Income Tax Return and Updated Return under Income-tax Act, 1961

The provided content outlines comprehensive provisions governing the filing of income-tax returns (ITR) under the Income-tax Act, 1961 for different categories of taxpayers, including individuals, Hindu Undivided Families (HUFs), companies, firms/LLPs, non-residents, and other entities. Filing of ITR is mandatory where total income exceeds the basic exemption limit, calculated before claiming specified deductions or exemptions. Additionally, filing is compulsory in certain cases irrespective of income level, such as ownership of foreign assets or undertaking specified high-value transactions, including large bank deposits, foreign travel expenses, high electricity consumption, significant business turnover or professional receipts, and specified thresholds of TDS/TCS or savings deposits.

Certain exemptions from filing are provided, such as for residents aged 75 years or above with only pension and interest income (subject to conditions), and in specific cases involving non-residents where tax has been deducted at source. Filing obligations vary across entities: companies, firms, and LLPs must file returns irrespective of income or loss, while other entities such as trusts, polaitical parties, and associations must file based on prescribed conditions.

Due dates for filing returns depend on the nature of the taxpayer and applicable compliance requirements. Cases involving transfer pricing audits require filing by 30th November, audit cases by 31st October, and others by 31st July. Returns must be filed in prescribed forms (ITR-1 to ITR-7) depending on income type and taxpayer category. Filing is primarily electronic through the e-filing portal, with verification through Digital Signature Certificate (DSC), Electronic Verification Code (EVC), Aadhaar OTP, or submission of signed ITR-V within 30 days. Failure to verify within the prescribed time renders the return invalid.

Verification of returns must be done by the appropriate person depending on the entity, such as the individual, Karta for HUF, managing director for companies, or designated partner for LLPs. In special circumstances, authorised persons may verify returns. Returns may be filed by representatives in cases such as death of the assessee, where legal representatives or executors file returns for income before and after death, or in cases involving minors, non-residents, or incapacitated persons.

The Act also provides for different types of returns, including original, belated, revised, updated, modified, and block assessment returns. Belated returns can be filed after the due date but within prescribed timelines, though they carry consequences such as loss of certain benefits, interest, and late fees. Revised returns allow correction of errors within the statutory period and substitute the original return. Updated returns, introduced to promote voluntary compliance, can be filed within 48 months from the end of the relevant assessment year, subject to restrictions such as prohibition on reducing tax liability or claiming refunds.

Defective returns arise where required information or documents are missing, and must be rectified within 15 days of notice, failing which they are treated as invalid. The Central Board of Direct Taxes (CBDT) has powers to condone delays in filing returns in genuine cases, particularly where refunds, deductions, or carry forward of losses are involved, subject to specified conditions and timelines.

Non-filing or delayed filing of returns results in significant consequences, including denial of deductions and exemptions, restriction on carry forward of losses, levy of interest and penalties, and possible prosecution. Authorities may also initiate best judgment assessments or reassessment proceedings where income is believed to have escaped assessment.

Further, statutory provisions such as Sections 80, 80A, and 80AC emphasize that deductions and carry-forward of losses are contingent upon timely filing of returns. Section 139 mandates filing of returns within due dates and prescribes conditions for mandatory filing, including cases involving foreign assets and high-value transactions. Overall, the framework establishes a structured compliance regime ensuring timely reporting, verification, and accountability in income-tax return filing.

Return of Income

INCOME-TAX RETURN

FILING OF INCOME-TAX RETURN BY AN INDIVIDUAL OR HUF

Individuals and HUFs is required to file an Income-tax return if their income before claiming specified exemptions or deductions exceeds the maximum exemption limit. Filing is mandatory in certain cases even if income is below the exemption limit, such as foreign assets ownership or high-value transactions.

Mandatory Filing Scenarios

1. Income Exceeds Exemption Limit: If the total income of an individual or HUF, before claiming the following deductions or exemptions, is more than the basic exemption limit:

• Deduction under Section 10A, 10B ,10BA
• Exemption under section 54, 54B , 54D , 54EC , 54F , 54G , 54GA or 54GB
• Deduction under Section 80C to 80U

1. Foreign Assets: Any resident individual who has or is a beneficiary of any asset or financial interest abroad, or if he has signing authority in any overseas bank account.

2. High-Value Transactions:

• • Deposits over Rs. 1 crore in current accounts.
  • Foreign travel expenses exceeding Rs. 2 lakh.
  • Electricity bills exceeding Rs. 1 lakh.
  • Business turnover above Rs. 60 lakh.
  • Gross receipts from the profession above Rs. 10 lakh.
  • TDS/TCS aggregating Rs. 25,000 or more (Rs. 50,000 or more for senior citizens).
  • Deposits exceeding Rs. 50 lakh in savings accounts.

Exemptions from Filing

• Residents aged 75+ with only a pension and interest income from a scheduled bank (Section 194P compliance required).
• Non-residents in specified cases.

Due Dates for Filing Income Tax Returns (ITR)

Situations	Due date for filing of return
If Individual or HUF is required to furnish a report of Transfer Pricing (TP) Audit in Form No. 3CEB	30th November
If an Individual or HUF is a partner in a firm who is required to furnish a report of Transfer Pricing (TP) Audit in Form No. 3CEB	30th November
If an Individual is a spouse of a person, being a partner in a firm required to furnish a report of Transfer Pricing (TP) Audit in Form No. 3CEB, and the provisions of section 5A applies to such spouse.	30th November
If Individual or HUF is required to get his accounts audited under Income-tax Act or under any other law	31st October
If an Individual is spouse of a person, being a partner in a firm whose accounts are required to be audited, and the provisions of section 5A applies to such spouse.	31st October
If an Individual is a partner in a firm whose accounts are required to be audited.	31st October
In any other case	31st July

Forms and Filing Process

• Applicable Forms: An Individual or HUF can file the return of income in form ITR 1 to ITR 4 depending upon the income type and applicable reporting requirements.
• Filing Modes:

• E-filing with Digital Signature (DSC), EVC, or Aadhaar OTP.
• Paper filing (only for super senior citizens filing ITR-1/ITR-4).

If filed without DSC/EVC, the signed ITR-V form must be sent to CPC Bengaluru within 30 days of uploading. Failure to verify invalidates the return, requiring condonation for belated verification.

When an assessee verifies ITR by sending a signed copy to CPC, Bengaluru, the 30-day limit is counted from the date CPC receives the ITR-V, not the dispatch date as earlier. [Notification No. 02 of 2024, dated 31-03-2024]

Verification of Returns

• Returns must be verified by the individual himself, and in the case of a Hindu Undivided Family (HUF), by the Karta.
• In special circumstances, another authorised person may sign the return.

FILING OF INCOME-TAX RETURN BY COMPANY

All companies are mandatorily required to file an income-tax return, regardless of income or losses. Companies file returns using ITR-6 or ITR-7 (for those claiming exemptions under Section 11).

Key Filing Requirements

• Mandatory Filing: Applicable to all companies, including loss-making ones.
• Due Dates:

• Transfer Pricing Audit (Form 3CEB): November 30.
• If the company is a partner in a Firm with TP Audit: November 30
• Other Cases: October 31.

Applicable Forms

• ITR-6: For companies not claiming exemptions under Section 11.
• ITR-7: For companies claiming exemptions under Sections 11 or 12.

Mode of Filing

• E-Filing: Mandatory through the e-filing portal (incometax.gov.in).
• Digital Signature Certificate (DSC): Required for all filings.

Verification of Returns

• Returns must be verified by the managing director.
• In special circumstances, another authorised person may sign the return.

FILING OF INCOME-TAX RETURN BY A FIRM OR LLP

Firms and LLPs are required to file returns irrespective of income levels. Filing is compulsory even in cases of a loss.

Due Dates for Return Filing

• If Transfer Pricing (TP) Audit: November 30
• If partner in a Firm with TP Audit: November 30
• If Tax Audit: October 31
• Other Cases: July 31

Applicable Forms

• ITR-5: For regular income-tax return filing.
• ITR-4: For resident firms opting for presumptive taxation.
• Partners receiving income such as salary, interest, or profit share from firm must file in ITR-3.

Modes of Return Filing

• Mandatory DSC: If tax audit is required.
• EVC or Aadhaar OTP: Permitted when no tax audit is required.
• ITR-V Submission: For returns without DSC/EVC, verification must be submitted to CPC, Bengaluru, within 30 days.

Verification of Returns

• A managing partner verifies for a firm, and a designated partner verifies for an LLP.
• Special cases allow verification by other authorised persons.

Consequences of Non-Verification

Returns not verified within 30 days are invalid. Condonation requests can be made through the e-filing portal, subject to approval by CPC. Late verification is treated as delayed filing, with applicable consequences.

FILING OF INCOME-TAX RETURN BY OTHER ASSESSEES

Income-tax return (ITR) filing rules differ based on the category of assessee, such as AOP, BOI, Political Parties, and charitable trusts. Filing must be completed in the prescribed forms and manner within the specified due dates.

Obligation to File Returns

The filing of ITR is mandatory for the following categories under specific conditions:

• AOP/BOI (Section 139(1)(b)): If income before claiming certain exemptions/deductions exceeds the basic exemption limit.
• Artificial Juridical Persons (AJP): Same conditions as AOP/BOI.
• Co-operative Societies and Local Authorities: Mandatory in all cases.
• Charitable/Religious Trusts (Section 139(4A)): If income before claiming exemptions under Sections 11 and 12 exceeds the exemption limit.
• Political Parties (>Section 139(4B)): If income before claiming exemption under Section 13A exceeds the exemption limit.
• Specified Institutions (Section 139(4C), 139(4D) , 139(4E) , and 139(4F) ): Filing is mandatory based on specific conditions.

Mandatory Filing in Special Situations

Filing is required even if income is below the exemption limit if:

• Deposits in current accounts exceed Rs. 1 crore.
• Foreign travel expenses exceed Rs. 2 lakh.
• Electricity expenses exceed Rs. 1 lakh.
• Business turnover exceeds Rs. 60 lakh.
• Professional receipts exceed Rs. 10 lakh.
• TDS and TCS are Rs. 25,000 or more (Rs. 50,000 for senior citizens).
• Savings account deposits exceed Rs. 50 lakh.

Due Dates for Return Filing

• Transfer Pricing Audit Report ( Form 3CEB):November 30.
• Audit Cases: October 31.
• Other Cases: July 31.

Applicable Forms

• ITR-5:AOPs, BOIs, Co-operative Societies, Local Authorities, AJPs, Business Trusts, and Investment Funds.
• ITR-7:Charitable/Religious Trusts, Political Parties, and institutions claiming exemption under Section 10, 11 or 12 .

Modes of Return Filing

Returns must be filed electronically on the e-filing portal:

• With DSC: Mandatory for companies, political parties, and tax audit cases.
• With EVC/Aadhaar OTP/ITR-V Submission: Permitted in other cases.

Verification of Returns

Returns must be signed and verified by the authorised person per the entity type. Failure to verify within 30 days renders the return invalid, with an option to submit a condonation request to CPC.

FILING OF INCOME-TAX RETURN BY NON-RESIDENTS

Non-residents are required to file income-tax returns (ITRs) in India if they have income taxable under Indian law or a Double Taxation Avoidance Agreement (DTAA). Specific exemptions apply in cases where tax has been deducted at source.

Obligation to File Returns

• Foreign Companies: Return filing is mandatory if income is taxable in India.
• Non-resident Individuals: Return filing is mandatory if income taxable in India exceeds the basic exemption limit.
• Non-resident Firms: Return filing is mandatory if income is taxable in India unless the firm qualifies as a fiscally transparent entity under a DTAA, in which case the partner’s status determines filing requirements.
• Other Non-resident Entities: Return filing provisions as applicable to resident assesses shall apply.

Exemptions from Filing Returns

Certain non-resident taxpayers are exempt from filing an Income Tax Return in India if their income falls under specified categories and tax has been deducted at source (TDS) at the prescribed rates.

1. Non-resident Indian (NRI)

No return required if income consists only of:

• • Investment income from a foreign exchange asset; or
  • Long-term capital gains from such assets.

2. Non-resident Non-citizen Sportsperson

No return required if income consists of:

• • Earnings from participation in games/sports in India (except lottery winnings under Section 115BB);
  • Advertisement income;
  • Writing articles on sports for Indian newspapers/journals/magazines.

3. Non-resident Sports Association/Institution

No return required if income only consists of any guaranteed amount paid or payable in relation to games/sports played in India (other than lottery winnings).

4. Non-resident Non-citizen Entertainer

No return if income arises from performance in India.

5. Non-residents with Specified Incomes

No return required if income consists only of the following:

• • Interest/dividend on specified bonds or GDRs (Section 115AC);
  • Dividend income;
  • Interest on foreign currency borrowings, Rupee Denominated Bonds, Government securities, Infrastructure Debt Funds, SPVs, etc.;
  • Income from mutual fund units purchased in foreign currency;
  • Royalty/fees for technical services (not covered under Section 44DA).

6. Foreign Companies with POEM in India

Even if deemed resident (due to Place of Effective Management in India), no return required if income is limited to:

• • Dividend;
  • Interest on foreign currency borrowings, Rupee Denominated Bonds, Government securities, Infrastructure Debt Funds, SPVs, etc.;
  • Income from mutual fund units purchased in foreign currency.

7. Non-resident with Income from IFSC Investment Fund

No return if:

• • Income consists only of income from an IFSC Investment Fund under Section 194LBB;
  • Tax is deducted and deposited as per Section 194LBB;
  • No notice issued under Sec. 142(1) /148 /153A /153C .

8. Non-resident/Foreign Company with Income from Specified Fund (Category III AIF)

Exempt from filing if:

• • Income only from investment made in Category III AIF, being a specified fund under Section 10(4D);
  • No other Indian income;
  • TDS under Sec. 194LBB is deducted and deposited from such income;
  • Basic details (name, email, address, residency declaration, Tax ID in home country) submitted to AIF;
  • No notice issued under Sec. 142(1) /148 /153A /153C .

