Taxation - DT Ch 11: Return Filing - Test 2: answer key

Question 1 · 2 marks · Taxation - DT Ch 11: Return Filing · medium

Scenario. Mr. Rohan Mehta, a resident individual aged 38 years, has salary income of ₹12,00,000, income from house property (computed) of ₹1,50,000, and long-term capital gains on sale of listed equity shares (STT paid) of ₹3,00,000 for the financial year 2026-27. His tax deducted at source was ₹1,20,000 and advance tax paid was ₹50,000. The due date for filing his return of income under Section 139(1) was 31st July 2027. He did not file his return by the due date. On 15th December 2027, he filed his return of income showing the above income. Later, on 20th January 2028, he realised that he had not claimed deduction under Section 80C for ₹1,50,000 (eligible) and also missed reporting interest income from a fixed deposit of ₹25,000. He wants to revise his return. He also wants to know if he can file an updated return instead. Additionally, the Assessing Officer issued a notice under Section 139(9) on 10th February 2028 stating that his return is defective because he did not fill certain schedules. Mr. Mehta seeks advice on the fee under Section 234F, the validity of revised return, updated return, and defective return.

What is the amount of fee payable under Section 234F by Mr. Rohan Mehta for filing his return of income on 15th December 2027?

1. ₹1,000
2. ₹10,000
3. ₹5,000 (correct answer)
4. Nil

Answer: C — ₹5,000

Explanation. Under Section 234F, a fee of ₹5,000 is payable if the total income exceeds ₹5,00,000 and the return is furnished after the due date. Mr. Mehta's total income is ₹12,00,000 (salary) + ₹1,50,000 (house property) + ₹3,00,000 (LTCG) = ₹16,50,000, which exceeds ₹5,00,000. The return was filed on 15th December 2027, after the due date of 31st July 2027. Therefore, the fee is ₹5,000. The ₹1,000 fee applies only when total income is up to ₹5,00,000.

Where it goes wrong. Students may incorrectly apply the ₹1,000 fee by overlooking the total income exceeding ₹5 lakh, or may think no fee applies because the return was eventually filed.

Authority. Section 234F of the Income-tax Act, 1961

Question 2 · 2 marks · Taxation - DT Ch 11: Return Filing · medium

Can Mr. Mehta file a revised return on 20th January 2028 to claim the missed deduction and report the interest income?

1. No, a belated return cannot be revised under any circumstances.
2. No, because the return has been treated as defective by the Assessing Officer.
3. Yes, but only if filed before 31st December 2028.
4. Yes, provided it is filed before 31st March 2029. (correct answer)

Answer: D — Yes, provided it is filed before 31st March 2029.

Explanation. Section 139(5) permits revision of a return furnished under Section 139(1) or a belated return under Section 139(4) if the assessee discovers any omission or wrong statement. The revised return must be filed before the expiry of twelve months from the end of the relevant assessment year or before completion of assessment, whichever is earlier. For AY 2027-28, twelve months from the end of the assessment year (31st March 2028) ends on 31st March 2029. Filing on 20th January 2028 is within this period. The belated return can be revised, and the defective notice does not bar revision if the defect is rectified.

Where it goes wrong. Students often believe a belated return cannot be revised, but Section 139(5) expressly allows revision of a belated return.

Authority. Section 139(5) of the Income-tax Act, 1961

Question 3 · 2 marks · Taxation - DT Ch 11: Return Filing · hard

If Mr. Mehta opts to file an updated return under Section 139(8A) on 20th January 2028, what additional tax rate would apply?

1. 25% of aggregate of tax and interest
2. 50% of aggregate of tax and interest
3. Updated return cannot be filed before 1st April 2028 (correct answer)
4. No additional tax is payable

Answer: C — Updated return cannot be filed before 1st April 2028

Explanation. An updated return under Section 139(8A) can be furnished only after the end of the relevant assessment year. For AY 2027-28, the assessment year ends on 31st March 2028. Therefore, an updated return cannot be filed on 20th January 2028, as it is before the end of the assessment year. The additional tax rates of 25% or 50% apply only when the updated return is filed within the permitted window starting from 1st April 2028.

Where it goes wrong. Students may focus on the 12-month or 24-month period and overlook that the updated return window opens only after the end of the relevant assessment year.

Authority. Section 139(8A) of the Income-tax Act, 1961

Question 4 · 2 marks · Taxation - DT Ch 11: Return Filing · hard

The Assessing Officer issued a notice under Section 139(9) on 10th February 2028. What is the time limit for Mr. Mehta to rectify the defect?

