INDIAN INCOME TAX UPDATED RETURN – ITR U – preliminary analysis of relevant provisions

[DEV KUMAR KOTHARI]

Vide Finance Act, 2022 w.e.f. 01-04-2022 a new sub-section 8A was inserted in section 139 of IT Act. This was with a view of simplified way of removing mistakes in ITR filed and also to cover cases where no ROI was filed to file a ROI within prescribed time. Additional tax @ 25 and 50% is payable on additional income if ROI U is filed within 12 or 24 months from end of assessment year respectively.

This was expected to be an easy method for honest tax payers who come forward to remove mistakes in ITR filed and also in some cases for years for which ROI was not filed. However, it appears that it is not so easy and involves many contentions issues and also required in difficult manner whether an assessed is eligible to file ITR U or not and for what purposes he can file ITR U and circumstances in which ITR U  can be filed or cannot be filed.

Underlying main concept is pay tax and additional tax and get rid of serious proceedings like reassessment, revision, penalty.

The ITR U cannot be used to avail additional benefits like reduced income and tax liability,  increased refund , increased loss CF  or unabsorbed depreciation  etc.

In a way it can also be considered a mini amnesty in a limited manner.

Cases in which search, survey, requisitions have been issued will not be eligible to file ROI for years in which such action is taken and any earlier year.

Cases in which information is with department and have been communicated to assesse under some laws relating to black money, money laundering, foreign assets  etc. In those cases assesse can file ROI U, if he has not received communication from department. This means that if an assesse has apprehension, he can file ROI U and get relief and peace of mind.

ROI U can be filed within 24 months from end of assessment year. So one can avail this opportunity only from assessment year 2020-21  (FY 2019-20) as 24 months will end on 31.03.2023.for FY 2018-19 assessment year 2019-20 ROI U cannot be filed because 24 month lapsed on  31.03.2022 when the provision was not in force.

New Rule and Form of ITR has been inserted vide notification GSR 309(E), dated the 22nd April, 2022.

In this write-up an exercise of preliminary nature has been undertaken to refer to relevant provisions of IT Act and IT Rules, as amended in connection with ITR U.

Some directly related  provisions:

Section 44AB – Audit of accounts of certain persons carrying on business or profession  - in relation to cases requiring  TAR  and other cases because  due dates to file ROI are different. This is also relevant in relation to method of verification of ITR U

Sub-section (4A) or sub-section (4B) or sub-section (4C) or sub-section (4D) of section 139, - specified cases where ROI is compulsory whether there is taxable  income or not.

Section 139 may be considered relevant because new provision vide sub-section 8A is a part of S.139 and it provides eligibility, disqualifications and conditions etc. for filing ITR U. And other provisions may have to be referred .

S.140B Tax on updated return Inserted vide Finance Act, 2022 w.e.f. 01-04-2022 – this covers computation of tax payable after taking into account  taxes paid,  TDS, TCS, credits allowable, rebates allowable etc. and also additional tax payable on additional income disclosed in ITR U

Provisions relating to search, survey and requisitions. – Because those cases are not eligible for ROI U filings

Rule making powers vide S.295.

Operative and relevant part of S.139 , 140B in relation to ROI U are reproduced below with highlights and catch words added for easy analysis:

CHAPTER XIV

PROCEDURE FOR ASSESSMENT

Statutory Provisions

Income-tax Act, 1961

CHAPTER XIV

PROCEDURE FOR ASSESSMENT

Return of income.

139.

⁹⁷[(8A) Any person, whether or not he has furnished a return under sub-section (1) or sub-section (4) or sub-section (5), for an assessment year (herein referred to as the relevant assessment year), may furnish an updated return of his income or the income of any other person in respect of which he is assessable under this Act, for the previous year relevant to such assessment year, in the prescribed form, verified in such manner and setting forth such particulars as may be prescribed, at any time within twenty-four months from the end of the relevant assessment year:

Provided that the provision of this sub-section shall not apply, if the updated return,-

(a) is a return of a loss; or

(b) has the effect of decreasing the total tax liability determined on the basis of return furnished under sub-section (1) or sub-section (4) or sub-section (5); or

(c) results in refund or increases the refund due on the basis of return furnished under sub-section (1) or sub-section (4) or sub-section (5),

of such person under this Act for the relevant assessment year:

Provided further that a person shall not be eligible to furnish an updated return under this sub-section, where-

(a) a search has been initiated under section 132 or books of account or other documents or any assets are requisitioned under section 132A in the case of such person; or

(b) a survey has been conducted under section 133A, other than sub-section (2A) of that section, in the case such person; or

(c) a notice has been issued to the effect that any money, bullion, jewellery or valuable article or thing, seized or requisitioned under section 132 or section 132A in the case of any other person belongs to such person; or

(d) a notice has been issued to the effect that any books of account or documents, seized or requisitioned under section 132 or section 132A in the case of any other person, pertain or pertains to, or any other information contained therein, relate to, such person,

for the assessment year relevant to the previous year in which such search is initiated or survey is conducted or requisition is made and any assessment year preceding such assessment year:

Provided also that no updated return shall be furnished by any person for the relevant assessment year, where-

(a) an updated return has been furnished by him under this sub-section for the relevant assessment year; or

(b) any proceeding for assessment or reassessment or recomputation or revision of income under this Act is pending or has been completed for the relevant assessment year in his case; or