9. Non-resident Eligible Foreign Investor

Exempt if:

• • Operates as per SEBI’s framework;
  • Income from transfer of capital assets under Sec. 47(viiab) , listed on IFSC stock exchange;
  • Consideration from such a transfer is in foreign currency;
  • No other Indian income;
  • Furnishes details (name, contact, address, residency declaration, Tax ID in home country) to stockbroker;
  • No notice issued under Sec. 142(1) /148 /153A /153C .

FILING OF RETURN BY ANOTHER PERSON ON BEHALF OF ASSESSEE

Under the Income-tax Act, 1961, certain situations require someone other than the assessee to file their income-tax return. Such scenarios include the death of an assessee, liquidation of a company, or when a representative assessee is appointed.

Filing of Return by Legal Representative in Case of Death

• For Income Earned Before Death:

The legal representative files the return for income earned by the deceased from April 1 of the relevant financial year until the date of death. This income is taxable in the name of the deceased.

• For Income After Death:

• If the deceased had a valid will, income from the estate is taxed in the hands of the executor until the distribution to beneficiaries.
• If no will exists, income from the estate is taxed in the hands of the legal heirs as per personal law.

Tax Filing and Verification Summary:

• Income Before Death: Filed under the deceased’s PAN, verified by the legal representative.
• Income After Death (Testate): Filed under the executor’s PAN, verified by the executor.
• Income After Death (Intestate): Filed under the legal heir’s PAN, verified by the legal heir.

Filing by Representative Assessee

As per Section 160, the following persons can file returns as representative assessees:

• Non-residents: Agents appointed by the non-resident.
• Minors, Lunatics, or Idiots: Guardians or managers.
• Courts or Wards: Administrators, official trustees, or receivers.
• Trusts:

These representatives are deemed assessees for tax purposes and can file returns on behalf of the individual or entity they represent.

Filing in Case of Company Liquidation

Although the Income-tax Act does not explicitly define the procedure for filing returns for companies under liquidation, the Ministry of Corporate Affairs (MCA) vide Circular No. 41/2011, dated 6-7-2011 clarifies that:

• The official liquidator must obtain the company’s PAN for filing.
• The liquidator uses their personal PAN to verify the return under the verification section of the ITR.

FORMS FOR FILING INCOME-TAX RETURNS

ITR-1 (Sahaj): For ordinary resident individuals with income up to Rs. 50 lakhs from salary/pension, one house property, family pension, or other sources (not income taxable at special rates). Not for directors, NRIs, those with foreign assets, capital gains (except LTCG u/s 112A up to Rs. 1,25,000), business income, current account deposit exceeding Rs. 1 crore.

ITR-2: For individuals/HUFs (residents & non-residents) having salary, multiple house properties, capital gains, or other sources (including income taxable at special rates), but no business/profession income.

ITR-3: For individuals/HUFs with income from business or profession.

ITR-4 (Sugam): For ordinary resident individuals/HUFs/firms (not LLPs) opting for presumptive taxation u/s 44AD , 44ADA , or 44AE , plus salary/pension, one house property, or other sources (not at special rates). Not for non-residents, directors, those with foreign assets, multiple houses, capital gains (except LTCG u/s 112A up to Rs. 1,25,000), speculative/agency income, or total income above Rs. 50 lakhs.

ITR-5: For firms, LLPs, AOPs, BOIs, cooperative societies, local authorities, business trusts, investment funds, and others not filing ITR-7.

ITR-6: For companies (except those claiming exemption u/s 11 for charitable/religious purposes).

ITR-7: For charitable/religious trusts, political parties, certain institutions, and companies claiming exemption u/s 11 or 12 .

Updated Return: Any assessee can file applicable ITR (1–7) with additional schedules ‘Part A Gen_139(8A)’ and Schedule ‘Part B ATI’ to disclose additional income and tax thereon.

Modified Return: Filed in ITR-A by the successor company after business reorganisation, limited to details as per the order of the competent authority.

Block Assessment Return: Filed in ITR-B in case of search/requisition (u/s 132 /132A ) for undisclosed income of the block period, within the time prescribed in the notice.

BELATED RETURN OF INCOME

A belated return refers to a return of income filed after the expiry of the due date of filing the original return. Filing a belated return is allowed, subject to certain conditions and consequences.

Definition and Timeline

• A belated return is a return filed after the due date specified under Section 139(1).
• The time limit for filing a belated return is three months before the expiry of the relevant assessment year or before the completion of the assessment, whichever is earlier.
• For example, for Assessment Year 2025-26, the last date to file a belated return is 31st December 2025unless the assessment is completed earlier.

Revision of Belated Returns

• A belated return can be revised to correct errors or omissions.

Consequences of Filing Belated Returns

• Loss of Benefits:

Certain benefits, such as carrying forward losses or claiming certain deductions, are not allowed in case the return is filed belatedly.

• Late Filing Fees and Interest:

• Fees under Section 234F.
• Interest on outstanding tax liability under Section 234A.

Condonation of Delay

• In exceptional cases, the CBDT(Central Board of Direct Taxes) may condone the delay in filing a return, allowing the assessee to:
• Carry forward losses.
• Claim deductions.

REVISED RETURN OF INCOME

A revised return of income is filed to rectify errors or omissions in the original return. It can be submitted within the statutory timeline specified under the Income-tax Act, 1961.

Key Provisions

• Definition: A revised return replaces the original return when it contains errors or omissions.
• Time Limit:
• It can be filed at any time up to 3 months before the end of the relevant assessment year or before the completion of the assessment, whichever is earlier.
  • Multiple Revisions:
• There is no limit to the number of times a return can be revised.
• Subsequent revisions can be made if errors or omissions exist in the earlier revised return.
  • Status of Revised Return:
• A revised return substitutes the original return, rendering the original as withdrawn.
• For all legal purposes, the filing date of the original return applies to the revised return.

MODE OF FILING INCOME-TAX RETURN

Income-tax returns (ITRs) can be filed electronically through the Income-tax Department’s e-filing portal. The return must be verified via Digital Signature Certificate (DSC), Electronic Verification Code (EVC), Aadhaar OTP, or by submitting a signed physical acknowledgment to the Centralized Processing Centre (CPC) in Bengaluru. Specific categories of taxpayers are required to verify their returns using DSC.

Filing Methods

E-filing with DSC:

• Mandatory for companies, political parties, and taxpayers (excluding individuals and HUFs) subject to tax audit under Section 44AB, except those filing ITR-7.

E-filing without DSC:

• Verification can be done through EVC, Aadhaar OTP, or submission of ITR-V to CPC Bengaluru.

Paper Filing:

• Available only to super senior citizens (aged 80 years or above) filing ITR-1 (Sahaj) or ITR-4 (Sugam). Updated returns cannot be filed in paper format.

Verification Methods

• Digital Signature Certificate (DSC): Required for mandatory categories as listed above.
• Electronic Verification Code (EVC)A 10-digit alphanumeric code generated through net banking, bank account, Demat account, or ATM.
• Aadhaar OTP: Verification through an OTP sent to the Aadhaar-registered mobile number.
• Submission of ITR-V: Unsigned ITRs must be verified by sending the signed ITR-V to CPC Bengaluru within 30 days of filing.

Consequences of Non-verification

• Returns not verified within 30 days are treated as invalid. A condonation request can be submitted to CPC, subject to acceptance.
• The verification date will be considered the date of return filing for all compliance purposes.

VERIFICATION OF INCOME-TAX RETURN

Verification of an Income-tax Return (ITR) is mandatory for completing the return filing process. An unverified return is treated as invalid and remains unprocessed by the Income-tax Department.

Who Shall Verify a Return?

Individual

• By the Individual: An individual must personally verify the ITR.
• By an Authorized Person(if the individual is unable):

• If absent from India: By a person with a valid power of attorney.
• If mentally incapacitated: By a guardian or a competent person.
• If a minor: By a guardian or a competent person.
• For other reasons: By an authorized person with a valid power of attorney.
• On death: By the legal representative or executor.

Hindu Undivided Family (HUF)

• By the Karta: The return must be verified by the Karta.
• By another Member: If the Karta is absent from India or incapacitated, any other adult family member may verify.

Company

• By the Managing Director (MD): Generally, the MD verifies the return.
• By a Director or Authorized Person: If the MD cannot verify or is absent.
• For Insolvency: By an insolvency professional as per NCLT appointment.
• For Non-resident Companies: By a person holding a valid power of attorney.
• For Winding-up or Government Takeover: By the liquidator or principal officer, respectively.

Partnership Firm

• By the Managing Partner: If unavailable, any major partner may verify.

Limited Liability Partnership (LLP)

• By the Designated Partner: If unavailable, any partner or an NCLT-appointed professional may verify.

Local Authority

• Verified by its principal officer.

Political Party

• Verified by the Chief Executive Officer (e.g., Secretary).

Other Associations

• Verified by any member or the principal officer.

Other Persons

• Verified by the individual or someone competent to act on their behalf.

DEFECTIVE INCOME-TAX RETURN

A return of income is deemed defective if it lacks the required information. Section 139(9) of the Income-tax Act outlines conditions under which a return is considered defective. The defect must be rectified within 15 days of intimation, failing which the return will be treated as invalid.

Circumstances Leading to Defective Returns

• Incomplete Forms: Return forms not duly filled or essential details omitted.
• Incorrect Form: Filing in an incorrect return form.
• Missing Statements: Failure to file required forms. For example, claiming relief under section 89 in the return of income without filing Form 10E.
• Updated Returns Without Proof of Payment: Updated returns not accompanied by proof of tax payment under Section 140B.

CBDT’s Powers

The Central Board of Direct Taxes (CBDT) may modify or exempt certain conditions for treating a return as defective via notifications.

Process for Intimation and Rectification

• Notification of Defect: The Assessing Officer issues a notice specifying defects.
• Response Period: The assessee has 15 days to rectify, extendable upon request.
• Submission of Rectified Return: Rectified returns must be submitted electronically without the need for personal appearances.

Consequences of Non-rectification

• Invalid Return: Non-rectified returns are treated as not filed, invoking penalties and potential Best Judgement Assessment.
• Condonation of Delay: The Assessing Officer may accept rectifications made after the deadline but before assessment.

CONDONATION OF DELAY IN FILING INCOME-TAX RETURN

The Central Board of Direct Taxes (CBDT) is authorised to condone delays in filing income-tax returns in certain cases. Competent authorities for condonation are determined by the monetary value of claims.

Key Guidelines for Condonation of Delay

1. Admissibility of Condonation

Under Section 119(2)(b), the CBDT can condone the delay for:

• • Returns claiming a refund of tax or carry forward of losses.
  • Supplementary refund claims(where an additional refund is due after assessment).
  • Returns claiming deductions from gross total income.
  • Returns in cases of amalgamation, merger, or demerger.

1. Returns Claiming Refunds or Losses

CBDT may condone the delay in filing a return claiming a refund or carry forward of losses, subject to the following guidelines:

• The applications are handled by the designated competent authority based on the amount of claim [Circular No. 11/2024, dated 01-10-2024]:
  • Up to 1 crore: Principal CIT or CIT
  • Exceeding Rs. 1 crore but upto Rs. 3 crore: CCIT
  • Exceeding 3 crore: Principal CCIT
• Application must be filed within 5 years from the end of the assessment year for which the application/claim is made. If a refund arises due to a Court order, the time the case was pending in Court is not counted in the 5-year limit. However, in such a case, the application must be filed within 6 months from the Court order or the end of the financial year, whichever is later.
• Application should be decided within 6 months from the end of the month in which it is received.
• The delay should be due to a genuine reason and the case must involve hardship to the taxpayer.
• The competent authority may ask the Assessing Officer to check facts.
• If return filing was done but verification (sending ITR-V) was delayed, the Commissioner of Income-tax (CPC, Bengaluru) can condone.
• In case of supplementary refund claims, the following additional conditions must also be satisfied:
• Refund should arise as result of excess payment of tax by way TDS, TCS, advance tax or self-assessment tax.
• No interest is admissible on belated claim of refund.

1. Returns Claiming Deduction under Section 80P

A co-operative society cannot claim a deduction under Section 80P if it fails to file its return by the due date specified under Section 139(1). However, the CBDT has allowed Chief Commissioners or Directors General of Income Tax to condone the delay for assessment years 2018-19 to 2023-24.

To get this relief, the society must prove that the delay was due to-

• Reasons beyond its control
• Late completion of audits under State laws,
• Delay was not intended to evade tax.

The authorities must decide the application within three months and provide a hearing before rejecting it.

1. Returns in case of Amalgamation, Merger, or Demerger

When a company goes through a merger, demerger, or amalgamation, Section 170A (introduced from 1 April 2022) allows it to file a modified return of income to reflect the changes arising from the business reorganisation order by the High Court, Tribunal, or an Adjudicating Authority. This modified return must be filed within six months from the end of the month in which the order is issued.

However, this provision applies only if the order is issued on or after 1 April 2022. Companies whose orders were issued before 1 April 2022 could not earlier file modified returns electronically. To resolve this, the CBDT has allowed such companies (where the order was issued between 1 June 2016 and 31 March 2022) to file revised returns through the e-filing portal under a special category — “u/s 119(2)(b) – after condonation of delay/Court Order or Sanction Order of Business Reorganisation.”

To use this facility, successor companies must:

1. Inform the Jurisdictional Assessing Officer (JAO)using a prescribed proforma by 30 April 2024.

2. The JAO will verify the details and enable e-filing within 30 days.

3. The successor company must then file the return online by 30 June 2024.

In these cases, no separate application under Section 119(2)(b) is needed.

CONSEQUENCES OF DEFAULT IN FILING OF RETURN

If a person does not file an income tax return on or before the due date, or fails to file it at all, he may face several consequences which include denial of deductions/exemptions, restriction on carry forward of losses, levy of interest penalties, and possible prosecution.

Key Implications of Default

1. Denial of Deductions and Exemptions

• • Deductions under Part C of Chapter VI-A (e.g., Sections 80-IA, 80-IAC , 80-IB , etc.) and exemptions under Sections 10A, 10AA , and 10B are disallowed if the return is not filed on or before the due date specified under Section 139(1).
  • Political parties lose exemption under Section 13A, and registered trusts under Sections 12AA or 12AB lose exemptions if returns are not filed on or before the due date specified under Section 139.
  • Refund claims cannot be made without filing an ITR.

