1. Facts of the Case
Mr. X is a resident individual aged 64 years during the relevant financial year. His gross total income (before deductions under Chapter VI-A) is Rs. 3,20,000. After claiming deduction of Rs. 35,000 under Section 80C, his total income is reduced to Rs. 2,85,000.
He wants to know whether he is mandatorily required to file an income tax return, or whether he may opt not to file it voluntarily due to his income being below the taxable limit after deductions.
2. Issues in the Case [Questions]
- Whether Mr. X is legally required to file a return of income under the Income Tax Act, 1961?
- Should the requirement to file return be evaluated on the basis of gross total income or total income after deductions?
- What are the legal exemptions available to senior citizens with income below threshold limits?
3. Legal Principles Covered
A. Section 139(1) – Obligation to File Return
- Under Section 139(1) of the Income Tax Act, every individual whose total income before giving effect to deductions under Chapter VI-A exceeds the maximum amount not chargeable to tax, is required to file a return.
- For a senior citizen (aged 60 years or more but less than 80), the basic exemption limit is Rs. 3,00,000.
B. Application to Mr. X
- Mr. X’s gross total income is Rs. 3,20,000, which is above the exemption limit of Rs. 3,00,000 applicable to senior citizens.
- Even though his total income after deduction is Rs. 2,85,000, the filing obligation is judged before deductions.
- Therefore, Section 139(1) mandates filing the return if gross total income exceeds Rs. 3,00,000, irrespective of the final taxable income after deductions.
C. Circulars and Clarifications
- CBDT circulars have consistently clarified that the requirement to file return arises on the basis of gross total income before considering deductions under sections like 80C, 80D, etc.
4. Possible Judgement
In the present case:
- Mr. X is a resident individual aged 64 years, qualifying as a senior citizen.
- His gross total income is Rs. 3,20,000, which exceeds the threshold limit of Rs. 3,00,000 applicable to senior citizens under the Income Tax Act.
- Therefore, under Section 139(1), he is mandatorily required to file his return of income, even though his net taxable income after deductions is only Rs. 2,85,000.
