19. A, an assessee filed a return of income on 25.7.2021 in respect of assessment year 2020-21 disclosing an income of Rs 8,00,0000 from his business. It was not accompanied by any proof of payment of Tax due on self assessment. Discuss the validity of such return.

1. Facts of the Case

• Mr. A, an assessee, filed his return of income on 25th July 2021.
• The return was filed for the Assessment Year (AY) 2020–21, disclosing income of Rs. 8,00,000 from business.
• The return was not accompanied by proof of payment of self-assessment tax (i.e., tax payable under Section 140A).
• The question is whether such a return is valid in law under the Income Tax Act, 1961.

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2. Issues in the Case

1. Is a return of income valid if it is filed without payment of self-assessment tax?
2. Does Section 139(1) require proof of tax payment for the return to be accepted?
3. Can the return be treated as defective or invalid under the Income Tax Act?
4. What are the consequences if the tax due under Section 140A is not paid?

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3. Legal Principles Covered to Support Case Proceedings and Judgements

A. Section 139(1) – Filing of Return of Income

• This section mandates filing of return by an assessee if total income exceeds the basic exemption limit.
• There is no requirement under this section that tax must be paid before filing the return.
• However, Section 140A imposes an obligation to pay self-assessment tax before filing the return.

B. Section 140A – Self-Assessment Tax

• An assessee is required to pay any tax and interest due before filing the return.
• Failure to do so may invite interest under Sections 234A/B/C, penalty under Section 271F (old provision), and even prosecution under certain circumstances.

C. Section 139(9) – Defective Return

• A return can be treated as defective if it is not accompanied by proof of self-assessment tax payment, wherever applicable.
• The Assessing Officer can notify the defect and allow the assessee to rectify it within 15 days.
• If the defect is not rectified, the return may be treated as invalid.

D. Judicial Precedents

• In CIT v. M. George & Brothers (1989) and other rulings, courts held that filing of return without tax payment may make it defective but not invalid outright, unless the defect is not rectified upon notice.
• The return will be considered valid once the self-assessment tax is paid and the defect is cured within the prescribed time.

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4. Possible Judgement

Based on the above legal framework:

• The return filed by Mr. A on 25.07.2021 is not invalid per se, but is considered defective under Section 139(9) because the self-assessment tax was not paid.
• The Assessing Officer (AO) has the authority to issue a notice of defect, and the assessee must rectify the defect within 15 days (or extended period).
• If Mr. A pays the tax and submits proof within the allowed time, the return will be treated as valid.
• If not rectified, the return may be declared invalid, and Mr. A may be deemed to have failed to file a return, attracting penalty and interest.