FACULTY OF COMMERCE

2024 - 25

SEMESTER 5
SPECIALIZATION:
TAXATION, FINANCE & ECONOMICS
SUBJECT:
ADVANCED TAX LAWS
UNIT: 3 TAX MANAGEMENT, RETURN AND
ASSESSMENT PROCEDURE

COMPILED BY
DR. BHAVIN BHATT CA DR. MALA DANI
STUDY MATERIAL FOR REFERENCE
 GLS UNIVERSITY
FACULTY OF COMMERCE
SEMESTER-5
SPECIALIZATION:
TAXATION, FINANCE & ECONOMICS
SUBJECT: ADVANCED TAX LAWS
UNIT: 3 TAX MANAGEMENT, RETURN AND ASSESSMENT PROCEDURE

SR.NO. TOPIC
1. Introduction To Tax Planning, Tax Avoidance,
Tax Evasion, Tax Management with Differences
2. Return of Income
3. Assessment Procedure
4. Interest & Fees
5. Survey, Search and Seizure

6. Collection, Recovery and Refund of Tax

7. Short Questions
8. Long Questions
9. Multiple Choice Questions

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[1] INTRODUCTION TO TAX PLANNING, TAX AVOIDANCE, TAX
EVASION, TAX MANAGEMENT:
TAX PLANNING
Tax planning is concerned with an arrangement of one’s financial and tax matters in a
way so as to reduce or avoid the tax burden without violation of law of the land. Such
planning is legitimated, provided it is within the provisions of law. Tax reduction or
avoidance through proper planning is not illegal, what constitutes a crime is tax
evasion by resorting to dubious methods.
Tax planning lies in taking maximum advantage of the exemption, deductions,
rebates, reliefs etc. by the tax payer so as to achieve his goals of tax reduction or
avoidance. One can and is entitled to arrange his affairs as not to attract taxes imposed
by the state. Tax planning is an important arrangement of tax management. Following
are the main points in the concept of tax planning and management for your
consideration.
(1) Compliance of tax laws by minimizing tax incidence.
(2) Taking advantage of tax concession.
(3) Keeping the incidence of tax or paying zero tax by planning location,
nature of business, form of business organization and availing maximum
advantage of various exemptions , deductions etc.
(4) Avoiding penalties and prosecutions.
(5) Creating a cell n the organization which is entrusted with the job of tax
planning.
(6) Maintenance of tax records.
Importance of Tax Planning:
1. Reduction in tax liability:
The first and foremost unction of tax planning is reduction in tax liability and tax
planning helps the tax payer to reduce his tax liability by enabling him to claim the
various exemptions and all. Since tax constitutes cash outflows therefore tax planning
helps tax payer to make savings and to feel a lesser pinch of taxation.
2. Minimization of litigation:
Taxation laws being so complicated and cumbersome have always been a cause of
litigation. By resorting to tax planning a tax payer can avoid litigation and also save a
considerable amount of money and time which otherwise get wasted in litigation
cases.
3. Healthy growth of nation:
As we know that tax revenues constitute a major portion of government revenues.
Any effort by the government to provide deduction, exemption etc. to tax payer leads
to the fall n the revenue of the government. But in spite of this government
deliberately provides such exemptions to the tax payers. As most of the times these
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deductions or exemptions are for the socio-economic development of the economy of
the country. For example deduction for investment in Infrastructure bonds.
4. Helps in the capital formation:
Tax Planning helps a lot in capital formation of a nation. Most of the times tax laws
encourage tax payers to invest money in government instruments. Many tax benefits
can be availed by investing money in the government owned undertakings or by
depositing money in the state sponsored saving schemes. For example deduction for
Investment in NSC’s.
5. A source of working capital:
As we know cash balance is the main constituent of working capital and is regarded
as life blood of business. It is required for meeting day to day expenses purchasing
assets etc. Effective tax planning helps in conserving this important constituent of
working capital. In the absence of proper tax planning much of the cash will go out of
business thus leaving lesser cash for other important purposes.
6. Other Implications:
Boast to capital markets, cost effectiveness, employment generation etc.
TAX AVOIDANCE
In the words of Justice Chinnapa Reddy, “Tax Avoidance is an act of dodging tax
authorities without breaking the law”
The Institution of Taxation in U.K. has defined Tax avoidance as:
-the transaction that are designed to avoid or reduce the liability of tax or
-the transaction that are brought into existence solely for tax avoidance and not to
achieve a commercial purpose and
-the transaction that are clearly outside the purview of the intentions of the law
makers.
Thus tax avoidance is an attempt to manage financial affairs by using colorable
devices with the intention of reducing the tax liability. Many a time tax avoidance
involves an attempt to reduce tax burden by taking advantage of certain loopholes or
weaknesses in tax laws.
In India before the decision of Supreme Court in McDowell & Co. Ltdvs. CTO, Tax
avoidance was regarded as a lawful act. But after the pronouncement of the case it
was held that tax avoidance is illegal because of following reasons:
(1) There is substantial loss of public revenue required for the economic
development of the nation
(2) It Results in the creation of black money economy which results into inflation
(3) It results into lot of litigation which results into huge amount of tax arrears
busy courts and wastage of time and money
(4) It results into injustice and inequality caused by the tax avoidance for the
honest tax payers

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 (5) It results into an unethical practice of transferring the incidence of tax liability
from the tax dodgers to the honest tax payers who have to pay tax at higher
rates.
Till now the rules settled under above case act as guiding principle for unpinning
cooked tax planning.
TAX EVASION
It is an illegal method of saving tax and makes the person liable to penalties and
prosecution. “Tax evasion” refers to an exercise by a tax payer for not paying the tax
legally becoming due. It is the general term for efforts by assesses to evade taxes by
illegal means. Tax evasion usually involves assesses deliberately misrepresenting or
concealing the true state of their economic affairs to the tax authorities to reduce their
tax liability and includes dishonest tax reporting. Tax evasion typically involves
failing to report income or improperly claiming deductions that are not allowed or
authorized. The methods of tax evasion are:-
(1) Under disclosure of income
(2) Inflating the expenses and thus reducing the real income
(3) Manipulation of accounts to reduce the real income
(4) Violation of rules and regulations of laws with the intention to save the tax
(5) Benami transactions
Although tax evasion leads to lower cash outflow on account of taxes yet such saving
of money may not be real and absolute. In fact tax evaded remains liability of the
evader. If trapped he will have pay the tax evaded along with penalties.
Difference between Tax Planning and Tax Evasion:
Tax Planning Tax Evasion
1) It is an exercise aimed at reducing tax 1) It is an exercise of reducing tax
liability by availing maximum benefits of liability either (a) by showing lesser
various deductions, exemptions, rebates, income than the actual or (b) by hiding
reliefs etc. provided under tax laws. the very source of any income.
2) It is completely within the framework 2) It is willful disobedience of law and
of law. involves an element of deceit.
3) It is legal and accepted by Judiciary. 3) It is illegal and is prohibited.
4) It is based on principle of disclosure. 4) It involves hiding the facts regarding
incomes and expenditures.
5) It is deliberate creation of law for 5) It is a white collar crime and is seen as
wealth creation trough encouraged an offence.
savings and investments.
6) Tax planning is an honest effort of the 6) It requires a dishonest nature and
tax payer to benefit him and economy as courage to violate the law.
a whole.
7) Tax Planning lead to socio economic 7) It leads to generation and accumulation
development of the economy. of black money which is great hurdle in
the progress of an economy.

