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April 3, 2021

What happens when you forgot to file IT returns by 31st March 2021?

by Mahesh Mara in Income Tax

What happens when you forgot to file returns by 31st March 2021?

The deadline to file income tax return (ITR) for this financial year (FY 2019-20) was extended twice first from July 31st to November 30th 2020 and then to December 31st, 2020 to January 10th 2021. In case the assessee fails to file the return on or before due date than they can file the belated return on or before 31st March of the Financial year.

In this article we will discuss what will happen in case for some reason assessee still do not manage to file ITR before the deadline i.e. on or before 31st March 2021.

Consequences of not filing ITR by 31st March 2021:

The following are the consequences of not filing Income tax return by 31st March 2021:

1. Notice of non filing of ITR under section 142(1)

Where the assessee has made high value transaction during the financial year and the same has not been disclosed by the assessee by filing ITR or the assessee has not filed Income tax return even though he was liable for filing Income Tax return, than assessee may get a non filer notice under section 142(1) of the Income Tax Act from the Assessing officer which will direct the assessee for filing the return of Income.

You cannot file your Income Tax Returns for FY 2019-20 or any previous years, unless you receive notice from income tax department

2. Notice under Best Judgment assessement under section 144

Where the assessee has made high value transaction during the financial year and the same has not been disclosed by the assessee by not filing ITR or in any other case has failed to disclose the same in the Income tax return, then the assessing officer will compute the income on best judgement basis i.e. compute income by considering 26 AS statement, Financial transaction made by assessee through his PAN etc and calculate the tax accordingly. The tax determined is liable for payment by the assessee and the same is communicated to the assessee by furnishing a notice under section 144 and assessee is liable for payment of such demand raised by the department.

3. Failure to claim of Refund of Taxes

In case the assesse’s tax payable is less than the TDS already deducted, than assessee can claim the refund of such excess TDS by filing your Income Tax Return. Thus taxpayer must file your Income Tax Return in order to claim the refund of TDS.

4. No Carry forward of losses

Where the assessee does not furnish the Income tax return than he will not be able to carry forward losses incurred during the financial year. For that he needs to file as per due date of original return, which is mostly 31 July. And for FY 2021-22 it is 31 July 2021 and or FY 2019-20 it was 10 January 2021.

5. Penalty for under reporting of Income under section 270A

Under reporting means assessee is failing to report the income either wholly or partly. As per section 270A where the assessee is under reporting his income than he is liable for a penalty of 50% of the tax determined on the underreported income. Thus in case the assessee has not filed the return and has taxable income than the assessee may end up paying penalty on underreported income. Thus, where no return of income is furnished and later the assessee are assessed at income higher than maximum amount not chargeable to tax than they may end up paying a heavy penalty.

6. Prosecution for failure to furnish return of income under section 276CC

Where the assessee wilfully fails to furnish in due time the return of income which he is required to furnish on or before due date or by notice given under section 142(1) i.e. Non filer notice or section 148 i.e. Scrutiny notice or section 153A i.e. Search cases, then the assessee shall be punishable—

(i)  in a case where the amount of tax, which would have been evaded if the failure had not been discovered, exceeds twenty-five hundred thousand rupees, with rigorous imprisonment for a term which shall not be less than six months but which may extend to seven years and with fine;

(ii)  in any other case, with imprisonment for a term which shall not be less than three months but which may extend to two years and with fine.

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