2. Loss of Carry-Forward of Losses

• • Business losses, speculation losses, capital losses, and losses under “Other Sources” cannot be carried forward unless returns are filed on time.
  • Losses under “House Property” may still be carried forward even if returns are filed late.

3. Loss of Interest on Refunds

• • Interest on tax refunds is calculated from the actual date of filing, not April 1 of the assessment year, if filed late.

Penalties and Prosecution

1. Interest and Late Fees

• • Interest under Section 234A is charged for delayed filing.
  • Late filing fees under Section 234F may apply.

2. Penalties

• • Institutions required to file under Sections 139(4A) or 139(4C) may face penalties under Section 272A for failure to file returns.

3. Prosecution

• • Non-filing may lead to imprisonment and fines under the Income-tax Act.

Assessment and Notices

1. Assessment Process

• • Assessing Officers may issue notices to file returns (Sections 142 and 148).
  • Non-filing may result in “Best Judgment Assessment” under Section 144.

2. Income Escaping Assessment

• • Unreported income may trigger reassessment proceedings under Section 148.

Updated Return of Income

Introduction

To promote voluntary tax compliance and provide flexibility beyond the timelines for filing belated or revised returns, the concept of an updated return was introduced. It allows taxpayers to file a return of income even after the expiry of the time limits for belated or revised returns.

When and Who Can File

Any person may file an updated return, whether or not an original, belated, or revised return has been filed earlier, and even in cases where a return of loss was previously filed.
The updated return must be a return of income and not a return of loss.

Time Limit

Effective April 1, 2025, an updated return can be filed within 48 months from the end of the relevant assessment year.

Form and Manner of Filing

The updated return shall be furnished in the applicable ITR Form, completing Schedules Part A Gen_139(8A) and Part B ATI.

It must be filed electronically under DSC in the case of a company, a political party, or any person (other than an individual or HUF) whose accounts are required to be audited under Section 44AB, except those filing ITR-7. All other taxpayers can verify their updated return either through a DSC or EVC.

Mandatory Disclosures in ITR

The assessee must provide:

• Basic identification details, prior return information, and eligibility to file;
• Reasons for filing and period of filing;
• Head-wise additional income and tax computation
• Details of tax payments, credits, and reliefs.

Restrictions on Filing

An updated return cannot be filed:

• If it results in a loss, reduction of tax liability, or increase in refund or results in refund of tax;
• If a search (Section 132), requisition (Section 132A), or survey (Section 133A)has been conducted (except TDS/TCS-related surveys). In such a case, an updated return cannot be furnished for the year in which the search/requisition/survey is made or for any earlier year;
• If assets or documents seized/requisitionedin another’s case belong to the assessee and notice has been issued. In such a case, an updated return cannot be furnished for the year in which the search or requisition is made or for any earlier year;
• If an updated return has already been filed for the same year;
• Where assessment, reassessment, recomputation, or revisionis pending or completed;
• If the Assessing Officer has information under the PMLA, Black Money Act, Benami Transactions Act, SAFEMA, or under DTAA/TIEA,and the same is communicated before filing;
• If prosecution proceedingshave been initiated for the relevant assessment year; or
• If the person/class of persons is notified by CBDTas ineligible.

Curative Updated Return

If filing an updated return for one year results in reduction of carried-forward loss, unabsorbed depreciation, or MAT/AMT credit in subsequent years, the assessee must also furnish updated returns for those affected years.

Tax Computation on Updated Return (Section 140B)

• The assessee must pay self-assessment tax, interest, fee, and additional income-taxbefore filing.
• If no earlier return was filed, tax and interest are computed on the updated income after considering advance tax, TDS/TCS, reliefs, and credits.
• Where an earlier return was filed, tax is computed on the incremental income.
• Additional taxis payable at prescribed rates, depending on the timing of the updated return. If return is filed within 12 months from the end of the relevant year, the additional tax is 25% of the total tax and interest payable. If filed between 12 and 24 months, it is 50%. If filed between 24 and 36 months, it is 60% and if filed between 36 and 48 months, it is 70%. For this calculation, “tax” includes surcharge and cess and any interest already paid earlier will be reduced from the total interest payable.

Assessment in case of updated return

In case of updated return, the assessment under Section 143(3) or Section 144 can be made at any time before the expiry of 12 months from the end of the financial year in which the updated return is furnished.

Income-tax Act, 1961

Section – 80

Submission of return for losses.

80. Notwithstanding anything contained in this Chapter, no loss which has not been determined in pursuance of a return filed in accordance with the provisions of sub-section (3) of section 139, shall be carried forward and set off under sub-section (1) of section 72or sub-section (2) of section 73 or sub-section (2) of section 73A or sub-section (1) or sub-section (3) of section 74 or sub-section (3) of section 74A.

Section – 80A

CHAPTER VIA

DEDUCTIONS TO BE MADE IN COMPUTING TOTAL INCOME

A.—General

Deductions to be made in computing total income.

80A. (1) In computing the total income of an assessee, there shall be allowed from his gross total income, in accordance with and subject to the provisions of this Chapter, the deductions specified in sections 80C to 80U.

(2) The aggregate amount of the deductions under this Chapter shall not, in any case, exceed the gross total income of the assessee.

(3) Where, in computing the total income of an association of persons or a body of individuals, any deduction is admissible under section 80G or section 80GGA or section 80GGC or section 80HH or section 80HHA or section 80HHB or section 80HHC or section 80HHD or section 80-I or section 80-IA or section 80-IB or section 80-IC or section 80-ID or section 80-IE or section 80J or section 80JJ, no deduction under the same section shall be made in computing the total income of a member of the association of persons or body of individuals in relation to the share of such member in the income of the association of persons or body of individuals.

(4) Notwithstanding anything to the contrary contained in section 10A or section 10AA or section 10B or section 10BA or in any provisions of this Chapter under the heading “C.—Deductions in respect of certain incomes“, where, in the case of an assessee, any amount of profits and gains of an undertaking or unit or enterprise or eligible business is claimed and allowed as a deduction under any of those provisions for any assessment year, deduction in respect of, and to the extent of, such profits and gains shall not be allowed under any other provisions of this Act for such assessment year and shall in no case exceed the profits and gains of such undertaking or unit or enterprise or eligible business, as the case may be.

(5) Where the assessee fails to make a claim in his return of income for any deduction under section 10A or section 10AA or section 10B or section 10BA or under any provision of this Chapter under the heading “C.—Deductions in respect of certain incomes”, no deduction shall be allowed to him thereunder.

(6) Notwithstanding anything to the contrary contained in section 10A or section 10AA or section 10B or section 10BA or in any provisions of this Chapter under the heading “C.—Deductions in respect of certain incomes”, where any goods or services held for the purposes of the undertaking or unit or enterprise or eligible business are transferred to any other business carried on by the assessee or where any goods or services held for the purposes of any other business carried on by the assessee are transferred to the undertaking or unit or enterprise or eligible business and, the consideration, if any, for such transfer as recorded in the accounts of the undertaking or unit or enterprise or eligible business does not correspond to the market value of such goods or services as on the date of the transfer, then, for the purposes of any deduction under this Chapter, the profits and gains of such undertaking or unit or enterprise or eligible business shall be computed as if the transfer, in either case, had been made at the market value of such goods or services as on that date.

Explanation.—For the purposes of this sub-section, the expression “market value”,—

(i) in relation to any goods or services sold or supplied, means the price that such goods or services would fetch if these were sold by the undertaking or unit or enterprise or eligible business in the open market, subject to statutory or regulatory restrictions, if any;

(ii) in relation to any goods or services acquired, means the price that such goods or services would cost if these were acquired by the undertaking or unit or enterprise or eligible business from the open market, subject to statutory or regulatory restrictions, if any;

(iii) in relation to any goods or services sold, supplied or acquired means the arm’s length price as defined in clause (ii) of section 92F of such goods or services, if it is a specified domestic transaction referred to in section 92BA.

(7) Where a deduction under any provision of this Chapter under the heading “C.—Deductions in respect of certain incomes” is claimed and allowed in respect of profits of any of the specified business referred to in clause (c) of sub-section (8) of section 35AD for any assessment year, no deduction shall be allowed under the provisions of section 35AD in relation to such specified business for the same or any other assessment year.

Section – 80AC

Deduction not to be allowed unless return furnished.

80AC. Where in computing the total income of an assessee of any previous year relevant to the assessment year commencing on or after—

(i) the 1st day of April, 2006 but before the 1st day of April, 2018, any deduction is admissible under section 80-IA or section 80-IAB or section 80-IB or section 80-IC or section 80-ID or section 80-IE;

(ii) the 1st day of April, 2018, any deduction is admissible under any provision of this Chapter under the heading “C.—Deductions in respect of certain incomes”,

no such deduction shall be allowed to him unless he furnishes a return of his income for such assessment year on or before the due date specified under sub-section (1) of section 139.

Section – 119

Instructions to subordinate authorities.

119. (1) The Board may, from time to time, issue such orders, instructions and directions to other income-tax authorities as it may deem fit for the proper administration of this Act, and such authorities and all other persons employed in the execution of this Act shall observe and follow such orders, instructions and directions of the Board :

Provided that no such orders, instructions or directions shall be issued—

(a) so as to require any income-tax authority to make a particular assessment or to dispose of a particular case in a particular manner; or

(b) so as to interfere with the discretion of 72-73[the Joint Commissioner (Appeals) or] the Commissioner (Appeals) in the exercise of his appellate functions.

(2) Without prejudice to the generality of the foregoing power,—

(a) the Board may, if it considers it necessary or expedient so to do, for the purpose of proper and efficient management of the work of assessment and collection of revenue, issue, from time to time (whether by way of relaxation of any of the provisions of sections 115P, 115S, 115WD, 115WE, 115WF, 115WG, 115WH, 115WJ, 115WK, 139, 143, 144, 147, 148, 154, 155, 158BFA, sub-section (1A) of section 201, sections 210, 211, 234A, 234B, 234C, 234E, 234F, 270A, 271, 271C, 271CA and 273 or otherwise), general or special orders in respect of any class of incomes or fringe benefits or class of cases, setting forth directions or instructions (not being prejudicial to assessees) as to the guidelines, principles or procedures to be followed by other income-tax authorities in the work relating to assessment or collection of revenue or the initiation of proceedings for the imposition of penalties and any such order may, if the Board is of opinion that it is necessary in the public interest so to do, be published and circulated in the prescribed manner for general information;

(b) the Board may, if it considers it desirable or expedient so to do for avoiding genuine hardship in any case or class of cases, by general or special order, authorise any income-tax authority, not being 72-73[a Joint Commissioner (Appeals) or] a Commissioner (Appeals)] to admit an application or claim for any exemption, deduction, refund or any other relief under this Act after the expiry of the period specified by or under this Act for making such application or claim and deal with the same on merits in accordance with law;

(c) the Board may, if it considers it desirable or expedient so to do for avoiding genuine hardship in any case or class of cases, by general or special order for reasons to be specified therein, relax any requirement contained in any of the provisions of Chapter IV or Chapter VI-A, where the assessee has failed to comply with any requirement specified in such provision for claiming deduction thereunder, subject to the following conditions, namely:—

(i) the default in complying with such requirement was due to circumstances beyond the control of the assessee; and

(ii) the assessee has complied with such requirement before the completion of assessment in relation to the previous year in which such deduction is claimed :

Provided that the Central Government shall cause every order issued under this clause to be laid before each House of Parliament.

(3) [*****]

Notes:

^72-73 Ins. by Act No. 08 of 2023, w.e.f. 1-4-2023.

Section – 139

CHAPTER XIV

PROCEDURE FOR ASSESSMENT

Return of income.

139. (1) Every person,—

a. being a company or a firm; or

b. being a person other than a company or a firm, if his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to income-tax,

shall, on or before the due date, furnish a return of his income or the income of such other person during the previous year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed :

Provided that a person referred to in clause (b), who is not required to furnish a return under this sub-section and residing in such area as may be specified by the Board in this behalf by notification in the Official Gazette, and who during the previous year incurs an expenditure of fifty thousand rupees or more towards consumption of electricity or at any time during the previous year fulfils any one of the following conditions, namely :—

i. is in occupation of an immovable property exceeding a specified floor area, whether by way of ownership, tenancy or otherwise, as may be specified by the Board in this behalf; or

ii. is the owner or the lessee of a motor vehicle other than a two wheeled motor vehicle, whether having any detachable side car having extra wheel attached to such two-wheeled motor vehicle or not; or

iii. [***]

iv. has incurred expenditure for himself or any other person on travel to any foreign country; or

v. is the holder of a credit card, not being an “add-on” card, issued by any bank or institution; or

vi. is a member of a club where entrance fee charged is twenty-five thousand rupees or more,

shall furnish a return, of his income during any previous year ending before the 1st day of April, 2005, on or before the due date in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed :

Provided further that the Central Government may, by notification in the Official Gazette, specify the class or classes of persons to whom the provisions of the first proviso shall not apply :

Provided also that every company or a firm shall furnish on or before the due date the return in respect of its income or loss in every previous year :

Provided also that a person, being a resident other than not ordinarily resident in India within the meaning of clause (6) of section 6, who is not required to furnish a return under this sub-section and who at any time during the previous year,—

a. holds, as a beneficial owner or otherwise, any asset (including any financial interest in any entity) located outside India or has signing authority in any account located outside India; or

b. is a beneficiary of any asset (including any financial interest in any entity) located outside India, shall furnish, on or before the due date, a return in respect of his income or loss for the previous year in such form and verified in such manner and setting forth such other particulars as may be prescribed:

Provided also that nothing contained in the fourth proviso shall apply to an individual, being a beneficiary of any asset (including any financial interest in any entity) located outside India where, income, if any, arising from such asset is includible in the income of the person referred to in clause (a) of that proviso in accordance with the provisions of this Act:

Provided also that every person, being an individual or a Hindu undivided family or an association of persons or a body of individuals, whether incorporated or not, or an artificial juridical person, if his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year, without giving effect to the provisions of clause (38) of section 10 or section 10A or section 10B or section 10BA or section 54 or section 54B or section 54D or section 54EC or section 54F or section 54G or section 54GA or section 54GB or Chapter VI-A exceeded the maximum amount which is not chargeable to income-tax, shall, on or before the due date, furnish a return of his income or the income of such other person during the previous year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed:

Provided also that a person referred to in clause (b), who is not required to furnish a return under this sub-section, and who during the previous year—

i. has deposited an amount or aggregate of the amounts exceeding one crore rupees in one or more current accounts maintained with a banking company or a co-operative bank; or

ii. has incurred expenditure of an amount or aggregate of the amounts exceeding two lakh rupees for himself or any other person for travel to a foreign country; or

iii. has incurred expenditure of an amount or aggregate of the amounts exceeding one lakh rupees towards consumption of electricity; or

iv. fulfils such other conditions as may be prescribed,

shall furnish a return of his income on or before the due date in such form and verified in such manner and setting forth such other particulars, as may be prescribed.

