The Income Tax return (ITR) form is a prescribed form through which the particulars of income earned by an assessee in a financial year are communicated to the Income Tax Department. While filing ITR, the taxpayers are required to choose the correct form. If ITR is filed using the wrong form, it could complicate the process and the taxpayer may face consequences.

The Central Board of Direct Taxes (CBDT) recently notified two ITR forms for the assessment year 2020-21. However, the tax body is yet to enable the tax filing utilities and release the remaining forms.

Under the current income tax laws, several forms are available for different types of assesses. The purpose of different forms is that each form is for different kinds of disclosure depending upon the amount or nature of incomes, assets and liabilities or foreign assets held by a person, availing of presumptive scheme, etc.

Consequences of filing ITR in a wrong form

An assessee is supposed to report all information under all heads of income applicable to him/her in an ITR form.

“In case the taxpayer file the income tax return in a wrong form- which means ITR form which is not applicable to him/her, the tax officer, while processing the ITR form, may consider the return so filed as defective return under the provision of section 139(9) of the Income Tax (I-T) Act,” said Gopal Bohra, Partner, NA Shah Associates.

“In that case, the tax office may intimate about the defect and the taxpayer will require to remove the defect within 15 days of such notice by filing a revised return with the correct ITR form,” he added.

If the defect is not removed within 15 days, the ITR return will be treated as invalid. Consequently, the person may face penalties for non-filing of ITR in addition to payment of interest under Section 234A for the delay in filing the tax return, according to tax experts.

What happens if belated return is filed in a wrong form

In cases where the original return (filed in an incorrect form) is a belated one, the remedy is to approach the department through the Commissioner Income Tax for permission to file delayed revised return under section 119 of the Income Tax Act, according to Mangesh Bhende - Sr Partner - Synemarke Legal, Advocates & Corporate Tax Advisors.

"In case of any adverse order, the Commissioner may also exercise his discretionary power under section 264 of the Income Tax Act," he said.

Exceptional cases

It is, however, possible that in few cases the return filed in wrong form would be treated as valid as the return may be structurally fine.

“However, the person may still face penalties for wrong disclosures e.g. if a person having salary income has used ITR-1. The person may be having foreign assets which can’t be disclosed in this form. In such a case, the person may face penal action for non-reporting of foreign assets,” said Sandeep Sehgal, Director- Tax and Regulatory, Ashok Maheshwary & Associates LLP.

Who is required to file ITR?

Individuals having an annual income of Rs 2.5 lakh or more are mandatorily required to file ITR. For senior citizens (those between 60 years and 80 years of age), the limit is Rs 3 lakh, and for very senior citizens (aged above 80 years), the limit is Rs 5 lakh.