Filing of returns by partners where firm's accounts are required to be audited-Assessment year 1989-90 - Income Tax - 542/1989

Filing of returns by partners where firm's accounts are required to be audited-Assessment year 1989-90 Circular No. 542 Dated 30/8/1989 To All Chief Commissioners and Directors General of Income-tax. Subject: Filing of returns by partners where firm's accounts are required to be audited-Assessment year 1989-90. Under the existing provisions of section 139(1) of the Income-tax Act, 1961, as amended by the Direct Tax Laws (Amendment) Act, 1987, with effect from April 1, 1989, a partnership firm, whose accounts are required to be audited under the Income-tax Act, or under any other law, can file its return by 31st October of the relevant assessment year. However, this time-limit is not available to the partners of such a firm, if their own accounts are not required to be so audited. 2. Some representations have been received to the effect that such partners would not be able to file their returns by 31st August, as they would not know their correct share income in the firm by this date. Considering this difficulty, it has been decided that such partners may also be allowed to file their returns by 31st October. The Direct Tax Laws (Second Amendment) Bill, 1989*, introduced in the Parliament on August 18, 1989, during the last Monsoon Session, contains a provision to this effect proposing to amend section 139(1) of the Income-tax Act retrospectively with effect from April 1, 1989. The Bill will come up for consideration in the next session of Parliament. However, as an interim measure, it has been decided that partners of such firms may also be allowed to file their returns by 31st October, 1989. A press note to this effect was issued on 24th August, 1989**, for the general information of the taxpayers that such partners can also file their returns for the assessment year 1989-90 by 31st October, 1989. A copy of the press note is enclosed as Annexure to this circular. The Assessing Officers are advised not to insist upon such partners to file their returns for the assessment year 1989-90 by 31st August, 1989. (Sd.) K.K. Mittal, Director, Central Board of Direct Taxes. * See page 35 supra. ** See page 68 supra. ANNEXURE Under the present provisions of section 139(1) of the Income-tax Act, 1961, the due date for filing the return of income in the case of an assessee, whose accounts are required to be audited under the Income-tax Act or under any other law, is 31st October of the relevant assessment year. Therefore, a partnership firm, whose accounts are required to be so audited, can file its return by 31st October. However, under the existing law, the partners of such a firm, if their own accounts are not required to be so audited, have to file their returns by 31st August. 2. Representations were received pointing out that this would cause hardship in the case of partners of such a firm as they would not know their correct share income in the firm unless the accounts of the firm have been finalised, which work may be over, in many cases, towards the end of October. Hence, it could be difficult for the partners of the firm to file their returns of income by 31st August. 3. To avoid difficulties to partners in such situations, the Government has taken a decision that the persons who are partners in the firms, whose accounts are required to be audited, can also file their returns by 31st October. The Direct Tax Laws (Second Amendment) Bill, 1989*, introduced in Parliament on August 18, 1989, during the last Monsoon Session, contains a provision by which section 139(1) is proposed to be amended retrospectively with effect from April 1, 1989. The proposed amendment provides that the partners of such firms can also file their returns by 31st October. Instructions are being issued to the Assessing Officers not to insist upon such partners to file their returns for the assessment year 1989-90 by 31st August, 1989. * See page 35 supra.