All About Updated Income Tax Return – Section 139(8A)

1. ALLABOUTUPDATEDINCOMETAXRETURN –SECTION139(8A) https://taxguru.in/income-tax/updated-income-tax-return-section-1398a.html TheFinanceBill2022hasinsertedanewsection,Section139(8A)inIncomeTaxAct.Thisnewsection providesforfacilitatingfilingof‘UpdatedReturn’bythetaxpayers.Thissectionhaseffectfrom1stApril2022. A taxpayer can file an updated return within two years from the end of the relevant Assessment Year. Thus, a taxpayer can now file an updated return for period from AY 2020-21. Updated return can be filed irrespective of the fact that whether the original return was filed by the taxpayer or not. However, to file an updated return, the taxpayerhas to meet the below-mentionedconditions: Theupdatedreturncanbefiledonlyifthetaxpayerhastodiscloseanyadditionalincome,whichwas missed/ omitted earlier, andpay the additional taxthereon. Updatedreturncannotbefiledtoreduceanyincomeandreportlossorincreasethelossthereby resultingin reduction of taxliability or increase intax refund. Theoptionofupdatedreturncanbeoptedonlyonceforoneassessmentyear. Iftheupdatedreturnisbeingfiledwithin12monthsfromtheendoftherelevantassessmentyear,then anadditional income taxof 25% and interestthereon shall bepayable. Iftheupdatedreturnisbeingfiledwithintheperiodof13monthsto24monthsfromtheendofthe relevantassessmentyear,thenanadditional incometaxof50%and interestthereonshallbepayable. Whilefilinganupdatedreturn,theproofofpaymentofadditionalincometax&interestthereonshall haveto be submitted by thetaxpayer.

2. 7.Ataxpayercannotfileanupdatedreturnincaseofsearch&seizureorcasewhereanyprosecution proceedingshave been initiated againstthe taxpayer. Althoughtheadditionalincometaxalongwiththeinterestthereonconstitutesinhighertaxliabilitiesand appearsasaburdenonataxpayer,thisfacilityoffilinganupdatedreturncanalsobeviewedasan opportunityto disclosetheearliermissedincomeandsaveoneselffromanylegalproceedingsandprosecutions.Ifthe Assessing Officer believes that the assessee has escaped any income to be reported in Income Tax Return or has under reported the income, such Officer has a power to assess or re-assess such income. In case of under- reporting of income, a penalty as high as 50% of the tax payable could be levied & for misreporting of income couldleadtoalevypenaltyashighas200%ofthetaxpayableonthemisreportedincome.Thus,theprovision of filing of Updated Return should act like an opportunity window to save oneself from paying extra amount in formof penalty.