2 Updated Return – Section 139(8A) – An Analysis

ITR-U is the form which is offer by Govt. to update your Income tax return or file your return within two years from the end of relevant Assessment Year. The concept was introduced in the union budget 2022 under section 139(8A) of Income tax Act, 1961 which allows assessee to update your ITR within two years. The Motto behind the introduction of such section is to improve tax compliance by assessee without distressing legal action. Please take care while filing such return, since once filed the updated return cannot be modified.

Time Limit :-Updated return can be submitted at any time within 24 months from the end of the year in which the original return was filed by assessee. For example, updated return of Assessment year 22-23 can be submitted on or before 31st March 2025.

Who can file :- Any Person who has made an error in their original return or has omitted certain income to disclosed in their return may file an updated return u/s 139(8A). Further Updated return can be submitted by any person whether or not he has furnished return under section 139(1), 139(4), 139(5).

When updated return cannot be submitted:-Updated return cannot be filed in the following circumstances which are as follows:-

1) If updated return is a return of loss.

2) If updated return is filed solely for the purpose of reducing the tax liability or Increasing the refund which earlier demanded during the filing of original return.

3) In case of search/survey conducted or initiated against the assessee.

4) If books of Accounts or assets are requisitioned in the case of assessee.

5) If AO has information about the assessee under specified Acts, DTAA or TIEA.

6) Where updated return is already filed by the assessee.

7) In case of any assessment is pending or completed against the department.

8) He is a person or belong to a class of persons, as may be notified by CBDT

How to calculate tax u/s 140B(Additional tax):-Mode of computation of tax (Inclusive of additional tax ) is given as follows:-

As Already discussed above Updated return can be submitted at any time within 24 months from the end of the year in which the original return was filed by assessee.

  • If updated return filed after the expiry of time mentioned u/s 139(4)/(5) but before expiry of 12 months from the end of Assessment year in which such return has to be filed – 25% of aggregate of tax inclusive of surcharge plus cess and interest
  • If updated return is furnished after expiry of 24 months from the end of Assessment year in which such return has to be filed-50% of aggregate of tax inclusive of surcharge plus cess and interest.

However while filing the Form U, the taxpayers need to give the exact reason for updating the income. The following are such reasons which are required to be selected by the assessee.

  • Return previously not filed
  • Heads of income wrongly selected while filing original return
  • Tax rate is wrongly taken
  • Reduction of carry forward of loss
  • Reduction of Unabsorbed depreciation
  • Income not reported appropriately
  • Others

Case1:- Where assessee has not furnished his return earlier u/s 139(1) or 139(4).

Where no return is filed u/s 139(1) or 139(4) by taxpayer, he shall before filing such return is liable to pay tax due together with interest and fee payable under the provision of the Act for delay in furnishing such return or any default or delay in payment of advance tax inclusive of additional tax and such tax payer can claim credit for Advance Tax, TDS, TCS, and relief under section 89,90,90A,91, 115JAA or 115JD

Important note:-Updated return to be accompanied by proof of payment of tax and additional income-tax, Interest and fee u/s 234F.

Example:-Mr. X has total income after considering deductions comprises of Business and other source income amounting to 4500000 for A.Y-2021-22.He does not submit his return u/s 139(1),139(4)/(5) during such Assessment year. Actual due date of filing such return is 31st July 2021. Further his 26 AS shows following information as follows:-

Advance tax paid on 01/01/2021-450000

TDS as per 26AS -30000

TCS as per 26AS-50000

Updated Return – Section 139(8A) – An Analysis

Mr. X has two question whether he can file updated return or not if he wishes to furnish such return on 25th December 2022? Or if he can submitted such return then what amount of tax Mr.X required to pay?

Yes, Mr. X can file updated Return as updated return can be filed by any taxpayer whether or not he has furnishing his return u/s 139(1), 139(4).

