Update Return- Report Under Reported Income!

UPDATE INCOME TAX RETURN

CBDT introduced a new concept ‘Update Return” on 29^th April 2022 notifying Rule 12AC of the Income Tax Rules 1962.

There are circumstances, an assessee failed to file income tax return, and time for filing income tax return, belated return has already been expired. Or income tax return filed within due date but subsequently found that income was under reported or some heads of income was not reported in the income tax return already filed for an assessment year, and time for revised return has expired.

Failure to furnish a return, under reporting or mis-reporting of income has many consequences. Under reporting income or misreporting of income may attract penalty from 50% to 200%, prosecutions resulting imprisonment may be up to seven years.

Update return is an opportunity to assessee to file a return due date of which has been expired. Underreporting of income can be reported through update return even after expiry for time specified for filing revised return.

Respective ITR form and ITR-U to file for update Income Tax return.

Individual, HUF, LLP, AOP, BOI, Local Authority, Artificial Juridical person, company, political party are eligible to file update return.

Update return can be filed up to 24 months form end of relevant Assessment Year. Assessee is required to pay additional Income tax 25% plus interest if filed within 12 months from end of relevant Assessment year, and 50% plus interest if filed after 12 months but before 24 months from end of relevant assessment year.

This update return facility is available w.e.f 1^st April 2022. From now onwards an assessee can for update return for the Assessment year 2020-21 and 2021-22. Update return for the AY 2020-21 can be filed up to 31^st March 2023. Update return cannot be revised.

Update return can be filed for additional Income only. No update return is filed resulting loss, resulting lower tax liability, resulting increase in refund.

No update return is permitted where search proceedings u/s 132 is initiated, where books of account or assets etc. are requisitioned in case of the assessee, in case survey conducted against the assessee, where documents or assets seized or requisitioned in case of any other person

belong to the assessee, 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.

A taxpayer filing the updated return disclosing additional income, can eliminate or mitigate the penal consequences related to non-reporting or underreporting of income. No prosecution under section 276CC shall be launched for failure to furnish a return of income if an updated return is furnished by the assessee.