1. 15 days from the date of intimation (correct answer)
2. 30 days from the date of intimation
3. 7 days from the date of intimation
4. 45 days from the date of intimation

Answer: A — 15 days from the date of intimation

Explanation. Under Section 139(9), where the Assessing Officer considers a return defective, he may intimate the defect and give the assessee an opportunity to rectify it within 15 days from the date of intimation. The Assessing Officer may extend this period on an application made by the assessee. If the defect is not rectified within the allowed time, the return is treated as invalid.

Where it goes wrong. Students may confuse the 15-day period with the 30-day period for other notices, or may think the period is 7 days.

Authority. Section 139(9) of the Income-tax Act, 1961

Question 5 · 2 marks · Taxation - DT Ch 11: Return Filing · medium

Scenario. Aryan Steels Ltd, a domestic company, filed its return of income for the assessment year 2027-28 on 30th October 2027, which was within the due date of 31st October 2027. The return showed a total income of ₹50,00,000 and tax payable of ₹12,00,000, which was paid. On 15th March 2028, while reconciling accounts, the company discovered that it had undervalued its closing stock by ₹5,00,000, leading to an understatement of income. The company wants to revise its return to correct this omission. The revised total income would be ₹55,00,000. The company has not paid any additional tax yet. It also wants to know whether it can file an updated return under Section 139(8A) instead of a revised return, and what would be the additional tax implications. Additionally, the company's tax accountant mentioned that if the revised return is filed, self-assessment tax under Section 140A must be paid along with interest under Section 234B and 234C. The company seeks advice on the validity of the revised return, the amount of self-assessment tax payable, and the additional tax under updated return if opted.

Can Aryan Steels Ltd file a revised return on 15th March 2028 to correct the undervaluation of closing stock?

1. No, revised return cannot be filed after 31st December 2027.
2. Yes, but only with the prior approval of the Assessing Officer.
3. No, because the original return was filed within the due date.
4. Yes, as it is within twelve months from the end of the relevant assessment year. (correct answer)

Answer: D — Yes, as it is within twelve months from the end of the relevant assessment year.

Explanation. Section 139(5) allows a revised return to be filed before the expiry of twelve months from the end of the relevant assessment year or before completion of assessment, whichever is earlier. For AY 2027-28, the assessment year ends on 31st March 2028, so the twelve-month period ends on 31st March 2029. Filing on 15th March 2028 is within this period. The original return was filed within the due date, and the discovery of an omission (undervaluation of stock) is a valid ground for revision.

Where it goes wrong. Students may incorrectly believe that a return filed within the due date cannot be revised, or may apply the belated return deadline of 31st December.

Authority. Section 139(5) of the Income-tax Act, 1961

Question 6 · 2 marks · Taxation - DT Ch 11: Return Filing · hard

What is the amount of self-assessment tax payable under Section 140A before filing the revised return, assuming interest under Section 234B is ₹5,000 and under Section 234C is ₹3,000?

1. ₹1,30,000
2. ₹1,50,000
3. ₹1,45,000
4. ₹1,38,000 (correct answer)

Answer: D — ₹1,38,000

Explanation. The additional income is ₹5,00,000. Tax at 25% = ₹1,25,000. Cess at 4% = ₹5,000. Total additional tax = ₹1,30,000. Self-assessment tax under Section 140A includes tax plus interest. Interest under Section 234B = ₹5,000 and under Section 234C = ₹3,000. Total self-assessment tax = ₹1,30,000 + ₹5,000 + ₹3,000 = ₹1,38,000.

Where it goes wrong. Students may forget to add interest or may compute tax without cess, leading to ₹1,30,000 or other amounts.

Authority. Section 140A of the Income-tax Act, 1961

Question 7 · 2 marks · Taxation - DT Ch 11: Return Filing · hard

If Aryan Steels Ltd opts to file an updated return under Section 139(8A) on 15th March 2028, what additional tax rate would apply?

1. 25% of aggregate of tax and interest
2. 50% of aggregate of tax and interest
3. Updated return cannot be filed before 1st April 2028 (correct answer)
4. No additional tax is payable

Answer: C — Updated return cannot be filed before 1st April 2028

Explanation. An updated return can be furnished only after the end of the relevant assessment year. For AY 2027-28, the assessment year ends on 31st March 2028. Therefore, an updated return cannot be filed on 15th March 2028. The 25% or 50% additional tax rates apply only when the updated return is filed within the permitted period starting from 1st April 2028.

