Section 139(8A) & 140B – Eligibility, Applicability & Opportunity

Introduction to Updated Income Tax Return- Sec 139(8A)

In the Budget 2022-23 presented by Honourable Union Finance Minister Nirmala Sitharaman presented on 1^st February 2022, a concept of Updated Income Tax Return has been introduced  by inserting a new sub-section to Section 139 of Income Tax Act, 1961 to provide an opportunity to taxpayers to rectify the mistake of omission of income in the Return of Income filed.

What is Updated Income Tax Return- Sec 139(8A):

If an assesse intends to file his Income Tax return or update his income tax return irrespective of belated return or revised return filed now has an option to furnish an updated return by including certain incomes which couldn’t be incorporated in the Original/belated/revised Return of income within two years from the end of the relevant assessment year.

For Eg: If A person files Return of income for the FY 2020-21(AY 2021-22) on 30-06-2021, for furnishing the updated Return of Income he will have the time limit up to 31^st March 2024 i.e., 12 months from the end of relevant assessment year (in this case it is 2021-22)

Who is not allowed to file Updated Income Tax Return- Sec 139(8A)

The Provisions of this sub-section shall not apply in the following instances:

1. If the updated return is a return of loss

2. Has the effect of decreasing the tax liability determined in the Return of Income furnished under Section 139(1)/ 139(4)/ 139(5)

3. Results in refund or increased refund compared to the Return filed under Section 139(1)/139(4)/139(5) Of such person for the relevant assessment year

Provided further that a person shall not be eligible to furnish an updated Return under 139(8A) when,

• a search has been initiated under section 132 or books of account or other documents or any assets are requisitioned under section 132A in the case of such person; or
• a survey has been conducted under section 133A, other than sub-section (2A) of that section, in the case such person; or
• a notice has been issued to the effect that any money, bullion, jewellery or valuable article or thing, seized or requisitioned under section 132 or section 132A in the case of any other person belongs to such person; or
• a notice has been issued to the effect that any books of account or documents, seized or requisitioned under section 132 or section 132A in the case of any other person, pertain or pertains to, or any other information contained therein, relate to, such person, for the Assessment year relevant Previous Year in which such search is initiated or survey is conducted and two assessment year preceding to such assessment year

Provided also that no updated return can be filed if

• an updated return has already been furnished, any assessment/ reassessment/revision of income is pending for the relevant assessment year or,
• the Assessing Officer has information in respect of such person for the relevant assessment year in his possession under the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 or the Prohibition of Benami Property Transactions Act, 1988 or the Prevention of Money-laundering Act, 2002 or the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 and the same has been communicated to him, prior to the date of furnishing of return under this sub-section; or
• information for the relevant assessment year has been received under an agreement referred to in section 90 or section 90A in respect of such person and the same has been communicated to him, prior to the date of furnishing of return under this sub-section; or
• any prosecution proceedings under the Chapter XXII have been initiated for the relevant assessment year in respect of such person, prior to the date of furnishing of return under this sub-section; or
• he is such person or belongs to such class of persons, as may be notified by the Board in this regard.

Additional Tax 25% and 50% – Sec 140B

• If a Person furnishes updated return of income within 12 months from the end of relevant Assessment year 25% additional tax of aggregate of tax and interest payable as computed under 139(1) or 139(2)
• If the updated return is furnished after the expiry of 12 months from the end of relevant assessment year but within 24 months from the end of the said assessment year 50% additional tax of aggregate of tax and interest payable as computed under 139(1) or 139(2)

Explanation – For the purposes of computation of “additional income-tax”, tax shall include surcharge and cess, by whatever name called, on such tax.

Aggregate Tax here would be after considering

• TDS, TCS, Advance Tax, Self-assessment tax, and the amount of credit brought in the original return return
• TDS or TCS on additional income offered
• Foreign tax credit u/s 90 or 91 on extra income offered
• any tax credit availed to be set off u/s 115JAA or section 115JD i.e is not claimed in the former return.

For Eg:  Income earned during the year Rs 15,00,000/-

Income disclosed in the Return of Income Rs 10,00,000/-

Now if the assesse decides to furnish the updated return of income for the additional income of Rs 5,00,000/- within a period 12 months/24 months from the end of the relevant assessment year the additional tax of 25%/50% respectively would be on the aggregate of tax and interest payable after considering the TDS credit/Self-assessment if any paid by the assesse on the additional income of Rs 5,00,000/-

Note: Tax here would include Surcharge and cess also.

(Republished with amendments)