Difference between Tax Planning and Tax Avoidance:

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Tax Planning Tax Avoidance
1) It is an exercise of reducing tax 1) It is an exercise of reducing tax
liability by staying within the four liability by exploiting some loopholes of
corners of law. the law.
2) It involves fair obedience of law with 2) It involves foul play with law.
an honest attitude.
3) It is legal and acceptable by judiciary 3) It is unethical, illegal and is prohibited.
4) Transactions are real and natural. 4) transactions are sham and fabricated
artificially
5) It is dependable. 5) It is not dependable because as and
when the ingenuity is exposed tax avoider
has to pay tax retrospectively.

Difference between Tax Avoidance and Tax Evasion:

Tax Avoidance Tax Evasion
1) Act of minimizing tax liability by 1) An act of bringing down the tax
locating some weaknesses of law. liability by disclosing less income than
the actual or by concealing the source of
income or by claiming deductions that are
not allowed otherwise.
2) It may be within the framework of law 2) The evasion is gross violation and
but it is against the basic intent of the disrespect of law.
legislative provisions.
3) It can be curbed by introducing anti 3) It can be curbed by implementing the
avoidance provisions or clubbing law effectively.
provisions.

Methods of Tax Management

The following are the methods of Tax Management:

1. Keep Detailed Records: Record all your income, expenses, and deductions
accurately. This helps when filing taxes and getting ready for audits.
2. File Taxes on Time: Submit your tax returns by the deadline to avoid
penalties and extra charges.
3. Stay Updated: Stay informed about tax laws and rules to comply with them
and benefit from new tax breaks.
4. Use Tax Software: Make tax preparation easier and error-free by using
reliable tax software.
5. Get Expert Advice: Seek guidance from tax professionals, especially for
complex situations and planning.
6. Manage Cash Flow: Plan your finances well to pay taxes on time, preventing
last-minute stress.
7. Know Deductions and Credits: Understand what deductions and credits
you’re eligible for to lower your tax bill.

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 8. Review Tax Strategy: Regularly review and adjust your tax strategies to
match your financial goals.
9. Prepare for Audits: Be ready for audits by keeping proper documentation for
all claims and deductions.
10. Follow Ethical Practices: Always report taxes honestly and avoid aggressive
strategies that could land you in legal trouble.

Tax Planning and Tax Management Differences

Difference Between Tax Planning and Tax Management

Aspect Tax Planning Tax Management

A way to lower
Definition Making sure you follow tax laws.
taxes legally.

Saving on taxes in Dealing with current tax needs and

Focus
the long term. records.

Planning for the

Timeline Covers past, present, and future.
future.

Investing smartly,
Strategies Accurate filing and record-keeping.
using deductions.

Cut taxes and

Objective manage finances Stay legal and penalty-free.
better.

Looking ahead to
Approach Reacting to current tax laws.
save on taxes.

Investments, life
Tools Used Tax software, paperwork, records.
insurance, etc.

Importance for Key for personal

Ensures financial safety.
Individuals wealth growth.

Importance for Essential for long-

Keeps businesses legal and reputable.
Businesses term planning.

More savings, better

Outcome Avoids trouble with the law.
finances.

[2] RETURN OF INCOME

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 What is Income Tax Return?
Income Tax Return (ITR) is a form that an individual submits to the Income Tax
Department of India to file information about his income and taxes payable during
that year. Information filed in an ITR should be applicable for a particular financial
year between 1st April to 31st March of the next year.
The income an assessee earns can be from sources such as salary, profit in business,
sale of house or property, dividend or capital gains, and interest received among
others. If taxes are paid in excess during a year, one gets a refund by the Income Tax
Department.
Is Filing ITR Compulsory?
Income Tax rules dictate that if an assessee earns more than the maximum exemption
limit that is exempted from being taxed by the Government, it is mandatory to file
tax return according to the tax slabs for each year. Filing ITR post the due date
may attract a penalty and one also becomes a deterrent in getting a loan or visa
approved in the future.
Who is Required to File ITR?
FILING OF RETURN OF INCOME

(1) Every year, a person earns income and if his Gross total income exceeds the basic
exemption limit then he pays tax on that income too.
The next task which he has to do, is to file his return of income on or before the
specified due dates.

In the case of the following persons, the Return of Income has to be Compulsorily
filed u/s 139 (1) of the Income Tax Act, 1961: -
✓ Companies and Firms (whether earning profits or incurring loss or having Nil
Income);
✓ A person, being a resident other than Not ordinarily Resident, having any Asset
located outside India or signing authority in any account located outside India,
whether or not having income chargeable to tax (Beneficial owner/ Beneficiary);
✓ Any other assessee (Individual/HUF/AOPs/ BOIs & Artificial judicial persons)
whose GROSS TOTAL INCOME exceeds the basic exemption limit. (It means that in
this case, if GTI does not exceed the basic exemption limit then Return Filing shall
not be required.).
✓ Every person whose income exceeds basic exemption limit without giving the
effect of provisions of chapter VI-A or section 54/54B/54D/54EC or 54F
✓ Any person entering into high-value transactions during the previous year:
• Deposited 1 crore or more in current accounts of a banking company or a co-
operative bank.
• Expenditure of 2 lakhs or more for travel to a foreign country either for own or
for other persons.
• Expenditure of 1 lakh or more towards electricity consumption
• Fulfils other conditions as prescribed

RETURN OF LOSS [SECTION 139(3)]

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1. This section requires the assessee to file a return of loss in the same manner as in
the case of return of income within the time allowed u/s 139(1).
-Section 80 requires mandatory filing of return of loss u/s 139(3) on
or before the due date specified u/s 139(1) for carry forward of the
following losses -
a. Business loss u/s 72(1)
b. Speculation business loss u/s 73(2)
c. Loss from specified business u/s 73A(2) [In case assesse has exercised the
option of shifting out of the default tax regime provided under section
115BAC(1A)]
d. Loss under the head “Capital Gains” u/s 74(1)
e. Loss from the activity of owning and maintaining race horses u/s 74A(3)

1. Consequently, section 139(3) requires filing of return of loss mandatorily

within the time allowed u/s 139(1) for claiming carry forward of losses
mentioned in (2) above.
2. However, loss under the head “Income from house property” u/s 71B and
unabsorbed depreciation u/s 32 can be carried forward for set-off even
though return of loss has not been filed before the due date.
3. A return of loss has to be filed by the assessee in his own interest and the
non- receipt of a notice from the Assessing Officer requiring him to file the
return cannot be a valid excuse under any circumstances for the non-filing of such
return.

BELATED RETURN [SECTION 139(4)]

Any person who has not furnished a return within the time allowed to him under
section 139(1) may furnish the return for any previous year at any time -
1.before three months prior to the end of the relevant assessment year (i.e., 31.12.2024
for P.Y. 2023-24); or
2. before the completion of the assessment, whichever is earlier.

Hence, belated return cannot be filed after 31st December of the relevant
assessment year.

REVISED RETURN [SECTION 139(5)]

If any person having furnished a return under section 139(1) or a belated return under
section 139(4), discovers any omission or any wrong statement therein, he may
furnish a revised return at any time –
1. before three months prior to the end of the relevant assessment year (i.e.,
31.12.2024 for P.Y. 2023-24); or
- before completion of assessment, whichever is earlier.
Hence, belated return cannot be filed after 31st December of the relevant assessment
year.