Calculation of tax payable by Mr.X

Particulars Amount
Total Income (After Considering Deduction ) 45,00,000/-
Tax on Total Income (As per Slab rate Inclusive of Cess) 12,09,000/-
Total Tax 12,09,000/-
Less:-TDS/TCS already paid 80,000/-
Less;-Advance Tax paid 4,50,000/-
Balance Payable(A) 6,79,000/-
Add:-Interest u/s 234A
(679000*1%*17 months )
1,15,430/-
Add:-Interest u/s 234B
(679000*1%*21 months)
1,42,590/-
Add:-Interest u/s 234C

(Interest for Deferred of advance tax Instalment)

52,514.50/-
Total Interest Payable(B) 3,10,534.50/-
Add:-Late fee for delayed in filing of return(C) 5,000/-
Total Tax Payable(A+B+C) 9,94,534.50/-
Add:-Additional Tax as per 140B(as return filed within 1Year)

(989534.50*25/100)   ( Interest to be calculated Excluding of Late fee)

2,47,383.60/-
Total tax payable before filing such return 12,41,918.00/-

Case:-2 Where Taxpayer already submitted his return u/s 139(1) or 139(4) :-

Where taxpayer already submitted his return now wishes to update his income in such return he shall before filing such return is liable to pay tax due together with interest and fee payable under the provision of the Act for delay in furnishing such return or any default or delay in payment of advance tax inclusive of additional tax, reduced by amount of interest which is already paid in earlier return and such tax payable shall be increased by amount of refund if issued for earlier return and computed after considering of the following :-

1) Any Relief of tax or deduction of tax u/s 89/90/90A/91 which is not claimed while filing earlier return.

2) Any TDS/TCS amount shown in 26AS which is not claimed while filing earlier return

3) Any MAT/AMT Credit claimed which is to be set off and which not claimed in earlier return.

Example:- Mr. Keshav submit his return u/s 139(4) on 25th December 2021, The Following Information has been derived from the previousyear 2020-2021 which is as follows:-

Total Income (net of deductions)-25,00,000

Advance Tax Paid on 30th November :-2,50,000

TDS/TCS as per 26AS:-1,50,000

Now keshav wants to declare his Rental Income of 22,50,000 more which is not included in above income and TDS against such income amounting to 2,25,000 respectively and suppose Mr Keshav Paid Tax amounted to 227867 while filing his belated return. Now keshav wants to know whether he can filed return under section 139(8A) or his tax implications while filing such return on 15TH March, 2024.

Mr. Keshav can file such return as the return is filed for the purpose of addition of rental Income and assessee can also claim the benefit of TDS shown in 26AS amounting to 2,50,000/- The Computation of tax payable for same is as follow:-

Particulars Amount
Total Income as per updated(2500000+2250000) 47,50,000
Tax Payable on same(Inclusive of Cess)(A) 12,87,000
Less:-TDS/TCS Paid(1,50,000+2,25,000)(B) 3,75,000
Less:-Advance Tax Paid (C) 2,50,000
(A-B-C) 6,62,000
Less:-Self Assessment tax paid during original return(D) 2,53,150
Balance Payable(E)—- (A-(B+C+D) 4,08,850
Add: Interest u/s 234A,B,C(F)— 239125

Less:-Interest already paid at the time of original return(37867)

2,01,258
Add: Late filing Fees(G)—- 5,000
Less:-Already paid at time of original return—(5000) 0.00
Total of tax (H)—- (E+F+G) 6,10,108
Add:-Additional tax as per 140B(3) (50% of H) 3,05,054
Tax Payable before furnished return u/s 139(8A) 9,15,162

Conclusion:- Any person may, whether or not he has furnished a return under section 139(1) or belated return under section 139(4) or revised return under section 139(5) for that assessment year, furnish an updated return of his income or the income of any other person in respect of which he is assessable, for the previous year relevant to the assessment year at any time within 24 months from the end of the elevant assessment year. The Provision of updated return would not apply if updated return of such person for that Assessment year is a loss of return or has the effect of decreasing the total tax liability determined on the basis of return furnished under section 139(1) or section 139(4) or section 139(5) or results in refund or increases the refund due on the basis of return furnished under section 139(1) or section 139(4) or section 139(5).

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