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CMA Final · Direct Tax Laws and International Taxation · Return of Income

Under section 263(7), the Assessing Officer intimates a defect in the return of Zenith Firm on 10 March. The firm does not rectify the defect within the prescribed period, but rectifies it on 20 April, before assessment is made. What is the position?

The return is treated as invalid because the defect was not cured within the allowed period, but since rectification came before assessment, the Assessing Officer may condone the delay and treat it as a valid return. The condonation is discretionary, not automatic.

  1. AThe return becomes permanently invalid and cannot be treated as valid
  2. BThe return is valid automatically since rectification was before assessment
  3. CThe return is invalid, but the Assessing Officer may condone the delay and treat it as validCorrect
  4. DThe return is invalid and the firm may only file an updated return

Explanation

Section 263(7)(a) gives fifteen days (or an extended period) to rectify. If not rectified in time, clause (b) treats the return as invalid. Clause (c) lets the Assessing Officer condone the delay and treat it as valid if rectified before assessment; this is discretionary, not automatic.

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