Explanation 1.—For the purposes of this sub-section, the expression “motor vehicle” shall have the meaning assigned to it in clause (28) of section 2 of the Motor Vehicles Act, 1988 (59 of 1988).

Explanation 2.—In this sub-section, “due date” means,—

(a) where the assessee other than an assessee referred to in clause (aa) is—

i. a company; or

ii. a person (other than a company) whose accounts are required to be audited under this Act or under any other law for the time being in force; or

iii. a partner of a firm whose accounts are required to be audited under this Act or under any other law for the time being in force or the spouse of such partner if the provisions of section 5A applies to such spouse, the 31st day of October of the assessment year;

aa. in the case of an assessee, including the partners of the firm or the spouse of such partner (if the provisions of section 5A applies to such spouse), being such assessee, who is required to furnish a report referred to in section 92E, the 30th day of November of the assessment year;

b. in the case of a person other than a company, referred to in the first proviso to this sub-section, the 31st day of October of the assessment year;

c. in the case of any other assessee, the 31st day of July of the assessment year.

Explanation 3.—For the purposes of this sub-section, the expression “travel to any foreign country” does not include travel to the neighbouring countries or to such places of pilgrimage as the Board may specify in this behalf by notification in the Official Gazette.

Explanation 4.—For the purposes of this section “beneficial owner” in respect of an asset means an individual who has provided, directly or indirectly, consideration for the asset for the immediate or future benefit, direct or indirect, of himself or any other person.

Explanation 5.—For the purposes of this section “beneficiary” in respect of an asset means an individual who derives benefit from the asset during the previous year and the consideration for such asset has been provided by any person other than such beneficiary.

Explanation 6.—For the purposes of this sub-section,—

a. “banking company” shall have the meaning assigned to it in clause (i) of the Explanation to section 269SS;

b. “co-operative bank” shall have the meaning assigned to it in clause (ii) of the Explanation to section 269SS.

(1A) Without prejudice to the provisions of sub-section (1), any person, being an individual who is in receipt of income chargeable under the head “Salaries” may, at his option, furnish a return of his income for any previous year to his employer, in accordance with such scheme as may be specified by the Board in this behalf, by notification in the Official Gazette, and subject to such conditions as may be specified therein, and such employer shall furnish all returns of income received by him on or before the due date, in such form (including on a floppy, diskette, magnetic cartridge tape, CD-ROM or any other computer readable media) and manner as may be specified in that scheme, and in such case, any employee who has filed a return of his income to his employer shall be deemed to have furnished a return of income under sub-section (1), and the provisions of this Act shall apply accordingly.

(1B) Without prejudice to the provisions of sub-section (1), any person, being a company or being a person other than a company, required to furnish a return of income under sub-section (1), may, at his option, on or before the due date, furnish a return of his income for any previous year in accordance with such scheme as may be specified by the Board in this behalf by notification in the Official Gazette and subject to such conditions as may be specified therein, in such form (including on a floppy, diskette, magnetic cartridge tape, CD-ROM or any other computer readable media) and in the manner as may be specified in that scheme, and in such case, the return of income furnished under such scheme shall be deemed to be a return furnished under sub-section (1), and the provisions of this Act shall apply accordingly.

(1C) Notwithstanding anything contained in sub-section (1), the Central Government may, by notification in the Official Gazette, exempt any class or classes of persons from the requirement of furnishing a return of income having regard to such conditions as may be specified in that notification.

(3) If any person who has sustained a loss in any previous year under the head “Profits and gains of business or profession” or under the head “Capital gains” and claims that the loss or any part thereof should be carried forward under sub-section (1) of section 72, or sub-section (2) of section 73, or sub­section (2) of section 73A or sub-section (1) or sub-section (3) of section 74, or sub-section (3) of section 74A, he may furnish, within the time allowed under sub-section (1), a return of loss in the prescribed form and verified in the prescribed manner and containing such other particulars as may be prescribed, and all the provisions of this Act shall apply as if it were a return under sub-section (1).

(4) Any person who has not furnished a return within the time allowed to him under sub-section (1), may furnish the return for any previous year at any time before three months prior to the end of the relevant assessment year or before the completion of the assessment, whichever is earlier.

(4A) Every person in receipt of income derived from property held under trust or other legal obligation wholly for charitable or religious purposes or in part only for such purposes, or of income being voluntary contributions referred to in sub-clause (iia) of clause (24) of section 2, shall, if the total income in respect of which he is assessable as a representative assessee (the total income for this purpose being computed under this Act without giving effect to the provisions of sections 11 and 12) exceeds the maximum amount which is not chargeable to income-tax, furnish a return of such income of the previous year in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and all the provisions of this Act shall, so far as may be, apply as if it were a return required to be furnished under sub-section (1).

(4B) The chief executive officer (whether such chief executive officer is known as Secretary or by any other designation) of every political party shall, if the total income in respect of which the political party is assessable (the total income for this purpose being computed under this Act without giving effect to the provisions of section 13A) exceeds the maximum amount which is not chargeable to income-tax, furnish a return of such income of the previous year in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and all the provisions of this Act, shall, so far as may be, apply as if it were a return required to be furnished under sub-section (1).

(4C) Every—

(a) research association referred to in clause (21) of section 10;

(b) news agency referred to in clause (22B) of section 10;

(c) association or institution referred to in clause (23A) of section 10;

(cc) person referred to in clause (23AAA) of section 10;

(d) institution referred to in clause (23B) of section 10;

(e) fund or institution referred to in sub-clause (iv) or trust or institution referred to in sub-clause (v) or any university or other educational institution referred to in sub-clause (iiiab) or sub-clause (iiiad) or sub-clause (vi) or any hospital or other medical institution referred to in sub-clause (iiiac) or sub-clause (iiiae) or sub-clause (via) of clause (23C) of section 10;

(ea) Mutual Fund referred to in clause (23D) of section 10;

(eb) securitisation trust referred to in clause (23DA) of section 10;

(eba) Investor Protection Fund referred to in clause (23EC) or clause (23ED) of section 10;

(ebb) Core Settlement Guarantee Fund referred to in clause (23EE) of section 10;

(ec) venture capital company or venture capital fund referred to in clause (23FB) of section 10;

(f) trade union referred to in sub-clause (a) or association referred to in sub-clause (b) of clause (24) of section 10;

(fa) Board or Authority referred to in clause (29A) of section 10;

(g) body or authority or Board or Trust or Commission (by whatever name called) referred to in clause (46) of section 10;

(h) infrastructure debt fund referred to in clause (47) of section 10,

shall, if the total income in respect of which such research association, news agency, association or institution, person or fund or trust or university or other educational institution or any hospital or other medical institution or trade union or body or authority or Board or Trust or Commission or infrastructure debt fund or Mutual Fund or securitisation trust or venture capital company or venture capital fund is assessable, without giving effect to the provisions of section 10, exceeds the maximum amount which is not chargeable to income-tax, furnish a return of such income of the previous year in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and all the provisions of this Act shall, so far as may be, apply as if it were a return required to be furnished under sub-section (1).

(4D) Every university, college or other institution referred to in clause (ii) and clause (iii) of sub-section (1) of section 35, which is not required to furnish return of income or loss under any other provision of this section, shall furnish the return in respect of its income or loss in every previous year and all the provisions of this Act shall, so far as may be, apply as if it were a return required to be furnished under sub-section (1).

(4E) Every business trust, which is not required to furnish return of income or loss under any other provisions of this section, shall furnish the return of its income in respect of its income or loss in every previous year and all the provisions of this Act shall, so far as may be, apply if it were a return required to be furnished under sub-section (1).

(4F) Every investment fund referred to in section 115UB, which is not required to furnish return of income or loss under any other provisions of this section, shall furnish the return of income in respect of its income or loss in every previous year and all the provisions of this Act shall, so far as may be, apply as if it were a return required to be furnished under sub-section (1).

(5) If any person, having furnished a return under sub-section (1) or sub-section (4), discovers any omission or any wrong statement therein, he may furnish a revised return at any time before three months prior to the end of the relevant assessment year or before the completion of the assessment, whichever is earlier.

(6) The prescribed form of the returns referred to in sub-sections (1) and (3) of this section, and in clause (i) of sub-section (1) of section 142 shall, in such cases as may be prescribed, require the assessee to furnish the particulars of income exempt from tax, assets of the prescribed nature and value, held by him as a beneficial owner or otherwise or in which he is a beneficiary , his bank account and credit card held by him, expenditure exceeding the prescribed limits incurred by him under prescribed heads and such other outgoings as may be prescribed.

(6A) Without prejudice to the provisions of sub-section (6), the prescribed form of the returns referred to in this section, and in clause (i) of sub-section (1) of section 142 shall, in the case of an assessee engaged in any business or profession, also require him to furnish the report of any audit referred to in section 44AB, or, where the report has been furnished prior to the furnishing of the return, a copy of such report together with proof of furnishing the report, the particulars of the location and style of the principal place where he carries on the business or profession and all the branches thereof, the names and addresses of his partners, if any, in such business or profession and, if he is a member of an association or body of individuals, the names of the other members of the association or the body of individuals and the extent of the share of the assessee and the shares of all such partners or the members, as the case may be, in the profits of the business or profession and any branches thereof.

(7) [***]

(8)(a) Where the return under sub-section (1) or sub-section (2) or sub-section (4) for an assessment year is furnished after the specified date, or is not furnished, then [whether or not the Assessing Officer has extended the date for furnishing the return under sub-section (1) or sub-section (2)] the assessee shall be liable to pay simple interest at fifteen per cent per annum, reckoned from the day immediately following the specified date to the date of the furnishing of the return or, where no return has been furnished, the date of completion of the assessment under section 144, on the amount of the tax payable on the total income as determined on regular assessment, as reduced by the advance tax, if any, paid, and any tax deducted at source :

Provided that the Assessing Officer may, in such cases and under such circumstances as may be prescribed, reduce or waive the interest payable by any assessee under this sub-section.

Explanation 1.—For the purposes of this sub-section, “specified date”, in relation to a return for an assessment year, means,—

a. in the case of every assessee whose total income, or the total income of any person in respect of which he is assessable under this Act, includes any income from business or profession, the date of the expiry of four months from the end of the previous year or where there is more than one previous year, from the end of the previous year which expired last before the commencement of the assessment year or the 30th day of June of the assessment year, whichever is later;

b. in the case of every other assessee, the 30th day of June of the assessment year.

Explanation 2.—Where, in relation to an assessment year, an assessment is made for the first time under section 147, the assessment so made shall be regarded as a regular assessment for the purposes of this sub-section.

(b) Where as a result of an order under section 147 or section 154 or section 155 or section 250 or section 254 or section 260 or section 262 or section 263 or section 264 or an order of the Settlement Commission under sub-section (4) of section 245D, the amount of tax on which interest was payable under this sub-section has been increased or reduced, as the case may be, the interest shall be increased or reduced accordingly, and—

i. in a case where the interest is increased, the Assessing Officer shall serve on the assessee, a notice of demand in the prescribed form specifying the sum payable, and such notice of demand shall be deemed to be a notice under section 156 and the provisions of this Act shall apply accordingly;

ii. in a case where the interest is reduced, the excess interest paid, if any, shall be refunded.

(c) The provisions of this sub-section shall apply in respect of the assessment for the assessment year commencing on the 1st day of April, 1988, or any earlier assessment year, and references therein to the other provisions of this Act shall be construed as references to the said provisions as they were applicable to the relevant assessment year.

(8A) Any person, whether or not he has furnished a return under sub-section (1) or sub-section (4) or sub-section (5), for an assessment year (herein referred to as the relevant assessment year), may furnish an updated return of his income or the income of any other person in respect of which he is assessable under this Act, for the previous year relevant to such assessment year, in the prescribed form, verified in such manner and setting forth such particulars as may be prescribed, at any time within [forty-eight] months from the end of the relevant assessment year:

Provided that the provision of this sub-section shall not apply, if the updated return,—

a. is a return of a loss; or

b. has the effect of decreasing the total tax liability determined on the basis of return furnished under sub-section (1) or sub-section (4) or sub-section (5); or

c. results in refund or increases the refund due on the basis of return furnished under sub-section (1) or sub-section (4) or sub-section (5), of such person under this Act for the relevant assessment year:

Provided further that a person shall not be eligible to furnish an updated return under this sub-section, where—

a. 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

b. a survey has been conducted under section 133A, other than sub-section (2A) of that section, in the case of such person; or

c. 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

d. 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 to the previous year in which such search is initiated or survey is conducted or requisition is made and any assessment year preceding such assessment year:

Provided also that no updated return shall be furnished by any person for the relevant assessment year, where—

a. an updated return has been furnished by him under this sub-section for the relevant assessment year; or

b. any proceeding for assessment or reassessment or recomputation or revision of income under this Act is pending or has been completed for the relevant assessment year in his case; or

c. 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 (13 of 1976) or the Prohibition of Benami Property Transactions Act, 1988 (45 of 1988) or the Prevention of Money-laundering Act, 2002 (15 of 2003) or the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (22 of 2015) and the same has been communicated to him, prior to the date of furnishing of return under this sub-section; or

d. 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

e. 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

f. he is such person or belongs to such class of persons, as may be notified by the Board in this regard:

⁸⁶[Provided also that no updated return shall be furnished by any person where any notice to show-cause under section 148A has been issued in his case after thirty-six months from the end of the relevant assessment year:

Provided also that the fourth proviso shall not apply where an order is passed under sub-section (3) of section 148A determining that it is not a fit case to issue notice under section 148:]

Provided also that if any person has sustained a loss in any previous year and has furnished a return of loss in the prescribed form within the time allowed under sub-section (1) and verified in the prescribed manner and containing such other particulars as may be prescribed, he shall be allowed to furnish an updated return where such updated return is a return of income:

Provided also that if the loss or any part thereof carried forward under Chapter VI or unabsorbed depreciation carried forward under sub-section (2) of section 32 or tax credit carried forward under section 115JAA or under section 115JD is to be reduced for any subsequent previous year as a result of furnishing of return of income under this sub-section for a previous year, an updated return shall be furnished for each such subsequent previous year.

