Major Features of Updated Income Tax Return with Open Issues

In the current times, the reduction in the time limits towards furnishing the belated or amended income tax return (ITR) gives assessees a short duration to amend the accidental glitches or meet these timelines in the difficult positions. Until now, the former day to furnish the amended or belated return was Dec 31 of the assessment year.

Through the view to furnish another chance to correct any omissions or errors made during furnishing the original or belated ITR for the case in which no return is furnished because of the unpredictable situations, revised law of the updated return would be introduced vide section 139(8A) of the Income-tax Act 1961 by Finance act, 2022.

As per the latest provision, another time duration of 12 months or 24 months from the finish of the related assessment year is given to all the assessees with more cost of 25%/ 50% of tax liability, correspondingly through which the updated return could be furnished.

Significant Features of Provision for Updated Income Tax Return

• The same shall be furnished once for the assessment year
• The tax liability shall be calculated post to permitting the due credit for the TDS, advance tax, withholding tax, and others
• Interest for default on filing the income return for default in payment of advance tax and for payment of advance tax deferment shall be imposed as subjected to apply
• Updated returns could be furnished from the assessment year 2020-21 and onwards
• The return is furnished along with the proof of payment of tax

Remind That No New ITR Could be Furnished in Below Cases

• Decreasing tax liability or increasing refund or claiming losses is caused due to the return
• If any assessment or reassessment proceedings are due with respect to the assessee for these assessment years
• When an investigation has been done with respect to the assessee, then for every assessment year and the assessment year before these assessment years
• If any prosecution proceedings are due for these assessment years.
• When any data from a foreign jurisdiction is obtained under the tax treaty and that is discussed by the assessee for the related assessment year.
• The tax officer poses the data beneath several acts such as smugglers, Benami, black money, money laundering, and others, and that is told to the assessee
• CBDT mentioned that these assessees shall not qualified to furnish the updated return

CBDT circulated that the rule for filing the updated return including with the Form ITR-U, a normal form that needs the income disclosure beneath numerous income heads without detailing the breakup of that as well as with the causes for the revised return. indeed, the information of the tax payment is required to be filed for that.

Also, the new form ITR-U is required to be furnished with the digital signature in the audit cases and an electronic verification code in the non-audit cases. There shall be no choice of a manual signature and furnishing that to Banglore for the updated return.

The provision of the window for the updated returns proves to be effective that the government has taken for the maximum compliance toward return filing. That shall be used by the assessee who could not furnish the return or has not been able to amend the glitches before the 31 December of the assessment year. But, the other tax liability of 25%/50% will act as the determinant for these a choice, as that is similar on a higher side for the return filing compliance.

Some Issues of the Updated Tax Return

1. Applicability of penalty provisions such as misreporting or underreporting in the income tax return on the other income declared in the updated return under Section 139 (8A)
2. The selection of the cases in the scrutiny assessment makes the window small for the updated returns as the updated return could not be furnished for the cases chosen for the scrutiny assessment
3. Returns resulting in a reduction of losses or refunds seem out of scope based on the literal interpretation of the Act. The same may be clarified for the inclusion or exclusion of the same

For the condonation of delay, only those would file the application who have genuine reason rather than opting for the updated return as the late condoned will not result in any other tax liability that is 25% or 50%.