Income tax return filling of a pvt. company
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
27 July 2013
Dear Friends i have a query regarding effect as per income tax on NON filling of Income Tax return in following case
X Pvt. Ltd has been dissolved wef 12/07/2012. but company has closed its operation before 31.03.2012 and there was no any assets and liability (except shareholder`s initial capital)on balance sheet date. the company did not file his return of income for the financial year 2012-13 (Closure year). Now a notice received form income tax department for asking a reason for non filling of income tax return.
Please tell me what type of penalty can be imposed on assessee.
X Pvt. Ltd has been dissolved wef 12/07/2012. but company has closed its operation before 31.03.2012 and there was no any assets and liability (except shareholder`s initial capital)on balance sheet date. the company did not file his return of income for the financial year 2012-13 (Closure year). Now a notice received form income tax department for asking a reason for non filling of income tax return.
Please tell me what type of penalty can be imposed on assessee.
27 July 2013
You can file return upto 30.09.2013.
.
This may be treated as reminder for the above.
.
Respond by mentioning that the assessee is in the process of filing the return for AY 2013-14.
.
This may be treated as reminder for the above.
.
Respond by mentioning that the assessee is in the process of filing the return for AY 2013-14.
Querist : Anonymous
Querist :
Anonymous
(Querist)
29 July 2013
Sir,
what will happen in case of A.Y. 2012-13
what will happen in case of A.Y. 2012-13
31 July 2024
When a private limited company is dissolved and has not filed its income tax return for the closure year, it may face several consequences and potential penalties. Below is a detailed explanation of the effects and potential penalties for non-filing of the income tax return for the financial year 2012-13 (Assessment Year 2013-14) for X Pvt. Ltd.:
### **Penalties and Consequences for Non-Filing of Income Tax Return**
1. **Penalty under Section 271F:**
- A penalty of ₹5,000 may be imposed for not filing the return before the end of the relevant assessment year. Since the return for the financial year 2012-13 should have been filed by July 31, 2013 (assuming the company did not have an audit requirement), and the notice is received after this period, the penalty can be levied.
2. **Interest under Section 234A:**
- Interest at the rate of 1% per month or part of the month may be charged from the due date of filing the return until the actual date of filing.
3. **Notice under Section 142(1):**
- The notice received from the Income Tax Department is likely under Section 142(1) to call for the return or accounts. It is mandatory to comply with this notice and submit the return to avoid further penalties.
4. **Best Judgment Assessment under Section 144:**
- If the company fails to respond to the notice, the Assessing Officer can make a best judgment assessment based on the available information. This might result in an unfavorable tax assessment.
### **Steps to Address the Issue:**
1. **Respond to the Notice:**
- Provide a response to the notice explaining the reason for non-filing. Clearly state that the company was dissolved on July 12, 2012, and ceased operations before March 31, 2012. Indicate that there were no assets or liabilities on the balance sheet except the initial capital.
2. **File the Return:**
- Despite the dissolution, file the income tax return for the financial year 2012-13 to comply with the notice and avoid further penalties. The return should show that there was no business activity and no taxable income for the year.
3. **Penalty Waiver Request:**
- Submit a request for a waiver of penalties, if applicable, citing genuine reasons for non-filing, such as the cessation of business activities and dissolution of the company. The assessing officer has the discretion to waive penalties in certain circumstances.
### **Sample Response to the Notice:**
Here is a template for the response to the Income Tax Department:
```plaintext
[Your Name]
[Your Address]
[City, State, ZIP Code]
[Date]
To,
The Assessing Officer,
Income Tax Department,
[Address of the Assessing Officer]
Subject: Response to Notice under Section 142(1) for Non-Filing of Income Tax Return for AY 2013-14
Dear Sir/Madam,
This is in reference to the notice received under Section 142(1) of the Income Tax Act, 1961, regarding non-filing of the income tax return for the Assessment Year 2013-14.
We would like to inform you that X Pvt. Ltd. was dissolved with effect from 12th July 2012. The company ceased all operations before 31st March 2012, and as of that date, there were no assets or liabilities except the initial capital contributed by the shareholders.