Illustration 1: Explain with brief reasons whether the return of income can be revised
under section 139(5) of the Income-tax Act, 1961 in the following cases:
1. Belated return filed under section 139(4).
2. Return already revised once under section 139(5).
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 3. Return of loss filed under section 139(3).
Solution:
Any person who has furnished a return under section 139(1) or 139(4)
can file a revised return at any time before three months prior to the
end of the relevant assessment year or before the completion of
assessment, whichever is earlier, if he discovers any omission or any
wrong statement in the return filed earlier. Accordingly,
1. A belated return filed under section 139(4) can be revised.

2. A return revised earlier can be revised again as the first revised return
replaces the original return. Therefore, if the assessee discovers any omission
or wrong statement in such a revised return, he can furnish a second revised
return within the prescribed time i.e. at any time before three months prior to
the end of the relevant assessment year or before the completion of
assessment, whichever is earlier. It implies that a return of income can be
revised more than once within the prescribed time.

3. A return of loss filed under section 139(3) is deemed to be return filed under
section 139(1), and therefore, can be revised under section 139(5).
Summary of Return of Income: Due Dates for filing the return of Income.
Category of Taxpayer Due Date for Tax Filing -
FY 2023-24
Individual / HUF/ AOP/ BOI 31st July 2024
(books of accounts not required to be audited)
Businesses (Requiring Audit) 31st October 2024
Businesses requiring transfer pricing reports 30th November 2024
(in case of international/specified domestic
transactions)
Revised return 31 December 2024

Belated/late return 31 December 2024

31 March 2027(2 years from

Updated return
end of the relevant AY)

Consequences of Missing the ITR Filing Deadline

Interest

If you submit your return after the deadline, you will be liable to pay interest at a rate
of 1% per month or part month on the unpaid tax amount as per Section 234A.

Late fee
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 In case of late filing, Section 234F imposes a late fee of Rs.5,000, which shall be
reduced to Rs.1,000 if your total income is below Rs.5 lakh.

Loss Adjustment

In case you have incurred losses from sources like the stock market, mutual funds,
properties, or any of your businesses, you have the option to carry them forward and
offset them against your income in the subsequent year. This provision substantially
reduces your tax liability in future years. However, you will not be allowed to carry
forward these losses if you miss filing your ITR before the deadline.

What if ITR Filing is Missed?

Belated Return

If the ITR filing due date is missed, one can file a return after the due date, called a
belated return. However, late fee and interest charges are to be paid, In that case carry
forward of losses will not be allowed for future adjustments. The last date for filing a
belated return is 31st December of the assessment year (unless extended by the
government). Therefore, for this year, one may submit the belated return by 31
December 2024 at the latest.
Which ITR to File?
There are seven different types of ITR forms for different categories of individuals and
source of income. The Income Tax Department has different forms for each taxpayer
depending on the category of income generation:
1. ITR - 1: This form is applicable only for resident individuals (not applicable to
NRIs/HUF/any other entity) having total income up to Rs 50 lacs and who has income
under the following heads:
a) Income from Salary/Pension; or
b) Income from One house property
c) Income from Other Sources
2. ITR - 2: ITR-2 form applies to all individual / HUF who are not eligible to file ITR- 1
and who are having income from any source other than income from Business or
Profession.
3. ITR - 3: This form is applicable for individuals and HUF who have income from
profits and gains from business or profession.
4. ITR - 4: This form applies to all resident individual / HUF / Firms (other than LLP)
having total income up to Rs 50 lacs & having income under the following heads:
a) Income from business or profession computed on presumptive basis under section
44AD or 44AE or 44ADA
b) Income from Salary/Pension
c) Income from One House Property
d) Income from other sources
5. ITR - 5: ITR-5 form applies to persons other than Individuals, HUF, Companies &
persons filing form ITR 7. Ideally, this form covers all partnership firms, LLP, AOP, BOI,

10
Artificial Judicial Person, Co-Operative Societies, and Local Authorities. The form is also
used by investment funds, business trusts, and estates of the deceased and insolvents.
6. ITR - 6: This form applies to all Companies other than companies claiming exemption
under section 11. Section 11 pertains to charitable trusts / religious trusts for which ITR 7
is applicable.
7. ITR - 7: This form applies to persons including companies required to furnish return
u/s 139(4A), 139(4B), 139(4C) or 139(4D) or 139(4E) or 139(4F). This includes religious
& charitable trusts, political parties, scientific research associations, universities &
colleges.

[3] INTEREST FOR DEFAULT IN FURNISHING RETURN OF INCOME

[SECTION 234A]

1. Interest under section 234A is attracted for failure to file a return of income on
or before the due date under section 139(1) i.e., interest is payable where an assessee
furnishes the return of income after the due date or does not furnish the return of
income.

2. Simple interest @1% per month or part of the month is payable for the period
commencing from the date immediately following the due date and ending on the
following dates -

Circumstances Ending on the following dates

Where the return is furnishedafter the date of furnishing of the return

due date

Where no return is furnished the date of completion of assessment

3. The interest has to be calculated on the amount of tax on total income as

determined under section 143(1) and where a regular assessment is made, on the
amount of the tax on the total income determined under regular assessment, as
reduced by the advance tax paid and any tax deducted or collected at source, any
relief of tax allowed under section 89 and any tax credit allowed to be set-off in
accordance with section 115JD, in case the assessee has exercised the option of
shifting out of the default tax regime provided under section 115BAC(1A).
4. No interest under section 234A shall be charged on self-assessment tax paid by
the assessee on or before the due date of filing of return.
5. The interest payable under section 234A shall be reduced by the interest, if any,
paid on self-assessment under section 140A towards interest chargeable under section
234A.
6. Tax on total income as determined under section 143(1) would not include the
additional income-tax, if any, payable under section 140B or section 143.

[4] SELF-ASSESSMENT [SECTION 140A]

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1. Payment of tax, interest and fee before furnishing return of income [Section
140A(1)]
Where any tax is payable on the basis of any return required to be furnished under,
inter alia, section 139, after taking into account -
(1) the amount of tax, already paid, under any provision of the Income-tax
Act, 1961
(i) the tax deducted or collected at source
(ii) any relief of tax claimed under section 89
(iii) any tax credit claimed to set-off in accordance with the provisions of
section 115JD, in case the assessee has exercised the option of shifting out
of the default tax regime provided under section 115BAC(1A); and
(iv) any tax or interest payable as per the provisions of section 191(2),

the assessee shall be liable to pay such tax together with interest and fee payable
under any provision of this Act for any delay in furnishing the return or any default
or delay in payment of advance tax before furnishing the return. The return has to
be accompanied by the proof of payment of suchtax, interest and fee.

2. Order of adjustment of amount paid by the assessee

Where the amount paid by the assessee under section 140A(1) falls short of the
aggregate of the tax, interest and fee as aforesaid, the amount so paid shall first be
adjusted towards the fee payable and thereafter towards interest and the balance, if
any, shall be adjusted towards the tax payable.

(1) Interest under section 234A [Section 140A(1A)]

For the above purpose, interest payable under section 234A shall be computed on the
amount of tax on the total income as declared in the return, as reduced by the amount
of-
(i) advance tax paid, if any;
(ii) any tax deducted or collected at source;
(iii) any relief of tax claimed under section 89
(iv) any tax credit claimed to be set-off in accordance with the provisions of
section 115JD, in case the assessee has exercised the option of shifting out of
the default tax regime provided under section 115BAC(1A).

