Updated Return u/s 139(8A)

As a step towards achieving the Tax certainty, the Finance Bill 2022 has introduced the new provisions vide Section 139(8A) of the Income Tax Act enabling the taxpayers to file the Updated Return subject to certain conditions which already come into effect from 01.04.2022.

This article gives you an idea of what the Updated Return is under the Income Tax Act 1961, for which Form U is recently notified by CBDT.

Applicability/Eligibility to file the Updated Return

• Omission or error in filing the original return/ Belated return/Revised return.
• And such omission or error results in disclosure of additional income and there by additional Income tax liability.
• And such return needs to be filed within 2 years from the end of such relevant Assessment year.

For Example:

For FY 2019-20, the updated return due date was 31^st March, 2023

(That is within 2 years from the end of the assessment year 2020-21)

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
• Income not reported correctly
• Wrong heads of income chosen
• Reduction of carry forward loss
• Reduction of unabsorbed depreciation
• Reduction of tax credit u/s 115JB/115JC
• Wrong rate of tax
• Others

Penalty/Additional Tax payable

If the Updated return is filed

• within 12 months from the end of the relevant assessment year, the additional tax/ penalty is 25% of such computed tax and interest.
• between 12 months to 24 months from the end of the relevant assessment year, the additional tax/ penalty is 50% of such computed tax and interest.

This levy of additional tax is over and above the regular Income tax and Interest

Steps to file Form ITR-U

ITR-U form is divided into two parts : A & B

Part A collects general personal information like -

• PAN
• Aadhaar Number
• Assessment Year
• Whether return previously filed for this assessment year? (Yes/No)
• If yes, Whether filed u/s 139(1) Others
• If applicable, enter form filed, Acknowledgement no. or Receipt No. and Date of filing the original return (DD/MM/YYYY)
• Are you eligible to file an updated return? i.e., a person is not falling in such circumstances wherein an updated return can’t be filed.
• Selecting the ITR form for filing an updated return
• Reasons for updating income. This includes reasons such as returns previously not filed, income not reported correctly, wrong heads of income chosen, etc.
• Are you filing an updated return within 12 months from the end of the relevant AY or between 12 to 24 months from the end of the relevant AY?
• Are you filing an updated return to reduce carried forward loss, unabsorbed dep., or tax credit?

Part B is for reporting updated income tax details, including -

• 1 (A) Head of income under which additional income is being returned as per Updated Return
• 1 (B) Total income as per last valid return (only in cases where the Income Tax Return has previously been filed)
• Total income as per Part B-TI
• The amount payable, if any (To be taken from the ―Amount payable of Part B-TT of the updated ITR)
• Amount refundable, if any (To be taken from ―Refund‖ of Part B-TTI of the updated ITR
• The amount payable on the basis of last valid return (only in applicable cases)
• 6. (i) Refund claimed as per last valid return if any
• 6. (ii) Total Refund issued as per last valid return, if any (including interest u/s 244A received
• Fee for default in furnishing return of income u/s 234F
• Regular Assessment Tax, if any
• Aggregate liability on additional income
• Additional income-tax liability on updated income [25% or 50% of (9-7)]
• Net amount payable (9+10)
• Tax paid u/s 140B
• Tax due (11-12)
• Details of payments of tax on updated return u/s 140B
• Details of payments of Advance Tax / Self-Assessment Tax / Regular Assessment Tax, credit for which has not been claimed in the earlier return (credit for the same is not to be allowed again under section 140B(2) )
• Note: Credit for the above is not to be allowed again under section 140B(2)
• Relief u/s 89, which is not claimed in earlier return [relief for the same is not to be allowed under section 140B(2)]

Updated Return cannot be filed in the following cases

• If it has the effect of showing a loss
• Resulting in refund
• Reducing the tax liability which was previously determined
• Has the effect of increasing the refund
• If the updated return is furnished for the relevant assessment year
• Any proceeding for assessment or reassessment or recomputation or revision of income under Income Tax is pending or has been competed for the relevant assessment year.
• The Assessing Officer has information in respect of such assessee for the relevant assessment year in his possession under Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 or the Prohibition of Benami Property Transactions Act, 1988 or the Prevention of Money Laundering Act, 2002 or the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 and the same has been communicated to him, prior to the date of furnishing of return
• If the information for the relevant assessment has been received under an agreement referred to in sections 90 or 90A of the Act in respect of assessee and the same has been communicated to him, prior to the date of furnishing of return
• 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
• He is such a person or belongs to such class of persons, as may be notified by the Board in this regard

Filing the updated return may provide the taxpayer the following benefits

• Avoid penal consequences for the under reporting of income identified during the assessment or reassessment proceedings
• Relief from further prosecution proceedings and thereby providing the opportunity to reduce the litigation.

Disclaimer: The facts and opinions written in this article are those of the author and have been prepared on the basis of relevant provisions and information available at the time of preparation and it does not constitute any professional advice.

Also Read: CBDT notified Form ITR-U for furnishing updated return under Section 139(8A) and Rule 12AC