Income Tax Return (ITR) is a form which an individual is required to submit to the Income Tax Department of India. It contains information about the person’s income and the taxes to be paid on it during that particular year. ITR filing is mandatory for all those who have income above the basic exemption limit under the Income Tax Act, 1961
The details of income earned by an assessee in a financial year are communicated to the Income Tax Department by the ITR filing. But in many cases, taxpayers leave ITR filing to the fag end of the due date. There is no doubt that they can also get their ITR filing done at the last moment, but the probability of committing a mistake, missing out on entering an important figure related to income or deduction or even making an oversight while filing ITR may not be ruled out. One can even file the wrong ITR form instead of filing the right form based on the income source. 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. Wrong ITR filing is quite common because the Income Tax Act prescribes a number of different forms for different combinations of income. But, any such mistake may still be rectified by filing a freshly revised return if the taxpayer has filed the return within the due date. In this article, we’ll talk about the impact of filing the wrong ITR and its solution.
Consequences of filing ITR in a wrong form
If the return is filed in the wrong form within the due date
An assessee is supposed to report all information under all heads of income applicable to him/her ITR filing.
If the taxpayer files the income tax return in a wrong form- which means ITR form which is not applicable to the particular taxpayer, the tax officer, while processing the ITR form, may consider the return so filed as defective return u/s 139(9) of the Income Tax Act. There could be a number of factors that may lead to an ITR being treated as defective. One of them that could prove costly is choosing the wrong ITR form while e-filing or filing ITR in paper form. You must make sure to choose the right ITR form before filing one. Choosing the wrong ITR form will make the ITR defective and may even lead it to be treated as an invalid return. But, If you have filed an incorrect return within the due date, you have the option of revising the return.
As per the rule pertaining to Defective Return Notice u/s 139(9), you will get a period of 15 days from the date of receiving the notice to sort out the defects in your return.
However, if you fail to revise it within 15 days, you can also ask for an extension by writing to your concerned local Assessing Officer.
In case the assessee fails to respond within the allotted time for notices issued under section 139(9) i.e 15 days, then the assessing officer may treat your return as invalid. This means the Income-Tax Department will consider it as if you’ve not filed the return for the year that may result in you losing out on some of your exemptions and deductions since your return is treated as not filed. You may also find yourself paying hefty penalties for failure to file your return on time.
If the belated return is filed in a wrong form
In the cases where the original return which has been filed in an incorrect form is a belated one, the solution is to approach the department through the Commissioner Income Tax for permission to file a delayed revised return under section 119 of the Income Tax Act
In case of any adverse order, the Commissioner may also exercise his discretionary power u/s 264 of the Income Tax Act.
It is, however, sometimes possible that in a few cases the return filed in the wrong form would be treated as valid as the return may be structurally fine. But, the person may still face penalties for wrong disclosures for eg. if a person having salary income has done ITR filing using the ITR-1 form. The person may be having foreign assets which can’t be disclosed in this form. In such a case, the person can face penal action for non-reporting of foreign assets
Checklist while filing revised returns
➜ The revised ITR filing must be done online just like in the case of original returns. The difference is you must clearly select the option (Revised u/s 139-5) while filing revised returns. Further, you also need to provide details like the acknowledgement number of the original returns and the original GST return filing date for the audit trail.
➜ It should be noted that there is no limit to the number of times you can file revised returns subject to the time stipulations mentioned.
➜ Like in the case of original returns, the revised returns also need to be verified by any of the approved methods like e-signature, Aadhar OTP, EVC or physical verification.
➜ You should keep in mind that your returns cannot be revised. once the scrutiny of assessment is completed u/s 143(3).