(2) Interest under section 234B [Section 140A(1B)]

Interest payable under section 234B shall be computed on the assessed tax or on the
amount by which the advance tax paid falls short of the assessed tax.
For this purpose “assessed tax” means the tax on total income declared in the return
as reduced by the amount of
-tax deducted or collected at source on any income which forms part of
the total income;
-any relief of tax claimed under section 89
-any tax credit claimed to be set-off in accordance with the
provisions of section 115JD, in case the assessee has exercised the
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option of shifting out of the default tax regime provided under section
115BAC(1A).

(3) Consequence of failure to pay tax, interest or fee [Section 140A(3)]

If any assessee fails to pay the whole or any part of such of tax or interest or fee, he
shall be deemed to be an assessee in default in respect of such tax or interest or fee
remaining unpaid and all the provisions of this Act shall apply accordingly.

UPDATED RETURN OF INCOME [SECTION 139(8A)]

(1) Option to furnish updated return - Any person may furnish an updated return
of his income or the income of any other person in respect of which he is
assessable, for the previous year relevant to the assessment year at any time within 24
months from the end of the relevant assessment year.
(2) This is irrespective of whether or not he has furnished a return under section
139(1) or belated return under section 139(4) or revised return under section 139(5)
for that assessment year.
For example, an updated return for A.Y. 2023-24 can be filed till 31.3.2026.
(3) Non applicability of the provisions of updated return – The provisions of
updated return would not apply, if the updated return of such person for that
assessment year –
(i) is a loss return; or
(ii) has the effect of decreasing the total tax liability determined on the
basis of return furnished under section 139(1) or section 139(4) or section
139(5); or
(iii) results in refund or increases the refund due on the basis of return
furnished under section 139(1) or section 139(4) or section 139(5).

(4) Updated return can be filed if original return is a loss return and updated
return is a return of income - If any person has a loss in any previous year and has
furnished a return of loss on or before the due date of filing return of income under
section 139(1), he shall be allowed to furnish an updated return if such updated return
is a return of income.
For example if Mr. X has furnished his return of loss for A.Y. 2023-24 on 31.5.2023
consisting of ` 5,00,000 as business loss, he can furnish an updated return for A.Y.
2023-24 upto 31.3.2026 if such updated return is a return of income.
(5) Updated return to be furnished for subsequent previous year in case (3)
above - If the loss or any part thereof carried forward under Chapter VI or unabsorbed
depreciation carried forward under section 32(2) or tax credit carried forward under
section 115JD is to be reduced for any subsequent previous year as a result of
furnishing of updated return of income for a previous year, an updated return is
required to be furnished for each such subsequent previous year [In case assessee has
exercised the option of shifting out of the default tax regime provided under
section 115BAC(1A)].

(6) Circumstances in which updated return cannot be furnished: No updated

return shall be furnished in the following scenarios –

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 S.No. Scenarios Updated return
cannot be furnished

(i) Where a person has furnished an updated return

under this sub-section for the relevant assessment
year.

(ii) Where any proceeding for assessment,

reassessment, recomputation, or revision of for such relevant
income is pending or has been completed for the Assessment Year.
relevant assessment year in his case.
Updated return for the relevant assessment year cannot be furnished by such person
or belongs to such class of persons, as may be notified by the Board in this regard.

TAX ON UPDATED RETURN [SECTION 140B]

(1) Payment of tax, additional tax, interest and fee before furnishing updated
return of income

(a) In a case where no return is furnished earlier [Section 140B(1)]

(i) Tax to be paid along with interest and fee before furnishing of updating
return:
Where no return of income under section 139(1) or 139(4) has been furnished by an
assessee and tax is payable, on the basis of updated return to be furnished by such
assessee under section 139(8A), the assessee would be liable to pay such tax
together with interest and fee payable under any provision of this Act for any delay in
furnishing the return or any default or delay in payment of advance tax, along with the
payment of additional tax computed under section 140B(3), before furnishing the
return.
The updated return shall be accompanied by proof of payment of such tax,
additional income-tax, interest and fee.
(ii) Manner of computation of tax payable on the basis of updated return
The tax payable is to be computed after taking into account thefollowing -
(i) the amount of tax, if any, already paid, as advance tax;
(ii) the tax deducted or collected at source;
(iii) any relief of tax claimed under section 89; and
(iv) any tax credit claimed to set-off in accordance with the provisions of section
115JD, in case the assessee has exercised the option of shifting out of the default
tax regime provided under section 115BAC(1A).

(iii) Interest under section 234A if no earlier return has been furnished

In a case, where no earlier return has been furnished, the interest payable under
section 234A has to be computed on the amount of the tax on the total income as
declared in the updated return under section 139(8A), in accordance with the
provisions of section 140A(1A).

(b) In a case where return is furnished earlier [Section 140B(2)]

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(I) Tax to be paid along with interest before furnishing updated return:
Where, return of income under section 139(1) or 139(4) or 139(5) has been furnished
by an assessee and tax is payable, on the basis of updated return to be furnished by
such assessee under section 139(8A), the assessee would be liable to pay such tax
together with interest payable under any provision of this Act for any default or delay
in payment of advance tax, along with the payment of additional tax computed under
section 140B(3) (as reduced by the amount of interest paid under the provisions
of this Act in the earlier return) before furnishing the return.
The updated return shall be accompanied by proof of payment of such tax, additional
income-tax and interest.

(I) Manner of computation of tax payable on the basis of updated

return:

The tax payable has to be computed after taking into account the
following -
(i) the amount of relief or tax referred to in section 140A(1), the credit for which has
been taken in the earlier return;
(ii) the tax deducted or collected at source, in accordance with the provisions of
Chapter XVII-B, on any income which is subject to such deduction or collection and
which is taken into account in computing total income and which has not been
included in the earlier return;
(iii) any tax credit claimed, to set-off in accordance with the provisions of section
115JD, which has not been claimed in the earlier return, in case the assessee has
exercised the option of shifting out of the default tax regime provided under section
115BAC(1A); and
the aforesaid tax would be increased by the amount of refund, if any, issued in respect
of such earlier return.

(II) Interest under section 234B where earlier return has been furnished [Section
140B(4)]

In a case where an earlier return has been furnished, interest payable under section
234B has to be computed on the assessed tax.
“Assessed tax” means the tax on the total income as declared in the updated return to
be furnished under section 139(8A), after taking into account the following:
(i) the amount of relief or tax referred to in section 140A(1), the credit for which has
been taken in the earlier return, if any;
(ii) the tax deducted or collected at source, in accordance with the provisions of
Chapter XVII-B, on any income which is subject to such deduction or collection and
which is taken into account in computing total income and which has not been
included in the earlier return;
(iii) any tax credit claimed, to set-off in accordance with the provisions of section
115JD, which has not been claimed in the earlier return, in case the assessee has
exercised the option of shifting out of the default tax regime provided under section
115BAC(1A); and
the aforesaid tax would be increased by the amount of refund, if any, issued in respect
of such earlier return.