(9) Where the Assessing Officer considers that the return of income furnished by the assessee is defective, he may intimate the defect to the assessee and give him an opportunity to rectify the defect within a period of fifteen days from the date of such intimation or within such further period which, on an application made in this behalf, the Assessing Officer may, in his discretion, allow; and if the defect is not rectified within the said period of fifteen days or, as the case may be, the further period so allowed, then, notwithstanding anything contained in any other provision of this Act, the return shall be treated as an invalid return and the provisions of this Act shall apply as if the assessee had failed to furnish the return :

Provided that where the assessee rectifies the defect after the expiry of the said period of fifteen days or the further period allowed, but before the assessment is made, the Assessing Officer may condone the delay and treat the return as a valid return.

Explanation.—For the purposes of this sub-section, a return of income shall be regarded as defective unless all the following conditions are fulfilled, namely :—

(a) the annexures, statements and columns in the return of income relating to computation of income chargeable under each head of income, computation of gross total income and total income have been duly filled in;

(aa) [***]

(b) the return is accompanied by a statement showing the computation of the tax payable on the basis of the return;

(bb) the return is accompanied by the report of the audit referred to in section 44AB, or, where the report has been furnished prior to the furnishing of the return, by a copy of such report together with proof of furnishing the report;

(c) the return is accompanied by proof of—

(i) the tax, if any, claimed to have been deducted or collected at source and the advance tax and tax on self-assessment, if any, claimed to have been paid :

Provided that where the return is not accompanied by proof of the tax, if any, claimed to have been deducted or collected at source, the return of income shall not be regarded as defective if—

a. a certificate for tax deducted or collected was not furnished under section 203 or section 206C to the person furnishing his return of income;

b. such certificate is produced within a period of two years specified under sub-section (14) of section 155;

(ii) the amount of compulsory deposit, if any, claimed to have been made under the Compulsory Deposit Scheme (Income-tax Payers) Act, 1974 (38 of 1974);

(ca) the return is accompanied by the proof of payment of tax as required under section 140B, if the return of income is a return furnished under sub­section (8A);

(d) where regular books of account are maintained by the assessee, the return is accompanied by copies of—

i. manufacturing account, trading account, profit and loss account or, as the case may be, income and expenditure account or any other similar account and balance sheet;

ii. in the case of a proprietary business or profession, the personal account of the proprietor; in the case of a firm, association of persons or body of individuals, personal accounts of the partners or members; and in the case of a partner or member of a firm, association of persons or body of individuals, also his personal account in the firm, association of persons or body of individuals;

(e) where the accounts of the assessee have been audited, the return is accompanied by copies of the audited profit and loss account and balance sheet and the auditor’s report and, where an audit of cost accounts of the assessee has been conducted, under section 233B of the Companies Act, 1956 (1 of 1956), also the report under that section;

(f) where regular books of account are not maintained by the assessee, the return is accompanied by a statement indicating the amounts of turnover or, as the case may be, gross receipts, gross profit, expenses and net profit of the business or profession and the basis on which such amounts have been computed, and also disclosing the amounts of total sundry debtors, sundry creditors, stock-in-trade and cash balance as at the end of the previous year:

Provided that the Board may, by notification in the Official Gazette, specify that any of the conditions specified in clauses (a) to (f) to the Explanation shall not apply to such class of assessees or shall apply with such modifications, as may be specified in such notification.

⁸⁷ [(9A) Where any return of income is furnished in pursuance of an order under clause (b) of sub-section (2) of section 119, the provisions of this section shall apply.]

(10) [Omitted by the Finance (No. 2) Act, 1991, w.e.f. 1-4-1991.]

Notes:

⁸⁵ for “twenty-four” by Act No. 7 of 2025, w.e.f. 1-4-2025.

⁸⁶ by Act No. 7 of 2025, w.e.f. 1-4-2025.

⁸⁷ by Act No. 15 of 2024, w.e.f. 1-10-2024.

Section – 140

Return by whom to be verified.

140. The return under section 115WD or section 139 shall be verified—

(a) in the case of an individual,—

i. by the individual himself;

ii. where he is absent from India, by the individual himself or by some person duly authorised by him in this behalf;

iii. where he is mentally incapacitated from attending to his affairs, by his guardian or any other person competent to act on his behalf; and

iv. where, for any other reason, it is not possible for the individual to verify the return, by any person duly authorised by him in this behalf:

Provided that in a case referred to in sub-clause (ii) or sub-clause (iv), the person verifying the return holds a valid power of attorney from the individual to do so, which shall be attached to the return;

(b) in the case of a Hindu undivided family, by the karta, and, where the karta is absent from India or is mentally incapacitated from attending to his affairs, by any other adult member of such family;

(c) in the case of a company, by the managing director thereof, or where for any unavoidable reason such managing director is not able to verify the return, or where there is no managing director, by any director thereof or any other person, as may be prescribed for this purpose:

Provided that where the company is not resident in India, the return may be verified by a person who holds a valid power of attorney from such company to do so, which shall be attached to the return :

Provided further that,—

(a) where the company is being wound up, whether under the orders of a court or otherwise, or where any person has been appointed as the receiver of any assets of the company, the return shall be verified by the liquidator referred to in sub-section (1) of section 178;

(b) where the management of the company has been taken over by the Central Government or any State Government under any law, the return of the company shall be verified by the principal officer thereof; or

(c) where in respect of a company, an application for corporate insolvency resolution process has been admitted by the Adjudicating Authority under section 7 or section 9 or section 10 of the Insolvency and Bankruptcy Code, 2016 (31 of 2016), the return shall be verified by the insolvency professional appointed by such Adjudicating Authority.

Explanation.—For the purposes of this clause the expressions “insolvency professional” and “Adjudicating Authority” shall have the respective meanings assigned to them in clause (18) of section 3 and clause (1) of section 5 of the Insolvency and Bankruptcy Code, 2016 (31 of 2016);

(cc) in the case of a firm, by the managing partner thereof, or where for any unavoidable reason such managing partner is not able to verify the return, or where there is no managing partner as such, by any partner thereof, not being a minor;

(cd) in the case of a limited liability partnership, by the designated partner thereof, or where for any unavoidable reason such designated partner is not able to verify the return, or where there is no designated partner as such, by any partner thereof or any other person, as may be prescribed for this purpose;

(d) in the case of a local authority, by the principal officer thereof;

(dd) in the case of a political party referred to in sub-section (4B) of section 139, by the chief executive officer of such party (whether such chief executive officer is known as secretary or by any other designation);

(e) in the case of any other association, by any member of the association or the principal officer thereof; and

(f) in the case of any other person, by that person or by some person competent to act on his behalf.

Section – 158BC

Procedure for block assessment.

158BC. (1) Where any search has been initiated under section 132 or books of account, other documents or assets are requisitioned under section 132A, in the case of any person, then,—

(a) the Assessing Officer shall, in respect of search initiated, or books of account or other documents or any assets requisitioned, on or after the 1st day of September, 2024, issue a notice to such person, requiring him to furnish within such period, not exceeding a period of sixty days, as may be specified in the notice, a return in the form and verified in the manner, as may be prescribed, setting forth his ⁴¹1***1 undisclosed income, for the block period: Provided that such return shall be considered as if it was a return furnished under the provisions of section 139 and notice under sub-section (2) of section 143 shall thereafter be issued:

Provided further that any return of income, required to be furnished by an assessee under this section and furnished beyond the period allowed in the notice shall not be deemed to be a return under section 139:

Provided also that no notice under section 148 is required to be issued for the purpose of proceeding under this Chapter:

Provided also that a person who has furnished a return under this clause shall not be entitled to furnish a revised return:

⁴²[Provided also that the time allowed for furnishing a return under this clause may be extended by a further period of thirty days, where—

(i) in respect of a previous year immediately preceding the previous year in which the search is initiated or requisition is made, the due date for furnishing the return has not expired prior to the date of initiation of such search or requisition;

(ii) the assessee was liable for audit under section 44AB for such previous year;

(iii) the accounts (maintained in normal course) of such previous year have not been audited on the date of issuance of such notice; and

(iv) the assessee requests in writing for extension of time for furnishing such return to get such accounts audited;]

(b) the Assessing Officer shall proceed to determine the ⁴³[total undisclosed income] of the block period in the manner laid down in section 158BB and the provisions of section 142, sub-sections (2) and (3) of section 143, section 144, section 145, section 145A and section 145B shall, so far as may be, apply;

(c) the Assessing Officer, on determination of the “[total undisclosed income] of the block period in accordance with this Chapter, shall pass an order of assessment or reassessment and determine the tax payable by him on the basis of such assessment or reassessment:

Provided that nothing in the provisions of section 144C shall apply in respect of such order:

⁴⁵ [****]

(d) the assets seized under section 132 or requisitioned under section 132A shall be dealt with in accordance with the provisions of section 132B.

(2) The provisions of sub-section (1) of section 143 shall not apply to the return furnished under this section.

(3) The Assessing Officer, before issuance of notice under clause (a) of sub-section (1), shall take prior approval of the Additional Commissioner or the Additional Director or the Joint Commissioner or the Joint Director, as the case may be.

Notes:

⁴¹ Words “total income, including the” omtt. by Act No. 7 of 2025, w.r.e.f. 1-9-2024.

⁴² by Act No. 7 of 2025, w.r.e.f. 1-9-2024.

⁴³ for “total income including the undisclosed income” by Act No. 7 of 2025, w.r.e.f. 1-9-2024.

⁴⁴ for “total income” by Act No. 7 of 2025, w.r.e.f. 1-9-2024.

⁴⁵ by Act No. 7 of 2025, w.r.e.f. 1-9-2024. Prior to its omission, second proviso read as under :

“Provided further that where the order of assessment or reassessment is made in pursuance of section 158BD, the block period for such assessment or reassessment shall be the same as that determined in respect of the person in whose case search was made under section 132, or whose books of account or other documents or any assets were requisitioned under section 132A, and proceedings under section 158BD were initiated due to such search or requisition, as the case may be;”

Section – 160

B. Representative assessees – General provisions

Representative assessee.

160. (1) For the purposes of this Act, “representative assessee” means—

i. in respect of the income of a non-resident specified in sub-section (1) of section 9, the agent of the non-resident, including a person who is treated as an agent under section 163;

ii. in respect of the income of a minor, lunatic or idiot, the guardian or manager who is entitled to receive or is in receipt of such income on behalf of such minor, lunatic or idiot;

iii. in respect of income which the Court of Wards, the Administrator- General, the Official Trustee or any receiver or manager (including any person, whatever his designation, who in fact manages property on behalf of another) appointed by or under any order of a court, receives or is entitled to receive, on behalf or for the benefit of any person, such Court of Wards, Administrator-General, Official Trustee, receiver or manager;

iv. in respect of income which a trustee appointed under a trust declared by a duly executed instrument in writing whether testamentary or otherwise [including any wakf deed which is valid under the Mussalman Wakf Validating Act, 1913 (6 of 1913),] receives or is entitled to receive on behalf or for the benefit of any person, such trustee or trustees;

v. in respect of income which a trustee appointed under an oral trust receives or is entitled to receive on behalf or for the benefit of any person, such trustee or trustees.

Explanation 1.—A trust which is not declared by a duly executed instrument in writing [including any wakf deed which is valid under the Mussalman Wakf Validating Act, 1913 (6 of 1913), shall be deemed, for the purposes of clause (iv), to be a trust declared by a duly executed instrument in writing if a statement in writing, signed by the trustee or trustees, setting out the purpose or purposes of the trust, particulars as to the trustee or trustees, the beneficiary or beneficiaries and the trust property, is forwarded to the Assessing Officer,—

i. where the trust has been declared before the 1st day of June, 1981, within a period of three months from that day; and

ii. in any other case, within three months from the date of declaration of the trust.

Explanation 2.—For the purposes of clause (v), “oral trust” means a trust which is not declared by a duly executed instrument in writing [including any wakf deed which is valid under the Mussalman Wakf Validating Act, 1913 (6 of 1913),] and which is not deemed under Explanation I to be a trust declared by a duly executed instrument in writing.

(2) Every representative assessee shall be deemed to be an assessee for the purposes of this Act.

Section – 168

E.—Executors

168. (1) Subject as hereinafter provided, the income of the estate of a deceased person shall be chargeable to tax in the hands of the executor,—

(a) if there is only one executor, then, as if the executor were an individual; or

(b) if there are more executors than one, then, as if the executors were an association of persons;

and for the purposes of this Act, the executor shall be deemed to be resident or non-resident according as the deceased person was a resident or non-resident during the previous year in which his death took place.

(2) The assessment of an executor under this section shall be made separately from any assessment that may be made on him in respect of his own

(3) Separate assessments shall be made under this section on the total income of each completed previous year or part thereof as is included in the period from the date of the death to the date of complete distribution to the beneficiaries of the estate according to their several interests.

(4) In computing the total income of any previous year under this section, any income of the estate of that previous year distributed to, or applied to the benefit of, any specific legatee of the estate during that previous year shall be excluded; but the income so excluded shall be included in the total income of the previous year of such specific legatee.

Explanation.—In this section, “executor” includes an administrator or other person administering the estate of a deceased person.

Section – 170

F.—Succession to business or profession

Succession to business otherwise than on death.

