Updated Return under Income Tax Act

Updated Income Tax Return Filing
Finally, provision of filing an updated Income Tax Return has been presented in Income Tax with effect from 01.04.2022. An assessee, whether he has filed or not, an income tax return (whether it be the original return, the delayed return or the revised return), may now provide an updated return of income, within two years from the end of applicable assessment year. For e.g.: For the AY 2022-23 (i.e. Financial Year 2021-22), the updated return could be filed up to 31st March, 2025. The updated return can be also fitted out only once for an assessment year. Though, the updated return cannot be filed, if it:

a) is a return of loss or
b) has the outcome of decreasing the tax liability determined as per previously filed return or
c) grades in refund or increases the refund determined as per previously filed return

Who cannot file updated return
A person will not be entitled to file an updated return for the applicable assessment year and any year preceding to that, if in the relevant previous year –

a) a search or survey has been initiated/ directed against him or
b) books of accounts/other documents/ any assets are requested or
c) a notice has been issued to the effect that any asset detained or requisitioned in the case of any other person, belongs to him or
d) a notice has been allotted to the effect that any books of account or documents, seized or requisitioned in the case of any other person, relates/pertains to him
For e.g.: If search has been originated against the person in FY 2022-23, then the updated return cannot be filed for the relevant AY 2023-24 or any former assessment year.

Updated return which cannot be filed for the year in respect of:
a) which has any assessment/reassessment/re-computation/revision of income is incomplete or has been completed
b) which has hearing chronicles have been initiated
c) the assessing officer has any information about the assessee, under double taxation avoidance agreements or under the following Acts, which has already been transferred to him, prior to the filing of such return –
i. The Smugglers and Foreign Exchange Schemers (Forfeit of Property) Act, 1976
ii. The Ban of Benami Property Transactions Act, 1988
iii. The Prevention of Money-laundering Act, 2002
iv. The Black Money (Unnamed Foreign Income and Assets) and Nuisance of Tax Act, 2015

Circumstance where filing of updated return is mandatory for succeeding years too
If any person has formerly filed a return of loss for any previous year, duly within the time allowed for filing the original return, then he shall be permitted to provide an updated return, if the updated return is a return of income, irrespective of the time limit of two years from the end of relevant assessment year. However, in such a case, the assessee will have to deliver an updated return for each subsequent previous year, if
a) such loss or even the unabsorbed reduction has been carried forward or
b) tax credit in respect of tax paid on supposed income relating to certain companies or tax credit for substitute minimum tax is to be condensed as a significance of filing the updated return.

Tax on Updated Return
The taxation norms in case of an updated return would though be somewhere different form the normal income tax return. The assessee will have to pay an “additional income-tax” along with the tax and interest figured to be payable, if filing an updated return.

Additional Income-Tax
The additional income-tax due in case of updated return shall be equal to – I. 25% of the aggregate tax and interest payable, if the updated return is furnished after the expiry of time offered for filing belated return or the revised return but before the completion of twelve months from the end of pertinent assessment year. II. 50% of the collective tax and interest payable, if the updated return is furnished after the expiry of twelve months but before the completion of twenty-four months from the end of applicable assessment year. Also, the proof of payment of tax, additional income-tax, interest and fee shall attend such return.

Conclusion: At this, one may accomplish that the introduction of provision for filing an updated return would result in escaping of litigation to a good extent. If any income has been left to be reported by the assessee in the return initially filed or the revised return, then the updated return results in an opportunity to rectify such mistake. Otherwise, assessment chronicles would have been initiated against him, which the assessee always wants to avoid, as he will have to sustain the consulting fees of professionals for responding the proceedings and then will pay the tax on that income on the conclusion of such proceedings.

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