15
(III)Interest under section 234C if earlier return has been furnished

Interest payable under section 234C, where an earlier return has been furnished, has to
be computed after taking into account the total income furnished in the updated
return as returned income.
(1) Additional income-tax payable at the time of updated return [Section 140B(3)]
The additional income-tax payable at the time of furnishing the updated return under
section 139(8A) would be –

S.No. Time of furnishing updated return Additional Income-

tax Payable

(i) If such return is furnished after expiry 25% of aggregate of

of the time available under section tax and interest
139(4) or 139(5) of the assessment year payable, as determined
and before completion of the period of in (1) above
12 months from the end of the relevant
assessment year;

(ii) If such return is furnished after the 50% of aggregate of

expiry of 12 months from the end of the tax and interest
relevant assessment year but before payable, as determined
completion of the period of 24 months in (1) above
from the end of the relevant assessment
year.

DEFECTIVE RETURN [SECTION 139(9)]

(1) Under this section, the Assessing Officer has the power to call upon the assessee
to rectify a defective return.

(1) Where the Assessing Officer considers that the return of income furnished by the
assessee is defective, he may intimate the defect to the assessee and give him an
opportunity to rectify the defect within 15 days from the date of intimation. The
Assessing Officer has the discretion to extend the time period beyond 15 days, on an
application made by the assessee in this behalf. The period of 15 days will have to be
reckoned from the date on which thecommunication is served upon the assessee.
(2) If the defect is not rectified within the period of 15 days or such further extended
period, the return would be treated as an invalid return. The consequential effect
would be the same as if the assessee had failed to furnish the return.
(3) Where, however, the assessee rectifies the defect after the expiry of 15 days or
the further extended period, but before the assessment is made, the Assessing Officer
may condone the delay and treat the return as a valid return.
(4) A return of income would be regarded as defective unless the annexures,
statements and columns therein relating to computation of income chargeable under
each head of income, gross total income and total income have been duly filled in.

16
(5) A return of income u/s 139 would also be regarded as defective if it is not
accompanied by proof of payment of taxes, whether by way of advance tax or
self-assessment tax.

FEE FOR DEFAULT IN FURNISHING RETURN OF INCOME [SECTION

234F]
Where a person, who is required to furnish a return of income under section 139, fails
to do so within the prescribed time limit under section 139(1), he shall pay, by way of
fee, a sum of Rs. 5,000.
However, if the total income of the person does not exceed Rs. 5 lakhs, the fees
payable shall not exceed Rs. 1,000.

Survey, Search and Seizure

1. Search and Survey

Power to carry out search under section 132 and survey under section 133A are
important tools in the armoury of the Income–tax department for detecting and
preventing tax evasion. Though the need to have such tools cannot be grudged, the
department has to use it sparingly and in deserving cases and after complying with
necessary guidelines and safeguards. A search is violation of personal privacy and
rights of a citizen and its use should only be in rarest of rare cases.

2. Search and Seizure u/s. 132

Meaning

‘Search’ means a thorough inspection of the building, place, vehicle, vessel, aircraft
and of the person.

‘Seizure’ means taking possession under the authority of law.

Powers in exercise of search

The Income-tax Act gives very wide powers to an authorised officer to carry out the
search and also to seize documents and unaccounted assets. The authorised officer has
the power to:

1. Enter and search any building, place, etc. where he has reason to suspect that
books of account, other documents, money, bullion, jewellery or other
valuable article or thing representing undisclosed income is kept;
2. Break open the locks, where the keys thereof are not available;
3. Carry out personal search of the person who is suspected to have secreted
some item as mentioned in a) above;
4. Seize the items as mentioned in a) above;
5. Place marks of identification and take extracts or copies of the books of
account and other documents; and
6. Make a note or inventory of the valuables found during the search.
17
The authorised officer is also permitted to pass orders placing prohibition on the
person in possession or control of the valuable article or thing from removing, parting
with or otherwise dealing with such article or thing without prior permission.
The authorised officer also has the right to demand the services of any Police officer
or any officer of the Central Government.

The authorised officer cannot seize stock-in-trade of a business and he can only make
a note of inventory of such s tock-in-trade. Irrespective of nature of business and
stock held for such business whether it is jewellery, bullion or any other valuable
article or thing, if such material is held by person searched as stock-in-trade of his
business, the same cannot be seized. Also, bar on seizure applies irrespective of
whether the person searched is able to explain the source of acquisition of such stock;
in common parlance, whether stock is disclosed or undisclosed is immaterial and the
same cannot be seized in any circumstance. However, restriction on seizure of stock-
in-trade applies only to valuables and not cash. Unaccounted cash, even if forming
part of stock-in-trade of business for an assessee, say carrying on money lending
business, can be seized, if other conditions are satisfied.

2.3 Circumstances in which search can be carried out

The powers of search can be exercised when the authorised officer has reason to
believe that:

1. Any person has omitted or failed to produce books of account or documents as

required by any summons or notice issued,
2. Any person to whom, when so summoned to produce the documents, etc., will
not or would not produce books of account or documents,
3. Any person is in possession of money, bullion, jewellery or other valuable
article or thing representing, income or property which has not been disclosed
or would not be disclosed for purposes of the Income-tax Act.

Who can authorise search

The authorisation to carry out the search can be given by the Principal Director
General, Director General, Principal Director of Income Tax, Director of Income Tax,
Principal Chief Commissioner of Income Tax, Chief Commissioner of Income Tax
and Commissioner of Income Tax only.

Authority who can execute and carry out search

However, the search warrant can be executed by any Additional Director or

Additional Commissioner, Joint Director, Joint Commissioner, Assistant Director or
Deputy Director, Assistant Commissioner or Deputy Commissioner or Income Tax
Officer and they can be authorised to carry out actual search and seizure.

Power of Survey – Section 133A

1 Introduction

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The powers under provisions of survey, though not very wide as powers of search, are
wide enough to effectively detect evasion of tax on income earned. The preconditions
which need to be satisfied by the Income Tax Authority before exercising the power
of survey are limited.

2 Extent of powers of survey

An Income Tax Authority can exercise following powers during survey:

1. To inspect books of account and other documents,

2. To place marks of identification on books of account or documents examined,
3. To make extracts or copies of books of account or documents,
4. To impound books of account or other documents. However, the same cannot
be retained beyond ten working days without prior approval of Chief
Commissioner of Income Tax or Director General.

Though the survey party can visit during survey only a place of business, but if the
party surveyed states that any books or other things relating to business are kept at a
place other than place of business, then power to visit and survey such place is also
available to the officers carrying out survey.

- An Income tax authority can exercise the power of survey to verify that tax has been
deducted at source or collected at source in accordance with the provisions of the act.

Income Tax Authority can enter after sunrise and before sunset any office or any other
place were business and profession is carried on were books of account or documents
are kept to inspect such books of account or other documents and to furnish such
information as may require in relation to such matter. However under such survey, no
action can be taken to impound and retain any books of account or other document or
to make inventory of cash, stock or other valuable article or thing.

-Whether books, cash, valuables, etc. can be seized or impounded during survey

By Finance Act, 2002, law has been amended to empower the Income Tax Authority
to impound and retain in his custody books of account or other documents inspected
by him during survey, after recording his reasons for doing so. However the power to
impound is restricted to only books and documents and does not extend to cash,
valuables and other assets found. Further, books of account and documents so
impounded cannot be retained beyond fifteen (exclusive of holidays) working days
without obtaining prior approval of the Principal Chief Commissioner of Income Tax
or Chief Commissioner of Income Tax or Principal Director General or Director
General or Principal Commissioner or Commissioner or the Principal Director or
Director.

3. Authority who can carry out survey

19
An Assessing Officer or a Tax Recovery Officer or an Inspector of Income Tax or
Assistant Director or an Deputy Director cannot carry out survey without obtaining
prior approval from the Joint Commissioner or the Joint Director.