170. (1) Where a person carrying on any business or profession (such person hereinafter in this section being referred to as the predecessor) has been succeeded therein by any other person (hereinafter in this section referred to as the successor) who continues to carry on that business or profession,—

(a) the predecessor shall be assessed in respect of the income of the previous year in which the succession took place up to the date of succession;

(b) the successor shall be assessed in respect of the income of the previous year after the date of succession.

(2) Notwithstanding anything contained in sub-section (1), when the predecessor cannot be found, the assessment of the income of the previous year in which the succession took place up to the date of succession and of the previous year preceding that year shall be made on the successor in like manner and to the same extent as it would have been made on the predecessor, and all the provisions of this Act shall, so far as may be, apply accordingly.

(2A) Notwithstanding anything contained in sub-sections (1) and (2), where there is succession, the assessment or reassessment or any other proceedings, made or initiated on the predecessor during the course of pendency of such succession, shall be deemed to have been made or initiated on the successor and all the provisions of this Act shall, so far as may be, apply accordingly.

Explanation.—For the purposes of this sub-section, the term “pendency” means the period commencing from the date of filing of application for such succession of business before the High Court or tribunal or the date of admission of an application for corporate insolvency resolution by the Adjudicating Authority as defined in clause (1) of section 5 of the Insolvency and Bankruptcy Code, 2016 (31 of 2016) and ending with the date on which the order of such High Court or tribunal or such Adjudicating Authority, as the case may be, is received by the Principal Commissioner or the Commissioner.

(3) When any sum payable under this section in respect of the income of such business or profession for the previous year in which the succession took place up to the date of succession or for the previous year preceding that year, assessed on the predecessor, cannot be recovered from him, the Assessing Officer shall record a finding to that effect and the sum payable by the predecessor shall thereafter be payable by and recoverable from the successor, and the successor shall be entitled to recover from the predecessor any sum so paid.

(4) Where any business or profession carried on by a Hindu undivided family is succeeded to, and simultaneously with the succession or after the succession there has been a partition of the joint family property between the members or groups of members, the tax due in respect of the income of the business or profession succeeded to, up to the date of succession, shall be assessed and recovered in the manner provided in section 171, but without prejudice to the provisions of this section.

Explanation.—For the purposes of this section, “income” includes any gain accruing from the transfer, in any manner whatsoever, of the business or profession as a result of the succession.

Section – 170A

⁵⁵[Effect of order of tribunal or court in respect of business reorganisation.

170A. (1) Notwithstanding anything to the contrary contained in section 139, in a case of business reorganisation, where prior to the date of order of a High Court or tribunal or an Adjudicating Authority as defined in clause (1) of section 5 of the Insolvency and Bankruptcy Code, 2016 (31 of 2016) (hereinafter referred to as order in respect of business reorganisation), as the case may be, any return of income has been furnished by an entity to which such order applies under the provisions of section 139 for any assessment year relevant to the previous year to which such order applies, the successor shall furnish, within a period of six months from the end of the month in which the order was issued, a modified return in such form and manner, as may be prescribed, in accordance with and limited to the said order.

(2) Where the assessment or reassessment proceedings for an assessment year relevant to a previous year to which the order in respect of the business reorganisation applies,—

(a) have been completed on the date of furnishing of the modified return in accordance with the provisions of sub-section (1), the Assessing Officer shall pass an order modifying the total income of the relevant assessment year determined in such assessment or reassessment, in accordance with such order and taking into account the modified return so furnished;

(b) are pending on the date of furnishing of the modified return in accordance with the provisions of sub-section (1), the Assessing Officer shall pass an order assessing or reassessing the total income of the relevant assessment year in accordance with the order of the business reorganisation and taking into account the modified return so furnished.

(3) Save as otherwise provided in this section, in an assessment or reassessment made in respect of an assessment year under this section, all other provisions of this Act shall apply and the tax shall be chargeable at the rate or rates as applicable to such assessment year.

Explanation.—In this section, the expressions—

(i) “business reorganisation” means the reorganisation of business involving the amalgamation or demerger or merger of business of one or more persons;

(ii) “successor” means all resulting companies in a business reorganisation, whether or not the company was in existence prior to such business reorganisation.]

Income Tax Rules

Rule – 12

PART III
ASSESSMENT PROCEDURE

Return of income and return of fringe benefits.

12. (1) The return of income required to be furnished under sub-section (1) or sub-section (3) or sub-section (4A) or sub-section (4B) or sub-section (4C) or sub-section (4D) ⁹¹[or sub-section (4E)] ⁹²[or sub-section (4F)] of section 139 or clause (i) of sub-section (1) of section 142 ⁹³[or section 148] or section 153A relating to the assessment year commencing [on the 1st day of April, ⁹⁴[2024] shall,—

(a) in the case of a person being ⁹⁵[an individual who is a resident other than not ordinarily resident and] where the total income includes income chargeable to income-tax, under the head,—

i. “Salaries” or income in the nature of family pension as defined in the Explanation to clause (Ha) of section 57; or

ii. “Income from house property”, where assessee does not own more than one house property and does not have any brought forward loss ⁹⁶[or loss to be carried forward] under the head; or

iii. “Income from other sources”, except winnings from lottery or income from race horses [and does not have any loss under the head], be in Form SAHAJ (ITR-1) and be verified in the manner indicated therein:

Provided that the provisions of this clause shall not apply to a person who,-

⁹⁷ [(I) has assets (including financial interest in any entity) located outside India;

(LA) has signing authority in any account located outside India;

(IB) has income from any source outside India;

(IC) has income to be apportioned in accordance with provisions of section 5Ad

⁹⁸[(ID) has claimed deduction under section 57, other than deduction claimed under clause (iia) thereof;

(IE) is a director in any company;

(IF) has held any unlisted equity share at any time during the previous year;

(IG) is assessable for the whole or any part of the income on which tax has been deducted at source in the hands of a person other than the assessee;]

(II) has claimed any relief of tax under section 90 or 90A or deduction of tax under section 91; ⁹⁹[***]

¹[(III) has agricultural income, exceeding five thousand rupees;]

²[(IV) has total income, exceeding fifty lakh rupees;

(V) has income taxable under section 115BBDA; ³[***]

⁴[(VI) has income of the nature referred to in section 115BBE;]

(VII) is a person in whose case tax has been deducted under section 194N; or is a person in whose case payment or deduction of tax has been deferred under sub-section (2) of section 191 or sub-section (1C) of section 192;]

(b) ⁵[***]

(ba) ⁶[***]

⁷[(c) in the case of a person being an individual [not being an individual to whom clause (a) applies] or a Hindu undivided family where the total income does not include income ⁸[under the head] business or profession, be in Form No. ITR-2 and be verified in the manner indicated therein;]

[(Co in the case of a person being an individual or ⁹[a Hindu undivided family, who is a resident other than not ordinarily resident, or a firm, other than limited liability partnership firm, which is a resident] deriving ¹⁰[income under the head “Profits or gains of business or profession” and such income is computed in accordance with special provisions referred to in section 44AD, section 44ADA and section 44AE of the Act for computation of such income, be in Form SUGAM (ITR-4)] and be verified in the manner indicated therein:]

Provided that the provisions of this clause shall not apply to a person who,-

¹¹[(I) has assets (including financial interest in any entity) located outside India;

(IA) has signing authority in any account located outside India;

(IB) has income from any source outside India;

(IC) has income to be apportioned in accordance with provisions of section 5A;

(ID) is a director in any company;

(1E) has held any unlisted equity share at any time during the previous year;

(IF) has total income, exceeding fifty lakh rupees;

(IG) owns more than one house property, the income of which is chargeable under the head “Income from house property”;

(IH) has any brought forward loss or loss to be carried forward under any head of income;

(IJ) is assessable for the whole or any part of the income on which tax has been deducted at source in the hands of a person other than the assessee;]

(II) has claimed any relief of tax under section 90 or 90A or deduction of tax under section 91; ¹²[***]

¹³[(III) has agricultural income, exceeding five thousand rupees;]

¹⁴[(P has income taxable under section 115BBDA; or

(V) has income of the nature referred to in section 115BBE;]

¹⁵[(VI) has income of the nature specified int clause (vi) of sub-section (2) of section 17 on which tax is payable or deductible, as the case may be, under sub-section (2) of section 191 or sub-section (1C) of section 192;]

(d) in the case of a person being an individual or a Hindu undivided family other than the individual or Hindu undivided family referred to in clause (a) 16_[***] or clause (c) [or clause (Ca)] and ¹⁷[having income under the head] business or profession, be in ¹⁸[Form No. ITR-3] and be verified in the manner indicated therein;

(e) in the case of a person not being an individual or a Hindu undivided family or a company or a person to which clause (g) applies, be in Form No. ITR-5 and be verified in the manner indicated therein;

(f) in the case of a company not being a company to which clause (g) applies, be in Form No. ITR-6 and be verified in the manner indicated therein;

(g) in the case of a person including a company whether or not registered under section 25 of the Companies Act, 1956 (1 of 1956), required to file a return under sub-section (4A) or sub-section (4B) or sub-section (4C) or sub-section (4D) ¹⁹[***] of section 139, be in Form No. ITR-7 and be verified in the manner indicated therein;

(h) [***]

(2) The return of income required to be furnished in Form SAHAJ (ITR-1) or Form No. ITR-2 or Form No. ITR-3 or ²⁰[Form SUGAM (ITR-4)] or Form No. ITR-5 or Form No. ITR-6 [or Form No. ITR-7] shall not be accompanied by a statement showing the computation of the tax payable on the basis of the return, or proof of the tax, if any, claimed to have been deducted or collected at source or the advance tax or tax on self-assessment, if any, claimed to have been paid or any document or copy of any account or form or report of audit required to be attached with the return of income under any of the provisions of the Act:

[Provided that where an assessee is required to furnish a report of audit specified under sub-clause (iv), (v), (vi) or (via) of clause (23C) of section 10, section 10A ²¹[, section 10AA], clause (b) of sub-section (1) of section 12A, section 44AB ²¹[, section 44DA, section 50B], section 80-IA, section 80-IB, section 80-IC, section 80-ID, section 80JJAA, section 80LA, section 92E, ²²[section 115JB ²³[, section 115JC] or section 115VW] ²⁴[or to give a notice under clause (a) of sub-section (2) of section 11] of the Act, he shall furnish the same electronically.]

²⁵[(3) The return of income referred to in sub-rule (1) shall be furnished by a person mentioned in column (ii) of the Table below to whom the conditions specified in column (iii) apply, in the manner specified in column (iv) thereof:—

TABLE

Sl. No.	Person	Condition	Manner of furnishing return of income
(i)	(ii)	(iii)	(iv)
26[1	Individual or Hindu Undivided Family	(a) Accounts are required to be audited under section 44AB of the Act ;	(A) Electronically under digital signature; or (B) Transmitting the data electronically in the return under electronic verification code;
		(b) Where total income assessable under the Act during the previous year of a person, being an individual of the age of eighty years or more at any time during the previous year, and who furnishes the return in Form number SAHAJ (ITR-1) or Form number SUGAM (ITR-4).	(A) Electronically under digital signature; or (B) Transmitting the data electronically in the return under electronic verification code; or (C) Transmitting the data in the return electronically and thereafter submitting the verification of the return in Form ITRV; or (D) Paper form;
		(c) In any other case	(A) Electronically under digital signature; or (B) Transmitting the data electronically in the return under electronic verification code; or (C) Transmitting the data in the return electronically and thereafter submitting the verification of the return in Form ITRV.]
2	Company	In all cases.	Electronically under digital signature.
3	A person required to furnish the re- turn in Form ITR-7	(a) In case of a political party; (b) In any other case.	Electronically under digital signature; (A) Electronically under digital signature; or (B) Transmitting the data in the return electronically under electronic verification code; or (C) Transmitting the data in the return electronically and thereafter submitting the verification of the return in Form ITRV
4	Firm or limited liability partnership or any person (other than a person mentioned in Sl. No. 1 to 3 above) who is required to file return in Form ITR-5	(a) Accounts are required to be audited under section 44AB of the Act; (b) In any other case.	Electronically under digital signature; (A) Electronically under digital signature; or (B) Transmitting the data in the return electronically under electronic verification code; or (C) Transmitting the data in the return electronically and thereafter submitting the verification of the return in Form ITRV.

Explanation.-For the purposes of this sub-rule “electronic verification code” means a code generated for the purpose of electronic verification of the person furnishing the return of income as per the data structure and standards specified by Principal Director General of Income-tax (Systems) or Director General of Income-tax (Systems).]

(4) The ²⁷ [Principal Director-General of Income-tax (Systems) or Director General of Income-tax (Systems)] shall specify the procedures, formats and standards for ensuring secure capture and transmission of data and shall also be responsible for evolving and implementing appropriate security, archival and retrieval policies in relation to furnishing the returns ²⁸[in the manners (other than the paper form) specified in column (iv) of the Table in sub-rule (3)] and the report of audit ²⁹[or notice] in the manner specified in proviso to sub-rule (2).

(5) Where a return of income relates to the assessment year commencing on the 1st day of April, ³⁰120231 or any earlier assessment year, it shall be furnished in the appropriate form as applicable in that assessment year.

Notes:

⁹¹ Inserted by the IT (Seventh Amdt.) Rules, 2015, w.r.e.f. 1-4-2015.

⁹² Inserted by the IT (Ninth Amdt.) Rules, 2016, w.e.f. 1-4-2016.

⁹³ Substituted for “or sub-section (1) of section 148” by the IT (Twentieth Amdt.) Rules, 2021, w.e.f. 27-7-2021.

⁹⁴ Substituted for “2023” by the IT (Thirtieth Amdt.) Rules, 2023, w.e.f. 1-4-2024.

⁹⁵ Substituted for “an individual” by the IT (Second Amdt.) Rules, 2018, w.r.e.f. 1-4-2018.

⁹⁶ Inserted by the IT (Second Amdt.) Rules, 2018, w.r.e.f. 1-4-2018.

⁹⁷ Items (I) to (IC) substituted for item (I) by the IT (Second Amdt.) Rules, 2018, w.r.e.f. 1-4-2018.

⁹⁸ Items (ID) to (IG) inserted by the IT (Second Amdt.) Rules, 2019, w.e.f. 1-4-2019.

