Section 139(8A) for Updating ITR applicable from AY 22-23

New Provision Section 139(8A) for Updating ITR as per Budget 2022 applicable from AY 22-23

Intention behind introducing Sec 139(8A)

In order to provide more time to tax payers, it is proposed to introduce a new provision in section 139(8A) of the Act for filing an Updated Return of income by any person, whether he has filed a return previously for the relevant assessment year, or not. The proposal for updated return over a period longer than that is provided in the existing provisions of Income-tax Act would on the one hand bring use of huge data with the IT Department to a logical conclusion resulting in additional revenue realization and on the other hand, it will facilitate ease of compliance to the taxpayer in a litigation free environment.

Time limit of filing Updated ITR

Any person may furnish an updated return of his income or the income of any other person in respect of which he is assessable under the Act for the P. Y. relevant to such A. Y., within 24 months from the end of the A. Y. with additional tax. Such return shall be furnished in the prescribed form and manner and shall contain prescribed particulars.

Cases where Section 139(8A) will not apply

The new proposed provision of Sec 139(8A) shall not apply, if the updated return,

• is a return of a loss or
• has the effect of decreasing the total tax liability determined on the basis of return furnished u/s 139(1), (4) or (5) or
• results in refund or increases the refund due on the basis of return furnished u/s 139(1), (4) or (5)

Crux: Updated return can only be filed if it increases tax liability.

Who is not eligible to file Updated ITR u/s 139(8A)

A person shall also not be eligible to furnish an updated return u/s 139(8A) if: –

• search has been initiated u/s 132 or books of account, other documents or any assets are requisitioned u/s 132A in the case of such person, or
• a survey has been conducted u/s section 133A, other than 133A(2A), in the case such person, or
• a notice has been issued to the effect that any money, bullion, jewellery or valuable article or thing, seized or requisitioned u/s 132 or sec 132A in the case of any other person belongs to such person, or
• a notice has been issued to the effect that any books of account or documents, seized or requisitioned u/s 132 or sec 132A in the case of any other person, pertain or pertains to, or any
• other information contained therein, relate to, such person. The above exception is for the A Y relevant to the P Y in which such search is initiated, or survey is conducted or requisition is made and two AYs. proceeding such assessment year.

Also, no updated return shall be furnished by any person for the relevant assessment year, where,

• an updated return has been furnished by him u/s 139(8A) for the relevant assessment year, or
• any proceeding for assessment or reassessment or recomputation or revision of income under the Act is pending or has been completed for the relevant assessment year in his
• case, or
• the Assessing Officer has information in respect of such person for the relevant assessment year in his possession under
  • the Prevention of Money Laundering Act, 2002 or
  • the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 or
  • the Prohibition of Benami Property Transactions Act, 1988 or
  • The Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976

and the same has been communicated to him, prior to the date of his filing of updated return, or

• information for the relevant assessment has been received under exchange of information under DTAA in respect of such person and the same has been communicated to him, prior to the date of his fi ling of updated return, or
• any prosecution proceedings under Chapter XXII have been initiated for the relevant assessment year in respect of such person, prior to the date of his filing of updated return, or
• he is a person or belongs to a class of persons, as maybe notified by the Board in this regard.

Further, It has also been proposed to amend sec 139(9) to provide that a return filed u/s 139(8A) shall be treated as defective return unless such return is accompanied by the proof of payment of tax as required under the proposed section 140B.

Section 140B – Additional tax to be paid with Updated ITR

A new section 140B has been proposed to provide for the tax required to be paid for opting to file the updated return: –

I. Where no return furnished earlier:

Where no ITR has been furnished u/s 139(1) or (4) by an assessee, he shall be liable to pay the tax due together with interest and fee payable under any provision of the Act for any delay in furnishing the return or any default or delay in payment of advance tax, along with the payment of additional tax.

The tax payable shall be computed after taking into account the following: –

(i) the amount of advance tax, if any;

(ii) any TDS or TCS;

(iii) any relief of tax claimed u/s 89;

(iv) any relief of foreign tax claimed u/s 90 or 91;

(v) any relief of foreign tax claimed u/s 90A; and

(vi) any tax credit claimed to be set off u/s 115JAA or section 115JD.

Such updated return shall also be accompanied by proof of payment of such tax, additional tax, interest and fee.

II. Where return furnished u/s 139(1) or (4) or (5):

In such case, he shall be liable to pay the tax due together with interest and fee payable under any provision of this Act for any delay in furnishing the return or any default or delay in payment of advance tax, along with the payment of additional tax, as reduced by the amount of interest paid in the earlier return.

The tax payable shall be computed after taking into account the following: –

(i) TDS, TCS, Advance Tax, Self-assessment tax and the amount of relief taken in the earlier return;

(ii) TDS or TCS on additional income offered;

(iii) Foreign tax credit u/s 90 or 91 on additional income offered;

(iv) Foreign tax credit u/s 90 or 91 on additional income offered

(v) any tax credit claimed to be set off u/s 115JAA or section 115JD which is not claimed in the earlier return.

The aforesaid tax shall be increased by the amount of refund, if any, issued in respect of such earlier return. Payment of additional tax by persons opting to furnish their updated returns u/s 139(8A) is also required at following rates: –

Payment to be made from December of the AY till 12 months from the end of the relevant assessment year: – 25% of aggregate of tax and interest payable

Payment to be made after the expiry of 12 months from the end of AY but before completion of 24 months from the end of the relevant AY: – 50% aggregate of tax and interest payable

It is also clarified that for the purposes of computation of “additional income-tax”, tax shall include surcharge and cess, by whatever name called, on such tax.