the total returns filed, and even after initial assessment for calculations, some cases are selected for detailed scrutiny. Selection is normally done either randomly through computer system (CASS) or in some cases based upon the internal criteria determined and circulated by the Central Board of Direct Taxes (CBDT), based upon the Annual Information Return (AIR) filed by several government department and private institutions like banks and at times also based upon intelligence and information gathered by the income tax department through its various sources.

In the detailed scrutiny, the department aims at cross verifying the details of income, expenses and taxes paid, so as to ascertain the actual total income and taxes on the same. If the assessed income determined after the scrutiny is more than the self-assessed income, the income tax law provides for taxing the additional income, charging interest on such late payment of taxes and penalty which may go in tune of 300 percent of the total tax liability, which had escaped being taxed in the original self-assessment.

In the absence of co-operation from the person being assessed, the income tax department has powers to gather information from related third parties, calling persons on summons, taking their statements on oath and even making assessment on their best judgment. If the department has reasons to believe that tax evasions is drastic, the tax department also has powers to conduct income tax search and surveys on the residential and business premises of the person.

Thus, it is important that one should be compliant with the income tax laws and file income tax returns only after having the self-assurance that the return filed contains all income earned by the person in the relevant year.

Now, we would like to discuss some basic concepts relating to income tax return filings.

MANDATORY INCOME TAX RETURN FILINGS

• A Company registered under the Companies Act or a partnership Firm including a LLP shall mandatorily furnish return of his income on or before the due date, irrespective of them earning any profit or carrying out business or not;
• Other than Company or Firm if his total income during the previous year exceeds the maximum amount which is not chargeable to income tax shall mandatorily have to file their income tax return. Maximum amount not chargeable to tax for a normal resident individual is Rs 250,000 for FY 2014-15.

• Further, as person is mandatorily required to file income tax return if the person:
o Is in occupation of an immovable property exceeding a specified floor area; or
o Is the owner or the lessee of a motor vehicle other than a two-wheeled motor vehicle; or
o Has incurred expenditure for himself or any other person on travel to any foreign country; or
o Is the holder of a credit card, not being an "add-on" card, issued by any bank or institution; or
o Is a member of a club where entrance fee charged is twenty-five thousand rupees or more;
• Persons, not mandatorily required to file their income tax returns can voluntarily file their income tax returns.

DUE DATES FOR INCOME TAX RETURN FILINGS

30th September for:
• A company; or
• a person (other than a company) whose accounts are required to be audited; or
• a working partner of a firm whose accounts are required to be audited.

30th November for an assessee who is required to furnish a report referred to in section 92E

For any other assessee, for FY 2014-15, the due date of 31.07.2015 for Individuals has been extended till 31.08.2015.

LOSS RETURN

If a person, other than a company or a firm, incurs loss in the previous year then it is not mandatory to file ITR for the same.

If loss arises under the head capital gains or profits and gains of business and profession, filing of return would be mandatory if this loss is to be carried forward to the next year and set-off against future income. The income tax return showing the loss should be filed on or before the due date if this loss is to be carried forward to the next year and set-off against future income.

• If loss arises under head house property it would be allowed to be carried forward even if the income tax return is filed after the due date of filing of return.
• If the loss is to be set-off against some other income arising in the same year, it is allowed to be set-off even if the return is filed after the due date of filing of returns.
• In case the taxpayer has submitted return of loss in response to a notice, such loss cannot be carried forward unless it is a loss under head income from house property. However, the unabsorbed depreciation can be carried forward in this case.

BELATED RETURNS

However, if a person fails to submit his income tax return on time, he is eligible to file his return even after the due date. Such return is called Belated Return.

Such belated return shall be filed before the expiry of 1 year from the end of the relevant assessment year or before the completion of assessment whichever is earlier.

Note: Belated Return cannot be revised.

If belated return if filed after the due date then, taxpayer shall be liable to pay the tax along with interest @ 1% per month.

REVISED RETURNS

Where a person after filing his return on or before the due date realizes that there was any mistake or omission in the return filed then such return can be revised. The revised return can be filed before the expiry of one year from the end of the relevant assessment year or before the completion of assessment, whichever is earlier.