Where it goes wrong. Students may think the updated return can be filed anytime within 24 months, ignoring the condition that it must be after the end of the assessment year.

Authority. Section 139(8A) of the Income-tax Act, 1961

Question 8 · 2 marks · Taxation - DT Ch 11: Return Filing · hard

If the additional tax payable is ₹1,30,000 and interest under Section 234B is computed at 1% per month for 3 months, what is the interest amount?

1. ₹1,300
2. ₹3,900 (correct answer)
3. ₹4,000
4. ₹5,000

Answer: B — ₹3,900

Explanation. Interest under Section 234B is computed at 1% per month or part of a month on the shortfall of tax. The additional tax is ₹1,30,000. Interest for 3 months = ₹1,30,000 × 1% × 3 = ₹3,900. The interest is payable before filing the revised return under Section 140A.

Where it goes wrong. Students may forget to multiply by the number of months or may apply the rate incorrectly, leading to ₹1,300 or ₹4,000.

Authority. Section 234B of the Income-tax Act, 1961

Question 9 · 2 marks · Taxation - DT Ch 11: Return Filing · hard

Scenario. During Tax Year 2026-27, a registered taxpayer is evaluating statutory compliance, computation of taxable income, and eligible tax deductions in accordance with the provisions of the Income-tax Act, 2025 and applicable rules for the May 2027 examination.

For the assessment year 2027-28, what is the last date for filing a belated return under Section 139(4)?

1. 31st March 2028
2. 31st December 2027 (correct answer)
3. 31st March 2029
4. 31st December 2028

Answer: B — 31st December 2027

Explanation. Under Section 139(4), as amended by the Finance Act, 2026, a belated return for any assessment year can be furnished at any time before the expiry of the relevant assessment year or before completion of assessment, whichever is earlier. For AY 2027-28, the relevant assessment year ends on 31st March 2028. However, the amended provision specifies that the belated return must be filed by 31st December of the relevant assessment year. Therefore, the last date is 31st December 2027.

Where it goes wrong. Students may apply the general one-year-from-end-of-assessment-year rule and choose 31st March 2028 or 31st March 2029, ignoring the specific amendment.

Authority. Section 139(4) of the Income-tax Act, 1961

Question 10 · 2 marks · Taxation - DT Ch 11: Return Filing · hard

Scenario. During Tax Year 2026-27, a registered taxpayer is evaluating statutory compliance, computation of taxable income, and eligible tax deductions in accordance with the provisions of the Income-tax Act, 2025 and applicable rules for the May 2027 examination.

Which of the following is NOT a valid ground for filing a revised return under Section 139(5)?

1. Discovery of an omission in the original return
2. Discovery of a wrong statement in the original return
3. Change in law with retrospective effect (correct answer)
4. Correcting a computation mistake in the original return

Answer: C — Change in law with retrospective effect

Explanation. Section 139(5) permits revision of a return only when the assessee discovers any omission or any wrong statement in the original return. A change in law with retrospective effect is not an omission or wrong statement by the assessee; it is an external change. Therefore, it is not a valid ground for revision under Section 139(5). The other options involve errors or omissions in the return itself.

Where it goes wrong. Students may think any subsequent change, including retrospective law amendments, justifies revision, but the statute limits revision to omissions and wrong statements by the assessee.

Authority. Section 139(5) of the Income-tax Act, 1961

Question 11 · 2 marks · Taxation - DT Ch 11: Return Filing · hard

Scenario. During Tax Year 2026-27, a registered taxpayer is evaluating statutory compliance, computation of taxable income, and eligible tax deductions in accordance with the provisions of the Income-tax Act, 2025 and applicable rules for the May 2027 examination.

Mr. X files an updated return for assessment year 2027-28 on 1st January 2029. What is the additional tax rate applicable under Section 139(8A)?

1. 25% of aggregate of tax and interest (correct answer)
2. 50% of aggregate of tax and interest
3. 75% of aggregate of tax and interest
4. all of aggregate of tax and interest

Answer: A — 25% of aggregate of tax and interest

Explanation. For AY 2027-28, the assessment year ends on 31st March 2028. The updated return window opens from 1st April 2028. Filing on 1st January 2029 falls within 12 months from the end of the assessment year (i.e., before 31st March 2029). Therefore, the additional tax rate is 25% of the aggregate of tax and interest. The 50% rate applies if filed after 12 months but within 24 months.