4. It is important to note that neither under the provisions of search nor of survey,
there is power to arrest the assessee for offence, if any, of concealment of income.

5. Recording of statements u/ss. 131 and 132(4)

The authorised officer has the right to examine on oath any person who is found to be
in possession of books of account, etc. or valuable article or thing. A statement on
oath may be used as evidence in any proceedings under the Act.

Recently a circular has been issued directing officers carrying out search to desist
from recording confessional statements offering income in such statements. (F. No.
286/2/2003-IT [Inv] dated. 10-3-2003)

6. Charter of Rights and Duties of Persons searched

6.1 Rights of the person searched

 To see the warrant of authorisation duly signed and sealed by the issuing
authority.
 To verify the identity of each member of the search party before the start of
the search and on conclusion of the search.
 To insist on personal search of ladies being taken only by a lady, with strict
regard to decency.
 To have at least two respectable and independent residents of the locality as
witnesses.
 A lady occupying an apartment being searched has a right to withdraw before
the search party enters, if, according to custom, she does not appear in public.
 To call a medical practitioner in case of emergency.
 To allow the children to go to school, after checking their bags.
 To have the facility of having meals, etc., at the normal time.
 To inspect the seals placed on various receptacles, sealed in course of search
and subsequently at the time of reopening of the seals.
 Every person who is examined under section 132(4) has a right to ensure that
the facts so stated by him have been recorded correctly.
 To have a copy of the panchanama together with all the annexures.
 To have a copy of any statement that is used against him by the Department.
 To have inspection of the seized books of account, etc., or to take extracts
therefrom in the presence of any of
the authorised officers or any other person empowered by him.
 To make an application objecting to the approval given by the Commissioner
of Income-tax for retention of books
and documents beyond 180 days from the date of the seizure.

6.2 Duties of the person searched

 To allow free and unhindered ingress into the premises.

20
  To see the warrant of authorisation and put signature on the same.
 To identify all receptacles in which assets or books of account and documents
are kept and to hand over keys to such receptacles to the authorised officer.
 To identify and explain the ownership of the assets, books of account and
documents found in the premises.
 To identify every individual in the premises and to explain their relationship to
the person being searched. He should not mislead by impersonation. If he
cheats by pretending to be some other person or knowingly substitutes one
person for another, it is an offence punishable under section 416 of the Indian
Penal Code.
 Not to allow or encourage the entry of any unauthorised person into the
premises.
 Not to remove any article from its place without notice or knowledge of the
authorised officer. If he secretes or destroys any document with the intention
of preventing the same from being produced or used as evidence before the
court or public servant, he shall be punishable with imprisonment or fine or
both, in accordance with section 204 of the Indian Penal Code.
 To answer all queries truthfully and to the best of his knowledge. He should
not allow any third party to either interfere or prompt while his statement is
being recorded by the authorised officer. In doing so, he should keep in mind
that –
 If he refuses to answer a question on a subject relevant to the search operation,
he shall be punishable with imprisonment of fine or both, under section 179 of
the Indian Penal Code.
 Being legally bound by an oath or affirmation to state the truth, if he makes a
false statement, he shall be punishable with imprisonment or fine or both
under section 181 of the Indian Penal Code.
 Similarly, if he provides evidence which is false and which he knows or
believes to be false, he is liable to be punished under section 191 of the Indian
Penal Code.
 To affix his signature on the recorded statement, inventories and the
panchanama.
 To ensure that peace is maintained throughout the duration of the search, and
to co-operate with the search party in all respects so that the search action is
concluded at the earliest and in a peaceful manner.
 Similar co-operation should be extended even after the search action is over,
so as to enable the authorised officer to complete necessary follow-up
investigations at the earliest.

Tax deducted at Source

TDS or Tax Deducted at Source is an income tax that is collected from certain
payments like rent, salary, commission, interest, professional fees, etc. The person
paying the amount should deduct TDS from such a payment.
As per the Income Tax Act, any company or a person is required to deduct tax at the
source itself if the money paid exceeds the specified limit. The person who receives a
payment also has a liability to pay tax on their income.
The payee will receive credits against the TDS payments, which they can claim
against their actual tax liability while filing the annual ITR.
21
The purpose of TDS may have been to reduce the chances of tax evasion by the
recipient of the income.
Important TDS rates for the FY 2023-24

TDS For
Nature of Threshold For
Section Individual
Payment (₹) Others
List / HUF
Payment made
192 ₹ 2,50,000 Slab Rates Slab Rates
as salaries
Early withdrawal
of EPF
192A ₹ 50,000 10% 10%
(Employee
Provident Fund)
Tax deduction at
source on
193 ₹ 10,000 10% 10%
interest earned
on securities
Distribution of
194 ₹ 5,000 10% 10%
dividends
Interest from ₹ 40,000
banks or post ₹ 50,000
194A 10% 10%
offices on (For senior
deposits citizens)
Interest from
194A sources other ₹ 5,000 10% 10%
than securities
Winnings of
lotteries, Aggregate
194B 30% 30%
puzzles, or of ₹ 10,000
games
Winnings from
194BA - 30% 30%
online Games
Winnings of
194BB ₹ 10,000 30% 30%
horse races
Payments made
to contractors or
194C ₹ 30,000 1% 2%
sub-contractors
one time
Payments made
to contractors or
194C sub-contractors ₹ 1,00,000 1% 2%
on an aggregate
basis
Commission
paid on
Not
194D insurance sales ₹ 15,000 10%
Applicable
to domestic
companies
22
 Commission
paid on
Not
194D insurance sales ₹ 15,000 5%
Applicable
to non-domestic
companies
Maturity of life
194DA ₹ 1,00,000 5% 5%
insurance policy
Payment
received from
the National
194EE ₹ 2500 10% 10%
Savings Scheme
(NSS) by
individuals
Repurchase of
units by UTI
194F (Unit Trust of No Limit 20% 20%
India) or any
mutual fund
Payments or
commission
194G ₹ 15,000 5% 5%
made on the sale
of lottery tickets
Commission or
194H ₹ 15,000 5% 5%
brokerage fees
Rent paid for
194I land, building, or ₹ 2,40,000 10% 10%
furniture
Rent paid for
194I plant and ₹ 2,40,000 2% 2%
machinery
Payment for the
transfer of
immovable
194IA ₹ 50,00,000 1% 1%
property
excluding
agricultural land
Rent payment
made by an
individual or ₹ 50,000 Not
194IB 5%
HUF not covered (per month) Applicable
under section
194I
Payments made
under a Joint
Development
194IC Agreement No Limit 10% 10%
(JDA) to
individuals or
HUF
23
 Fees paid for
professional and
194J ₹ 30,000 10% 10%
technical
services
Royalty paid for
the sale,
distribution, or
194J ₹ 30,000 2% 2%
exhibition of
cinematographic
films
Income received
from units of a
194K mutual fund, ₹ 5,000 10% 10%
such as
dividends
Compensation
payment for
194LA acquiring certain ₹ 2,50,000 10% 10%
immovable
property
Interest payment
on infrastructure Not
194LB 5% 5%
bonds to Non- Applicable
Resident Indians
Distribution of
certain income
Not
194LBA(1) by a business 10% 10%
Applicable
trust to its unit
holders
Interest payment
on rupee-
denominated
Not
194LD bonds, municipal 5% 5%
Applicable
debt security,
and government
securities
Payments made
for contracts,
brokerage,
commission, or
194M ₹ 50,00,000 5% 5%
professional fees
(excluding
sections 194C,
194H, 194J)
Cash withdrawal
exceeding a
₹
194N specified amount 2% 2%
1,00,00,000
from the bank,
with filed ITR
24
 Cash withdrawal
from a bank
194N ₹ 20,00,000 2% 2%
without filing
ITR
Amount received
for the sale of
products/services
194O by e-commerce ₹ 5,00,000 1% 1%
service providers
through digital
platforms
Payments made
194Q for the purchase ₹ 50,00,000 0.10% 0.10%
of goods
TDS on the
payment of
Not
194S cryptocurrencies 1% 1%
Applicable
or other virtual
assets