Due to the cessation of business activities and subsequent dissolution, the income tax return for the financial year 2012-13 was not filed. We apologize for this oversight.
To comply with the notice and rectify the situation, we are in the process of filing the return for the Assessment Year 2013-14, showing no business activities and no taxable income for the period in question.
We kindly request your understanding of the circumstances and consider waiving any penalties imposed for the delay in filing the return. We assure you that this oversight was unintentional and due to the company's dissolution.
Thank you for your understanding and cooperation.
Yours sincerely,
[Your Name]
[Designation]
[Contact Information]
```
### **Conclusion:**
Non-filing of the income tax return for the closure year can lead to penalties and interest. However, by promptly responding to the notice, explaining the dissolution, and filing the required return, you can mitigate these penalties. It is advisable to seek assistance from a tax professional to ensure compliance and proper handling of the notice.
### **Penalties and Consequences for Non-Filing of Income Tax Return**
1. **Penalty under Section 271F:**
- A penalty of ₹5,000 may be imposed for not filing the return before the end of the relevant assessment year. Since the return for the financial year 2012-13 should have been filed by July 31, 2013 (assuming the company did not have an audit requirement), and the notice is received after this period, the penalty can be levied.
2. **Interest under Section 234A:**
- Interest at the rate of 1% per month or part of the month may be charged from the due date of filing the return until the actual date of filing.
3. **Notice under Section 142(1):**
- The notice received from the Income Tax Department is likely under Section 142(1) to call for the return or accounts. It is mandatory to comply with this notice and submit the return to avoid further penalties.
4. **Best Judgment Assessment under Section 144:**
- If the company fails to respond to the notice, the Assessing Officer can make a best judgment assessment based on the available information. This might result in an unfavorable tax assessment.
### **Steps to Address the Issue:**
1. **Respond to the Notice:**
- Provide a response to the notice explaining the reason for non-filing. Clearly state that the company was dissolved on July 12, 2012, and ceased operations before March 31, 2012. Indicate that there were no assets or liabilities on the balance sheet except the initial capital.
2. **File the Return:**
- Despite the dissolution, file the income tax return for the financial year 2012-13 to comply with the notice and avoid further penalties. The return should show that there was no business activity and no taxable income for the year.
3. **Penalty Waiver Request:**
- Submit a request for a waiver of penalties, if applicable, citing genuine reasons for non-filing, such as the cessation of business activities and dissolution of the company. The assessing officer has the discretion to waive penalties in certain circumstances.
### **Sample Response to the Notice:**
Here is a template for the response to the Income Tax Department:
```plaintext
[Your Name]
[Your Address]
[City, State, ZIP Code]
[Date]
To,
The Assessing Officer,
Income Tax Department,
[Address of the Assessing Officer]
Subject: Response to Notice under Section 142(1) for Non-Filing of Income Tax Return for AY 2013-14
Dear Sir/Madam,
This is in reference to the notice received under Section 142(1) of the Income Tax Act, 1961, regarding non-filing of the income tax return for the Assessment Year 2013-14.
We would like to inform you that X Pvt. Ltd. was dissolved with effect from 12th July 2012. The company ceased all operations before 31st March 2012, and as of that date, there were no assets or liabilities except the initial capital contributed by the shareholders.
Due to the cessation of business activities and subsequent dissolution, the income tax return for the financial year 2012-13 was not filed. We apologize for this oversight.
To comply with the notice and rectify the situation, we are in the process of filing the return for the Assessment Year 2013-14, showing no business activities and no taxable income for the period in question.
We kindly request your understanding of the circumstances and consider waiving any penalties imposed for the delay in filing the return. We assure you that this oversight was unintentional and due to the company's dissolution.
Thank you for your understanding and cooperation.
Yours sincerely,
[Your Name]
[Designation]
[Contact Information]
```
### **Conclusion:**
Non-filing of the income tax return for the closure year can lead to penalties and interest. However, by promptly responding to the notice, explaining the dissolution, and filing the required return, you can mitigate these penalties. It is advisable to seek assistance from a tax professional to ensure compliance and proper handling of the notice.
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