Where it goes wrong. Students may miscalculate the 12-month period from the end of the assessment year and choose 50% instead of 25%.

Authority. Section 139(8A) of the Income-tax Act, 1961

Question 12 · 2 marks · Taxation - DT Ch 11: Return Filing · medium

Scenario. During Tax Year 2026-27, a registered taxpayer is evaluating statutory compliance, computation of taxable income, and eligible tax deductions in accordance with the provisions of the Income-tax Act, 2025 and applicable rules for the May 2027 examination.

Under Section 139(9), if the Assessing Officer intimates a defect in the return, within how many days must the assessee rectify it?

1. 15 days (correct answer)
2. 30 days
3. 7 days
4. 45 days

Answer: A — 15 days

Explanation. Section 139(9) provides that the Assessing Officer may intimate the defect to the assessee and give an opportunity to rectify it within 15 days from the date of intimation. The Assessing Officer may extend this period on an application by the assessee. If not rectified, the return is treated as invalid.

Where it goes wrong. Students may confuse the 15-day period with the 30-day period applicable to other notices under the Act.

Authority. Section 139(9) of the Income-tax Act, 1961

Question 13 · 2 marks · Taxation - DT Ch 11: Return Filing · medium

Scenario. During Tax Year 2026-27, a registered taxpayer is evaluating statutory compliance, computation of taxable income, and eligible tax deductions in accordance with the provisions of the Income-tax Act, 2025 and applicable rules for the May 2027 examination.

Mr. Y has a total income of ₹4,80,000 and files his return after the due date. What is the fee payable under Section 234F?

1. ₹5,000
2. ₹1,000 (correct answer)
3. ₹500
4. Nil

Answer: B — ₹1,000

Explanation. Under Section 234F, the fee for default in furnishing return of income is ₹1,000 if the total income does not exceed ₹5,00,000. Since Mr. Y's total income is ₹4,80,000, which is up to ₹5,00,000, the fee is ₹1,000. The ₹5,000 fee applies only when total income exceeds ₹5,00,000.

Where it goes wrong. Students may apply the ₹5,000 fee without checking the total income threshold of ₹5,00,000.

Authority. Section 234F of the Income-tax Act, 1961

Question 14 · 2 marks · Taxation - DT Ch 11: Return Filing · medium

Scenario. During Tax Year 2026-27, a registered taxpayer is evaluating statutory compliance, computation of taxable income, and eligible tax deductions in accordance with the provisions of the Income-tax Act, 2025 and applicable rules for the May 2027 examination.

Which of the following statements is correct regarding self-assessment tax under Section 140A?

1. It is payable only by companies.
2. It is payable before furnishing the return of income. (correct answer)
3. It is payable after the assessment is completed.
4. It is optional and can be paid at any time.

Answer: B — It is payable before furnishing the return of income.

Explanation. Section 140A requires an assessee to pay self-assessment tax before furnishing the return of income. The tax is computed after taking into account advance tax, TDS, TCS, and reliefs. It is mandatory for all assessees who have tax payable on the basis of the return, not just companies. It is not payable after assessment; it is a pre-condition for filing the return.

Where it goes wrong. Students may think self-assessment tax is paid after assessment or is optional, but it is a mandatory pre-filing payment.

Authority. Section 140A of the Income-tax Act, 1961

Question 15 · 2 marks · Taxation - DT Ch 11: Return Filing · hard

Scenario. During Tax Year 2026-27, a registered taxpayer is evaluating statutory compliance, computation of taxable income, and eligible tax deductions in accordance with the provisions of the Income-tax Act, 2025 and applicable rules for the May 2027 examination.

If an assessee files a revised return increasing the tax liability, is interest under Section 234B payable on the additional tax?

1. Yes, interest under Section 234B is payable on the shortfall. (correct answer)
2. No, interest under Section 234B is not applicable to revised returns.
3. Yes, but only if the additional tax exceeds ₹1,00,000.
4. No, interest under Section 234B applies only to companies.

Answer: A — Yes, interest under Section 234B is payable on the shortfall.

Explanation. Interest under Section 234B is payable on the assessed tax that remains unpaid after the due date for payment of advance tax. When a revised return increases the tax liability, the additional tax is part of the assessed tax, and interest under Section 234B is computed on the shortfall from the due date of advance tax until the date of payment. Therefore, interest is payable on the additional tax.

Where it goes wrong. Students may think revised returns are exempt from interest, but the additional tax liability attracts interest under Section 234B from the original due date.

Authority. Section 234B of the Income-tax Act, 1961