Theory Questions:
Short Questions:
1. What are the due dates of filing the return of income u/s139(1).
2. What is Tax planning?
3. Write a short note on Importance of Tax planning
4. What is meant by Tax avoidance. Give two examples.
5. What is Income tax return? Is it compulsory to file return of income
6. What is return of loss?
7. What is meant by Belated return?
8. What is Revised return?
9. Write a note on Section 194B when TDS is to be deducted on winning from lottery,
crossword puzzles etc.
10. Mention the circumstances in which search can be carried out.

Long Questions
1. Differentiate between tax planning and tax avoidance.
2. Differentiate between tax planning and tax evasion.
3. Differentiate between tax evasion and tax avoidance.

25
4. Differentiate between tax planning and tax management.
5. Discuss who are required to compulsory file their returns of income.
6. Write a note on Return of Income.
7. Write a note on Updated Return.
8. Discuss Powers in exercise of search.
9. Discuss rights and duties of person searched.
10. Write a note on Tax deducted at source.

Multiple Choice Questions:

1. ______ is concerned with an arrangement of one’s financial and tax matters in a
way so as to reduce or avoid the tax burden without violation of law of the land.
(a) Tax avoidance (b) Tax planning (c ) Tax Management (d) Tax Evasion
2. ____ is legally permissible
(a) Tax planning (b) Tax Avoidance (c ) Tax evasion (d) all of these
3. ____ constitutes a crime by resorting to dubious methods.
(a) Tax management (b) Tax planning (c ) Tax evasion (d) all of these
4. _____ lies in taking maximum advantage of the exemption, deductions, rebates,
reliefs etc. by the tax payer so as to achieve his goals of tax reduction.
(a) Tax avoidance (b) Tax planning (c ) Tax Management (d) Tax Evasion
5. ____is/are importance of Tax planning.
(a) Reduction in tax liability (b) Minimization of tax litigation
(c ) Healthy growth of Nation (d) all of these
6. Most of the times tax laws encourage tax payers to invest money in government
instruments. It is _____
(a) Tax planning (b) Tax Avoidance (c) Tax evasion (d) all of these
7. _____ is an act of dodging tax authorities without breaking the law.
(a) Tax planning (b) Tax Avoidance (c) Tax evasion (d) all of these
8. ____ is the transaction that are designed to avoid or reduce the liability of tax.
(a) Tax planning (b) Tax Avoidance (c) Tax management (d) all of these
9. _______ is an attempt to manage financial affairs by using colorable devices with
the intention of reducing the tax liability.
(a) Tax planning (b) Tax Avoidance (c) Tax management (d) all of these

26
10. Many a time ____ involves an attempt to reduce tax burden by taking advantage
of certain loopholes or weaknesses in tax laws.
(a) Tax planning (b) Tax Avoidance (c ) Tax management (d) all of these
11. _____ is an illegal method of saving tax and makes the person liable to penalties
and prosecution.
(a) Tax planning (b) Tax Management (c ) Tax evasion (d) all of these
12. ___ refers to an exercise by a tax payer for not paying the tax legally becoming
due.
(a) Tax planning (b) Tax Management (c ) Tax evasion (d) all of these
13. ____ is the general term for efforts by assesses to evade taxes by illegal means.
(a) Tax planning (b) Tax Management (c ) Tax evasion (d) all of these

14. ____ usually involves assesses deliberately misrepresenting or concealing the

true state of their economic affairs to the tax authorities to reduce their tax liability
and includes dishonest tax reporting.
(a) Tax planning (b) Tax Management (c ) Tax evasion (d) all of these
15. Manipulation of accounts to reduce the real income can be termed as___
(a) Tax planning (b) Tax Management (c ) Tax evasion (d) all of these
16. Violation of rules and regulations of laws with the intention to save the tax is__
(a) Tax planning (b) Tax Management (c ) Tax evasion (d) all of these
17. Benami transactions fall under the category of____
(a) Tax planning (b) Tax Management (c ) Tax evasion (d) all of these
18. Making tax preparation easier and error-free by using reliable tax software can be
termed as ___
(a) Tax planning (b) Tax Management (c ) Tax evasion (d) all of these
19. Staying informed about tax laws and rules to comply with them and benefit from
new tax breaks can be called___
(a) Tax planning (b) Tax Management (c ) Tax evasion (d) all of these
20. Submitting your tax returns by the deadline to avoid penalties and extra charges is
a part of ___
(a) Tax planning (b) Tax Management (c ) Tax evasion (d) all of these
21. Seeking guidance from tax professionals, especially for complex situations and
planning is termed as___
(a) Tax planning (b) Tax Management (c ) Tax evasion (d) all of these
22. A way to lower taxes legally is ___
27
(a) Tax planning (b) Tax Management (c ) Tax evasion (d) all of these
23. Making sure you follow tax laws is___
(a) Tax planning (b) Tax Management (c ) Tax evasion (d) all of these
24. ITR stands for -
(a) Income Tax Running (b) Income Tally Return
(c ) Income Tax Return (d) Initial Tax Return
25. ___ is a form that an individual submits to the Income Tax Department of India to
file information about his income and taxes payable during that year.
(a) Income tax return (b) Refund (c ) TDS (d) Advance tax
26. Information filed in an ITR should be applicable for a particular financial year
between 1st ____ to 31st _____ of the next year.
(a) March, April (b) May, July (c ) April, March (d) July, May
27. If taxes are paid in excess during a year, one gets a ___ by the Income Tax
Department.
(a) Income tax return (b) Refund (c ) TDS (d) Advance tax
28. Income Tax rules dictate that if an assessee earns more than the maximum
exemption limit that is exempted from being taxed by the Government, it is ____ to
file tax return according to the tax slabs for each year.
(a) Compulsory (b) Optional (c ) Not necessary (d) illegal
29. Income Tax rules dictate that if an assessee earns more than _____ , compulsory
return filing needs to be done.
(a) His family members (b) Maximum exemption limit
(c ) His last year’s income (d) Re.1
30. ITR post the due date may attract ____
(a) Gift (b) Reward (c ) Award (d) Penalty
31. According to Section 80 of the Income Tax Act, losses can be carried forward to
the next year only when _____ is filed before the due dates mentioned u/s 139(1) .
(a) Return of Loss (b) Belated return (c ) Revised Return (d) All of these
32. ______ losses can be carried forward even if no return of loss is filed within the
due date of filing the return u.s 139 (1) .
(a) Business (b) Speculation (c) House property (d) All of these
33. A belated return can be filed any time____
(a) before three months prior to the end of the relevant assessment year
(b) before the completion of the assessment
(c ) (a) or (b) whichever is earlier
(d) (a) or (b) whichever is later
28
34. Belated return for P.Y. 2023-24 can be filed maximum by___
(a) 31-3-2024 (b) 31-12-2024 (c) 31-3-2023 (d) 31-12-2023
35. A Belated return can be revised.
(a) True (b) False (c ) Can’t say (d) None of these
36. A revised return can be revised.
(a) True (b) False (c ) Can’t say (d) None of these
37. A return of loss can be revised.
(a) True (b) False (c ) Can’t say (d) None of these
38. A Defective return can be revised.
(a) True (b) False (c ) Can’t say (d) None of these
39. Individual / HUF/ AOP/ BOI who do not get their books of accounts audited
should file their return of income by _____ of the relevant assessment year.
(a) 31st July (b) 30th September (c ) 31st December (d) 31st March
40. Businesses Requiring Audit should file their return of income by____
(a) 31st July (b) 31st October (c ) 30th November (d) 31st March
41. Businesses requiring transfer pricing reports, in case of international/specified
domestic transactions shall file their return of income by___
(a) 31st July (b) 31st October (c ) 30th November (d) 31st March
42. Updated return for the PY 2023-24 shall be filed by___
(a) 31st March 2024 (b) 31st March 2025 (c )31st March 2026 (d) 31st March
2027
43. Updated return for any year shall be filed maximum within___
(a) One year from the end of the relevant previous year
(b) One year from the end of the relevant assessment year
(c) Two years from the end of the relevant previous year
(d) Two years from the end of the relevant assessment year
44. If the return filing date is missed, interest will be charged under section
(a) 234 A (b) 234 B (c ) 234 C (d) 234 F
45. If the return filing date is missed, interest will be charged @___% per month or
part of the month on unpaid tax amount.
(a) 1% (b) 2% (c ) 3% (d) 4%
46. If the return filing date is missed, interest will be charged @ 1 % per month or
part of the month on ___ amount.