⁹⁹ Word “or” omitted by the IT (Fourth Amdt.) Rules, 2017, w.e.f. 1-4-2017.

¹ Substituted by the IT (Eighth Amdt.) Rules, 2015, w.r.e.f. 1-4-2015.

² Inserted by the IT (Fourth Amdt.) Rules, 2017, w.e.f. 1-4-2017.

³ Word “or” omitted by the IT (Seventh Amdt.) Rules, 2021, w.e.f. 1-4-2021.

⁴ Inserted by the IT (Seventh Amdt.) Rules, 2021, w.e.f. 1-4-2021.

⁵ Omitted by the IT (Fourth Amdt.) Rules, 2017, w.e.f. 1-4-2017.

⁶ Omitted, by the IT (Fourth Amdt.) Rules, 2017, w.e.f. 1-4-2017.

⁷ Substituted by the IT (Fourth Amdt.) Rules, 2017, w.e.f. 1-4-2017.

⁸ Substituted for “derived from a proprietory” by the IT (Second Amdt.) Rules, 2018, w.r.e.f. 1-4-2018.

⁹ Substituted for “a Hindu undivided family or a firm, other than a limited liability partnership firm,” by the IT (Second Amdt.) Rules, 2019, w.e.f. 1-4­2019.

¹⁰ Substituted for “business income and such income is computed in accordance with special provisions referred to in section 44AD and section 44AE of the Act for computation of business income, be in Form SUGAM (ITR-4S)” by the IT (Fourth Amdt.) Rules, 2017, w.e.f. 1-4-2017.

¹¹ Items (I) to (II) substituted for item (I) by the IT (Second Amdt.) Rules, 2019, w.e.f. 1-4-2019.

¹² Word “or” omitted by the IT (Fourth Amdt.) Rules, 2017, w.e.f. 1-4-2017.

¹³ Substituted by the IT (Eighth Amdt.) Rules, 2015, w.r.e.f. 1-4-2015.

¹⁴ Inserted by the IT (Fourth Amdt.) Rules, 2017, w.e.f. 1-4-2017.

¹⁵ Inserted by the IT (Seventh Amdt.) Rules, 2021, w.e.f. 1-4-2021.

¹⁶ Words “or clause (b)” omitted by the IT (Fourth Amdt.) Rules, 2017, w.e.f. 1-4-2017.

¹⁷ Substituted for “deriving income from a proprietary” by the IT (Second Amdt.) Rules, 2018, w.r.e.f. 1-4-2018.

¹⁸ Substituted for “Form No. ITR-4” by the IT (Fourth Amdt.) Rules, 2017, w.e.f. 1-4-2017.

¹⁹ Words “or sub-section (4E) or sub-section (4F)” omitted by the IT (Second Amdt.) Rules, 2019, w.e.f. 1-4-2019.

²⁰ Substituted for “Form SUGAM (ITR-45) or Form No. ITR-4” by the IT (Fourth Amdt.) Rules, 2017, w.e.f. 1-4-2017.

²¹ Inserted by the IT (Sixth Amdt.) Rules, 2014, w.r.e.f. 1-4-2014.

²² Substituted for “or section 115JB” by the IT (Sixth Amdt.) Rules, 2014, w.r.e.f. 1-4-2014.

²³ Inserted by the IT (Twenty-second Amdt.) Rules, 2017, w.e.f. 18-8-2017.

²⁴ Inserted by the IT (Fourth Amdt.) Rules, 2014, w.e.f. 1-4-2014.

²⁵ Substituted by the IT (Seventh Amdt.) Rules, 2015, w.r.e.f. 1-4-2015.

²⁶ Substituted by the IT (Second Amdt.) Rules, 2024, w.e.f. 1-4-2024 [as corrected by Corrigen- dum G.S.R. 120(E), dated 21-2-2024]. Prior to its substitution, SI. No. 1, as substituted by the IT (Fourth Amdt.) Rules, 2017, w.e.f. 1-4-2017 and later on amended by the IT (Second Amdt.) Rules, 2019, w.e.f. 1-4-2019, read as under :

Individual or Hindu undivided family	(a) Accounts are required to be audited under section 44AB of the Act;	Electronically under digital signature;
	(b) Where total income assessable under the Act during the previous year of a person, being an individual of the age of eighty years or more at any time during the previous year, and who furnishes the return in Form number SAHAJ (ITR-1) or Form number SUGAM (ITR-4).	(A) Electronically under digital signature; or (B) Transmitting the data electronically in the return under electronic verification code; or (C) Transmitting the data in the return electronically and thereafter submitting the verification of the return in Form ITR-V; or (D) Paper form;
	(c) In any other case	(A) Electronically under digital signature; or (B) Transmitting the data electronically in the return under electronic verification code; or (C) Transmitting the data in the return electronically and thereafter submitting the verification of the return in Form ITR-V;”

²⁷ Substituted for “Director-General of Income-tax (Systems)” by the IT (Seventh Amdt.) Rules, 2015, w.r.e.f. 1-4-2015.

²⁸ Substituted for “in the manners specified in clauses (i), (iii) and (iv) of sub-rule (3)” by the IT (Eighth Amdt.) Rules, 2015, w.r.e.f. 1-4-2015.

²⁹ Inserted by the IT (Fourth Amdt.) Rules, 2014, w.e.f. 1-4-2014.

³⁰ Substituted for “2022” by the IT (Thirtieth Amdt.) Rules, 2023, w.e.f. 1-4-2024.

Rule – 12AB

³²[Conditions for furnishing return of income by persons referred to in clause (b) of sub-section (1) of section 139.

12AB. The conditions for furnishing return of income in respect of persons referred to in clause (b) of sub-section (1) of section 139 in terms of clause (iv) of the seventh proviso to sub-section (1) of section 139 shall be the following, namely:—

(i) if his total sales, turnover or gross receipts, as the case may be, in the business exceeds sixty lakh rupees during the previous year; or

(ii) if his total gross receipts in profession exceeds ten lakh rupees during the previous year; or

(iii) if the aggregate of tax deducted at source and tax collected at source during the previous year, in the case of the person, is twenty-five thousand rupees or more; or

(iv) the deposit in one or more savings bank account of the person, in aggregate, is rupees fifty lakh or more during the previous year:

Provided that in the case of an individual resident in India who is of the age of sixty years or more, at any time during the relevant previous year, the provision of clause (iii) shall have effect as if for the words “twenty-five thousand”, the words “fifty thousand” had bee

Notes:

³² Inserted by the IT (Ninth Amdt.) Rules, 2022, w.e.f. 21-4-2022.

Rule – 12AC

³³[Updated return of income.

12AC. (1) The return of income to be furnished by any person, eligible to file such return under sub-section (8A) of section 139, relating to the assessment year commencing on the 1st day of April, 2020 and subsequent assessment years, shall be in the Form ITR-U and be verified in the manner indicated therein.

(2) The return of income referred to in sub-rule (1) shall be furnished by a person, mentioned in column (2) of the Table below in the manner specified in column (3) thereof:–

TABLE

Sl. No.	Person	Manner of furnishing return of income
(1)	(2)	(3)
1.	Individual, or Hindu undivided family or a firm or limited liability partnership or an association of persons or a body of individuals, whether incorporated or not, or a local authority or an artificial juridical person in whose case accounts are required to be audited under section 44AB of the Act or a Company or a political party required to furnish a return in Form ITR-7.	Electronically under digital signature.
2.	Individual, or Hindu undivided family, or firm, or limited liability partnership, or an association of persons or a body of individuals, whether incorporated or not, or a local authority or an artificial juridical person, or a person required to file a return under sub-section (4A) or sub-section (4B) or sub-section (4C) or sub-section (4D) of section 139, other than a person mentioned in column (2) of Sl. No. (1) above.	(A) Electronically under digital signature; (B) Transmitting the data electronically in the return under electronic verification code.

Explanation.—For the purposes of this sub-rule, “electronic verification code” means a code generated for the purpose of electronic verification of the person furnishing the return of income as per the data structure and standards specified by Principal Director General of Income-tax (Systems) or Director General of Income-tax (Systems).

(3) The Principal Director General of Income-tax (Systems) or Director General of Income-tax (Systems) shall specify the procedures, formats and standards for ensuring secure capture and transmission of data and shall also be responsible for evolving and implementing appropriate security, archival and retrieval policies in relation to furnishing the return in the manners specified in column (3) of the Table.]

Note:

³³ Inserted by the IT (Eleventh Amdt.) Rules, 2022, w.e.f. 29-4-2022

Rule – 12AD

³⁴[Return of income under section 170A.

12AD. (1) The modified return of income to be furnished by a successor entity to a business reorganisation, as referred to in section 170A, for an assessment year, shall be in the Form ITR-A and verified in the manner specified therein.

(2) The return of income referred to in sub-rule (1) shall be furnished electronically under digital signature.

(3) If the assessment or reassessment proceedings for an assessment year relevant to a previous year to which the order of the business reorganisation applies have been completed or are pending on the date of furnishing of the modified return in accordance with the provisions of section 170A, the Assessing Officer shall, pass an order modifying the total income of the relevant assessment year determined in such assessment or reassessment, or proceed to complete the assessment or reassessment proceedings, as the case may be, in accordance with the order of the business reorganisation and the modified return so furnished.

(4) The Principal Director General of Income-tax (Systems) or Director General of Income-tax (Systems) shall specify the procedures, formats and standards for ensuring secure capture and transmission of data and shall also be responsible for evolving and implementing appropriate security, archival and retrieval policies in relation to furnishing the return in the manner specified in sub-rule (2).]

Note:

³⁴ Inserted by the IT (Thirty-first Amdt.) Rules, 2022, w.e.f. 1-11-2022.

Rule – 125

Electronic payment of tax.

125. (1) The following persons shall pay tax electronically on or after the 1st day of April, 2008:—

(a) a company; and

(b) a person (other than a company), to whom the provisions of section 44AB are

(2) For the purposes of this rule :—

(a) “pay tax electronically” shall mean, payment of tax by way of—

(i) internet banking facility of the authority bank; or

(ii) credit or debit cards;

(b) the word “tax” shall have the meaning as assigned to it in clause (43) of section 2 of the Act and shall include interest and

Tutorials

Updated Return of Income

An updated return is a return of income that can be filed by a taxpayer within 48 months from the end of the relevant assessment year, even if he has not previously filed a return for that year. An amount equal to 25% or 50% as additional tax is required to be paid with such updated return.[Section 139(8A), Section 140B, Rule 12AC]

Note: The Finance Act 2025 has increased the timelines to file updated returns from 24 months to 48 months effective from Assessment Year 2026-27.

What is an updated return?

An updated return is a type of tax return that allows taxpayers to file their returns with more time. It is intended to encourage voluntary tax compliance.

An updated return can be filed by any person, except in certain circumstances, regardless of whether they have previously filed an original, belated, or revised return for the relevant assessment year.

The filing of an updated return is optional for the taxpayer.

When can an updated return be filed?

An updated return may be filed by any person in any case, except under certain circumstances.

A person may file an updated return of his income or the income of any other person in respect of which he is assessable under the Income-tax Act, such as in a representative capacity or in case of clubbing of income.

A person can file an updated return even if he has furnished a return of loss under section 139(3) earlier for the relevant assessment year, but the updated return should not be a return of loss.

The time limit for filing of updated return

The time limit provided for filing an updated return is 48 months from the end of the relevant assessment year.

In the financial year 2025-26, a person can file an updated return for AY 2024-25, 2023-24, 2022-23, 2021-22.

Form for filing an updated return

An updated return shall be filed in the relevant ITR Form as applicable to the taxpayer. The taxpayer will be required to fill the Schedule ‘Part A Gen_139(8A)’ and Schedule ‘Part B ATI’ of the relevant form to file an updated return.

Manner of furnishing of an updated return

An updated return shall be filed electronically under Digital Signature Certificate (DSC) in case of the following taxpayers: (a) Company (b) Political Party

(c) Any person whose accounts are required to be audited under Section 44AB of the Income-tax Act except person filing return in ITR-7.

For other taxpayers, the updated return shall be filed electronically either under Digital Signature Certificate or under Electronic Verification Code (EVC).

Reporting in ITR while filing an updated return

When a person is filing an updated return, he is required to provide certain details in the relevant ITR forms. These forms include Schedule ‘Part A Gen_139(8A)’ and ‘Part B ATI’. The details that need to be provided include:

• Basic details i.e. PAN, Name, and Aadhaar Number
• Details of earlier return, if filed i.e. section, ITR form, acknowledgment number, and date of filing of the previous return
• Eligibility of filing an updated return
• Relevant ITR form selected for updated return
• Reasons for filing the updated return
• Time of filing of updated return – The person needs to specify whether the updated return is being filed within 12 months, between 12 to 24 months, 24 to 36 months or 36 to 48 months from the end of the assessment year.
• Whether filing of updated return result in the reduction of carried forward loss, unabsorbed depreciation, or tax credit? If yes, then the person needs to select the affected assessment years and whether the revised or updated return is filed for such years.
• Head-wise reporting of additional income as shown in the updated return and computation of tax payable on the updated return
• Details of payments of tax on updated return
• Details of advance tax, self-assessment tax, and regular assessment tax paid, the credit of which has not been claimed in the earlier return
• Relief under section 89 which was not claimed in the earlier return

When an updated return cannot be filed?

If an updated return is a return of loss

An updated return cannot be filed if it reflects total income as a loss. However, there is no prohibition on filing an updated return if there is a loss under any head of income but the total income is positive.

For example, Mr. A filed his return of income for the Assessment Year 2022-23 declaring a total income of Rs. 10 lakhs. Subsequently, he noticed that he had failed to disclose in his return of income a short-term capital gain of Rs. 2 lakhs arising from the transfer of listed equity shares under section 111A. In the same year, he also suffered a long-term capital loss of Rs. 10 lakhs from the transfer of immovable property.

In this case, Mr. A would be required to carry forward the long-term capital loss from the transfer of immovable property because it cannot be adjusted from the other incomes that Mr. A has. But due to this fact, he won’t be restricted from filing an updated return because ultimately his total income (after including short-term capital gain from the transfer of listed equity shares) would be positive, i.e., Rs. 12 lakh.