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(a) Taxable income (b) Surcharge amount (c ) Unpaid tax (d ) All of these
47. Under section 139(9), the ___ has the power to call upon the assessee to rectify a
defective return.
(a) Assessing Officer (b) Chartered Accountant
(c ) Auditor (d) Nobody

48. Where the Assessing Officer considers that the return of income furnished by the
assessee is defective, he may intimate the defect to the assessee and give him an
opportunity to rectify the defect within ___ days from the date of intimation.
(a) 10 (b) 12 (c ) 15 (d) 20
49. Where the Assessing Officer considers that the return of income furnished by the
assessee is defective, he may intimate the defect to the assessee and give him an
opportunity to rectify the defect within 15 days from the ______.
(a) Date of filing the return (b) End of previous year
(c ) End of assessment year (d ) Date of intimation
50. If the defect is not rectified within the period of 15 days or such further extended
period, the return would be treated as an ___ return.
(a) Valid (b) Invalid (c ) revised (d) belated

51. The consequential effect of a invalid return would be the same as if the assessee
had __
(a) failed to furnish the return (b) deemed to have furnished a valid return
(c ) deemed to have paid the tax (d) deemed to have filed a revised return

52. ____ means a thorough inspection of the building, place, vehicle, vessel, aircraft
and of the person.

(a) Search (b) Seizure (c ) Audit (d) Inspection

53. ___ means taking possession under the authority of law.

(a) Search (b) Seizure (c ) Audit (d) Inspection

54. In case of a search the authorised officer has the power to

(a) Enter any building where he has reason to suspect that books of account are kept
(b) Break open the locks, where the keys thereof are not available;
(c) Carry out personal search of the person who is suspected to have secreted some
item
(d) All of these

55. In case of a search, the authorised officer has the power to seize certain valuables
representing undisclosed income_
(a) True (b) False (c ) Cant say (d) None of these
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56. In case of a search, the authorised officer has the power to place marks of
identification and take extracts or copies of the books of account and other
documents__
(a) True (b) False (c ) Cant say (d) None of these
57. In case of a search, the authorised officer has the power to make a note or
inventory of the valuables found during the search_
(a )True (b) False (c ) Cant say (d) None of these
58. The authorisation to carry out the search can be given by __
(a) Principal Director General, Director General
(b) Principal Director of Income Tax, Director of Income Tax
(c) Principal Chief Commissioner of Income Tax, Chief Commissioner of Income Tax
(d) Any of the above

59. Authority who can execute and carry out search__

(a) Additional Director or Additional Commissioner

(b) Joint Director, Joint Commissioner
(c) Assistant Director or Deputy Director
(d) Any of the above

60. The powers under provisions of survey, are _____ in comparision as powers of
search.

(a) Limited (b) Wide (c ) Enormous (d) Huge

61. The powers under provisions of survey are not very wide as powers of search.
(a )True (b) False (c ) Cant say (d) None of these
62. Power of Survey includes_
(a) To inspect books of account and other documents
(b) To place marks of identification on books of account or documents examined
(c) To make extracts or copies of books of account or documents
(d) All of these
63. In survey, Income Tax Authority can enter after ____ and before sunset any office
or any other place were business and profession is carried on were books of account
or documents are kept to inspect.
(a) Sun rise (b) Sunset (c ) Moon rise (d) Moon set

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64. In survey, Income Tax Authority can enter before ___ any office or any other
place were business and profession is carried on were books of account or documents
are kept to inspect.
(a) Sun rise (b) Sunset (c) Moon rise (d) Moon set
65. Neither under the provisions of search nor of survey, there is power to ___ the
assessee for offence, if any, of concealment of income.
(a) Arrest (b) Check books of accounts (c) Enter premises (d) All of these

66. Duties of the person searched include__

(a) To allow free and unhindered ingress into the premises.

(b) To see the warrant of authorisation and put signature on the same.
(c) To identify all receptacles in which assets or books of account and documents are
kept and to hand over keys to such receptacles to the authorised officer.
(d) All of these

67. TDS stands for __

(a) Tax delivery standards (b) Tedious Deduction Service
(c ) Tax deducted at source (d )Total deduction standard
68. _____ is an income tax that is collected from certain payments like rent, salary,
commission, interest, professional fees, etc.
(a) Tax deducted at source (b) General deductions (c ) Exemptions (d ) Advance
tax
69. The threshhold limit for tax deduction at source on interest earned on securities
u/s193 is __
(a) Rs.1,000 (b) Rs. 5,000 (c ) Rs.10,000 (d) Rs.15,000
70. TDS for Winnings of lotteries, puzzles, or games u/s 194 B is deducted @__%.
(a) 10% (b) 20% (c) 30% (d) 40%

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Note: - The above material has been compiled from the below mentioned
reference books and study material of professional examinations

1 Taxmann’s Direct Taxes Law & Practice-by Dr. Vinod Singhania & Dr. Kapil
Singhania

2 CA Final Direct Tax by CA Vinod Gupta

3 Study Material of Taxation by Institute of Chartered Accountants of

India (ICAI)
4 Systematic Approach to Taxation by Dr. Girish Ahuja and Dr. Ravi Gupta,
Wolters Kluwer Publication
5 Student’s Guide to Income Tax by Dr. Vinod K. Singhania and Dr. Monica
Singhania, Taxaman publication
6 Students’ Handbook on Income-tax by CA. T. N. Manoharan, Snowhite
Publication
7 Study Material of Taxation by Institute of Cost and Management
Accountant of India (CMA)
8 Study Material of Taxation by Institute of Company Secretaries of India
(CS)

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