If an updated return results in lower tax liability

An updated return cannot be filed if it decreases the total tax liability determined based on an earlier return.

If an updated return results in or increase in the refiluil

An updated return cannot be filed if it results in a refund or increases the refund previously due on the basis of an earlier return.

If a search is initiated against the assessee

An updated return cannot be filed for the assessment year relevant to the previous year in which a search is initiated under section 132 and for any assessment year preceding such assessment year.

For example, if a search was initiated on 01-06-2024, the updated return cannot be filed for the assessment year 2025-26 and any year preceding such assessment year.

If books of account or other documents or any assets are requisitioned

An updated return cannot be filed for the assessment year relevant to the previous year in which requisition is made under section 132A and for any assessment year preceding such assessment year.

If a survey conducted against the assessee

An updated return cannot be filed for the assessment year relevant to the previous year in which the survey is conducted under section 133A and for any assessment year preceding such assessment year.

However, this provision does not restrict the assessee from filing an updated return where the survey is conducted in connection to TDS or TCS.

If documents or assets are seized or requisitioned in case of any other person belonging to the assessee

A person shall not be eligible to file an updated return if a notice has been issued to him 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 belonging to him; or
• any books of account or documents, seized or requisitioned under section 132 or section 132A in the case of any other person, pertaining to, or any other information contained therein, related to him.

In the above cases, the person shall not be eligible to file an updated return for the assessment year relevant to the previous year in which such search is initiated or requisition is made and any assessment year preceding such assessment year.

If the updated return has already been  filed

An updated return cannot be revised as it can be filed only once for any particular assessment year.

If the assessment is pending or completed

An assessee shall not be eligible to file an updated return of the year of which assessment or reassessment or recomputation or revision is pending or has been completed.

If AO has information about the assessee under specified Acts

A person cannot file an updated return for any assessment year if the Assessing Officer (AO) has information in respect of him for that year under the following Acts, and the same has been communicated to him before the filing of the updated return:

• Prevention of Money Laundering Act, 2002;
• The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015;
• The Prohibition of Benami Property Transactions Act, 1988; or
• The Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976.

If AO has information about the assessee under DTAA or TIEA

Where any information is received under Double Taxation Avoidance Agreement (DTAA) or Tax Information Exchange Agreement (TIEA) in respect of a person for the relevant assessment year, he shall not be eligible to file an updated return for that year provided the same has been communicated to him before the filing of updated return.

Ifialy prosecution proceeding is initiated

Where any prosecution proceedings have been initiated against the person for the relevant assessment year, he shall not be eligible to file an updated return for such year.

If show cause notice under section 148A

Where any show-cause notice is issued under section 148A after 36 months from end of relevant assessment year, he shall not be eligible to file an updated return for such year.

However if the order has been passed under section 148A(3) determining that the case is not a fit case to issue notice under section 148 then such provision shall not be applicable.

In other notified cases

A person or class of persons as notified by the Central Board of Direct Taxes (CBDT) shall not be eligible to file the updated return.

Curative Updated Return of Subsequent Years

When a person files an updated return for a previous year, and as a result, the amount of the following is reduced for any subsequent year, the person shall be required to file an updated return for each subsequent year:

• Carried Forward Losses; or
• Carried Forward Unabsorbed Depreciation; or
• MAT Credit; or
• AMT Credit

This is to ensure that the correct amount of losses are carried forward and can be used to offset future income.

For Example, Mr. A had reported the following income or loss in the income-tax return filed for the following assessment years:

Particulars	AY 2023-24	AY 2022-23	AY 2021-22
Income (or loss) under the head Business or Profession	80,00,000	10,00,000	(20,00,000)
Less: Set-off of loss (AY 2019-20)	(10,00,000)	(10,00,000)
Total Income	70,00,000
Loss carried forward for adjustment in subsequent years		10,00,000	20,00,000

Mr. A filed an updated return for Assessment Year 2022-23 declaring the additional business income of Rs. 25,00,000. He set off the entire loss of AY 2021-22(Rs. 20,00,000) against the business income reported in such an updated return. As declaring additional income in the updated return for AY 2022-23 results in the reduction of loss carried forward to subsequent year (i.e., AY 2023-24), Mr. A shall be required to furnish an updated return for AY 2023-24 as well. The revised computation of income or loss in updated returns shall be as under:

Particulars	Updated Return AY 2023-24	Updated Return AY 2022-23
Income (or loss) under the head Business or Profession disclosed in earlier return	80,00,000	10,00,000
Additional business income disclosed in the updated return	–	25,00,000
Less: Set-off of loss (AY 2021-22)	–	(20,00,000)
Total Income	80,00,000	15,00,000
Loss carried forward for adjustment in subsequent years	–	–

Tax payable on filing of updated return shall be paid along with interest for default or deferment in payment of advance tax and additional tax.

Tax on updated return

The provisions of section 140B provide for payment and computation of tax, interest, fee, and additional income tax on updated returns. The updated return

shall be accompanied by the proof of tax payment, i.e., normal tax (if any), additional tax, interest, and fee as required under section 140B otherwise it shall

be treated as a defective return.

Computation of tax,  interest, and fee on the updated return where no return was  filed earlier

Where a person has not filed the original or belated return for the relevant assessment year, the tax payable on the updated return (self-assessment tax) shall be paid along with interest and fee for delay in furnishing the return of income and interest for any default or delay in payment of advance tax. Further, an additional income tax shall be paid before filing an updated return.

(a) Self-assessment tax – Self-assessment tax on income reported in updated return shall be computed after taking into account the following:

a) Advance tax;

b) Tax deducted at source (TDS) or Tax collected at source (TCS);

c) Relief under section 89;

d) Foreign tax credit; and

e) MAT or AMT credit

(b) Interest under section 234A – At the time of furnishing the updated return, the interest under section 234A shall be computed on the self-assessment tax payable on the updated return. The interest shall be charged for the period commencing from the date immediately following the due date for filing the original return of income and ending with the date on which the updated return is furnished.

However, this interest shall not be charged on the amount of additional income tax payable on the updated return.

(c) Interest under section 234B – An assessee may be liable to pay interest under Section 234B at the time of filing of updated return on the amount of assessed tax (total tax less TDS/TCS/relief/credit) declared in the updated return for the period starting from April 1 of the relevant assessment year and ending on the date on which assessed tax is paid before filing of updated return.

Where the taxes are paid in parts before the filing of the updated return, the interest shall be computed for the broken period considering the taxes paid in each part.

However, this interest shall not be charged on the amount of additional income tax payable on the updated return.

(d) Interest under section 234C – Section 234C provides for a levy of interest at the rate of 1% per month in case of a shortfall in payment of advance tax instalments. The amount of shortfall is computed with reference to the “tax due on the returned income”.

Section 234C interest is computed with reference to tax due on the returned income. Thus, in the case of an updated return, the total income reported in the updated return is to be considered as returned income.

(e) Fee under section 234F -Where a person files a return of income after the due date of filing the original return, he is liable to pay a fee under Section 234F.

(f) Additional tax on updated return -The additional tax shall be equal to 25% of the aggregate of tax and interest payable by a person on the filing of the updated return where such return is furnished after the expiry of the due date of filing of belated or revised return but before completion of a period of 12 months from the end of the relevant assessment year.

Where the updated return is furnished after the expiry of 12 months from the end of the relevant assessment year but before completion of the period of 24 months from the end of the relevant assessment year, the additional tax payable shall be 50% of the aggregate of tax and interest payable.

Where the updated return is furnished after the expiry of 24 months from the end of the relevant assessment year but before completion of the period of 36 months from the end of the relevant assessment year, the additional tax payable shall be 60% of the aggregate of tax and interest payable

Also, where the updated return is furnished after the expiry of 36 months from the end of the relevant assessment year but before completion of the period of 48 months from the end of the relevant assessment year, the additional tax payable shall be 70% of the aggregate of tax and interest payable.

Here it is to be noted that for computation of “additional income-tax”, tax shall include surcharge and cess. Further, for the computation of additional tax, the amount of interest payable shall be reduced by the amount of interest paid in accordance with the earlier return.

Computation of tax,  interest, and fee on the updated return where a return was  filed earlier

Where a person has already filed the original, belated return, or revised return for the relevant assessment year, the tax payable on the updated return (self-assessment tax) shall be paid along with interest for any default or delay in payment of advance tax as reduced by the amount of interest paid in an earlier return. Further, an additional income tax shall be paid before filing an updated return.

(a) Self-assessment tax-The self-assessment tax shall be computed after taking into account the following:

• • Tax or relief, the credit of which has already been taken in earlier return; and
  • Tax or relief, the credit of which has not been claimed in an earlier return.

Further, the amount of tax so computed shall be increased by the amount of refund, if any, issued in respect of such an earlier return.

(b) Interest under section 234A – A person shall not be required to pay interest under section 234A at the time of furnishing of updated return if he has already filed the original, revised, or belated return for the relevant assessment year.

(c) Interest under section 234B – Where a person has already filed the original, belated, or revised return for the relevant assessment year and subsequently files an updated return, Section 140B provides that interest under Section 234B at the time of furnishing of updated return shall be computed on the amount of assessed tax.

An assessee may be liable to pay interest under Section 234B at the time of filing of updated return for the period starting from April 1 of the relevant assessment year and ending on the date on which assessed tax (including self-assessment tax) is paid before filing of updated return.

Where the taxes are paid in parts before the filing of the updated return, the interest shall be computed for the broken period considering the taxes paid in each part.

However, this interest shall not be charged on the amount of additional income tax payable under section 140B. It is to be noted that the amount of interest shall be reduced by the amount of interest paid in an earlier return.

(d) Interest under section 234C – Interest under section 234C shall be computed after taking into account the income furnished in the updated return as the returned income. It is to be noted that the amount of interest computed shall be reduced by the amount of interest paid in an earlier return.

(e) Fee under section 234F -A person shall not be required to pay the fee under section 234F at the time of furnishing of the updated return if he has already filed the original, revised, or belated return for the relevant assessment year.

(f) Additional tax on updated return – The additional tax shall be as follows:

• • 25% of the aggregate of tax and interest payable by a person on the filing of the updated return where such return is furnished after the expiry of the due date of filing of belated or revised return but before completion of a period of 12 months from the end of the relevant assessment year.
  • Where the updated return is furnished after the expiry of 12 months from the end of the relevant assessment year but before completion of the period of 24 months from the end of the relevant assessment year, the additional tax payable shall be 50% of the aggregate of tax and interest payable.
  • Where the updated return is furnished after the expiry of 24 months from the end of the relevant assessment year but before completion of the period of 36 months from the end of the relevant assessment year, the additional tax payable shall be 60% of the aggregate of tax and interest payable.
  • Where the updated return is furnished after the expiry of 36 months from the end of the relevant assessment year but before completion of the period of 48 months from the end of the relevant assessment year, the additional tax payable shall be 70% of the aggregate of tax and interest payable.

Here it is to be noted that for computation of “additional income-tax”, tax shall include surcharge and cess. Further, for the computation of additional tax, the amount of interest payable shall be reduced by the amount of interest paid in accordance with the earlier return.

MCQs on updated return

Q1. An updated return shall be filed electronically under Digital Signature Certificate (DSC), where the taxpayer is

(a) A company

(b) A political Party

(c) Both (a) and (b)

(d) Any person without any condition

Correct answer: (c)

Justification for correct answer: An updated return shall be filed electronically under Digital Signature Certificate (DSC) in case of the following

taxpayers: (a) Company (b) Political Party (c) Any person whose accounts are required to be audited under Section 44AB of the Income-tax Act except

person filing return in ITR-7.

Q2. When an updated return cannot be filed?

(a) If an updated return results in or increase in the refund

(b) If a search is initiated against the assessee

(c) If a survey conducted against the assessee

(d) All of the above

Correct Answer: (d)

Justification for correct answer: An updated return can be filed by any person, except in certain circumstances, regardless of whether they have previously filed an original, belated, or revised return for the relevant assessment year. The circumstances covered under options (a), (b), and (c) are specified in the exception for filing an updated return.

Q3. Can an updated return be revised for any particular assessment year?

(a) Yes

(b) No

(c) Within a certain time limit

(d) If AO allowed

Correct Answer: (b)

Justification for correct answer: An updated return cannot be revised as it can be filed only once for any particular assessment year.

Q4. A person needs to file the updated return for each subsequent year, where the amount of the_________ is reduced for any subsequent year while filing the updated return for the previous year.

(a) Carried forward losses

(b) MAT or AMT credit

(c) Carried forward unabsorbed depreciation

(d) All of the above

Correct Answer: (d)

Justification for correct answer: When a person files an updated return for a previous year, and as a result, the amount of the following is reduced for any subsequent year, the person shall be required to file an updated return for each subsequent year:

• Carried Forward Losses; or
• Carried Forward Unabsorbed Depreciation; or
• MAT Credit; or
• AMT Credit.

Q5. In the case of the updated return, the assessment under section 143 or section 144 can be made at any time before the expiry of of the financial year in which the updated return is furnished.

(a) 12 months

(b) 9 months

(c) 21 months

(d) 18 months

Correct Answer: (b)

Justification for correct answer: In the case of the updated return, the assessment under section 143 or section 144 can be made at any time before the expiry of 9 months from the end of the financial year in which the updated return is furnished.

Q6. What is the amount of additional tax where an updated return is filed within 12 months from the end of the relevant assessment year?

(a) 25% of the aggregate of tax and interest payable

(b) 50% of the aggregate of tax and interest payable

(c) 100% of the aggregate of tax and interest payable

(d) None of the above

Correct Answer: (a)

Justification for correct answer: The additional tax shall be equal to 25% of the aggregate of tax and interest payable by a person on the filing of the updated return where such return is furnished after the expiry of the due date of filing of belated or revised return but before completion of a period of 12 months from the end of the relevant assessment year.

Comment on incorrect answer: Where the updated return is furnished after the expiry of 12 months from the end of the relevant assessment year but before completion of the period of 24 months from the end of the relevant assessment year, the additional tax payable shall be 50% of the aggregate of tax and interest payable. Therefore, option (b) is incorrect.