(c) the Assessing Officer has information in respect of such person for the relevant assessment year in his possession under the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 (13 of 1976.) or the Prohibition of Benami Property Transactions Act, 1988 (45 of 1988.) or the Prevention of Money-laundering Act, 2002 (15 of 2003.) or the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (22 of 2015.) and the same has been communicated to him, prior to the date of furnishing of return under this sub-section; or

(d) information for the relevant assessment year has been received under an agreement referred to in section 90 or section 90A in respect of such person and the same has been communicated to him, prior to the date of furnishing of return under this sub-section; or

(e) 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 under this sub-section; or

(f) he is such person or belongs to such class of persons, as may be notified by the Board in this regard:

Provided also that if any person has sustained a loss in any previous year and has furnished a return of loss in the prescribed from within the time allowed under sub-section (1) and verified in the prescribed manner and containing such other particulars as may be prescribed, he shall be allowed to furnish an updated return where such updated return is a return of income:

Provided also that if the loss or any part thereof carried forward under Chapter VI or unabsorbed depreciation carried forward under sub-section (2) of section 32 or tax credit carried forward under section 115JAA or under section 115JD is to be reduced for any subsequent previous year as a result of furnishing of return of income under this sub-section for a previous year, an updated return shall be furnished for each such subsequent previous year.]

97. Inserted vide Finance Act, 2022 w.e.f. 01-04-2022 

¹[Tax on updated return.

140B. (1) Where no return of income under sub-section (1) or sub-section (4) of section 139 has been furnished by an assessee and tax is payable, on the basis of return to be furnished by such assessee under sub-section (8A) of section 139, after taking into account,-

(i) the amount of tax, if any, already paid as advance tax;

(ii) any tax deducted or collected at source;

(iii) any relief of tax claimed under section 89;

(iv) any relief of tax or deduction of tax claimed under section 90 or section 91 on account of tax paid in a country outside India;

(v) any relief of tax claimed under section 90A on account of tax paid in any specified territory outside India referred to in that section; and

(vi) any tax credit claimed to be set off in accordance with the provisions of section 115JAA or section 115JD,

the assessee shall be liable to pay such tax together with interest and fee payable under any of the provisions of this Act for any delay in furnishing the return or any default or delay in payment of advance tax, along with the payment of additional income-tax computed in accordance with sub-section (3), before furnishing the return and the return shall be accompanied by proof of payment of such tax, additional income-tax, interest and fee.

(2) Where, return of income under sub-section (1) or sub-section (4) or sub-section (5) of section 139 (referred to as earlier return) has been furnished by an assessee and tax is payable on the basis of return to be furnished by such assessee under sub-section (8A) of section 139,-

(a) after taking into account,-

(i) the amount of relief or tax referred to in sub-section (1) of section 140A, the credit for which has been taken in the earlier return;

(ii) tax deducted or collected at source, in accordance with the provisions of Chapter XVII-B, on any income which is subject to such deduction or collection and which is taken into account in computing total income and which has not been included in the earlier return;

(iii) any relief of tax or deduction of tax claimed under section 90 or section 91 on account of tax paid in a country outside India on such income which has not been included in the earlier return;

(iv) any relief of tax claimed under section 90A on account of tax paid in any specified territory outside India referred to in that section on such income which has not been included in the earlier return;

(v) any tax credit claimed, to be set off in accordance with the provisions of section 115JAA or section 115JD,which has not been claimed in the earlier return; and

(b) as increased by the amount of refund, if any, issued in respect of such earlier return,

the assessee shall be liable to pay such tax together with interest payable under any provision of this Act for any default or delay in payment of advance tax along with the payment of additional income-tax, as computed in accordance with sub-section (3), as reduced by the amount of interest paid under the provisions of this Act in the earlier return, before furnishing the return and the return shall be accompanied by proof of payment of such tax, additional income-tax, interest and fee.

(3) For the purposes of sub-sections (1) and (2), the additional income-tax payable at the time of furnishing the return under sub-section (8A) of section 139 shall be equal to,-

(i) twenty-five per cent. of aggregate of tax and interest payable, as determined in sub-section (1) or sub-section (2), as the case may be, if such return is furnished after expiry of the time available under sub-section (4) or sub-section (5) of section 139 and before completion of the period of twelve months from the end of the relevant assessment year; or

(ii) fifty per cent. of aggregate of tax and interest payable, as determined in sub-section (1) or sub-section (2), as the case may be, if such return is furnished after the expiry of twelve months from the end of the relevant assessment year but before completion of the period of twenty-four months from the end of the relevant assessment year.

Explanation.-For the purposes of computation of “additional income-tax”, tax shall include surcharge and cess, by whatever name called, on such tax.

(4) Notwithstanding anything contained in Explanation 1 to section 234B, for the purposes of sub-section (2), interest payable under section 234B shall be computed on an amount equal to the assessed tax or, as the case may be, on the amount by which the advance tax paid falls short of the assessed tax, where, “assessed tax” means the tax on the total income as declared in the return to be furnished under sub-section (8A) of section 139,-

(a) after taking into account,-

(i) the amount of relief or tax referred to in sub-section (1) of section 140A, the credit for which has been claimed in the earlier return;

(ii) tax deducted or collected at source, in accordance with the provisions of Chapter XVII-B, on any income which is subject to such deduction or collection and which is taken into account in computing such total income, which has not been included in the earlier return;

(iii) any relief of tax or deduction of tax claimed under section 90 or section 91 on account of tax paid in a country outside India on such income which has not been included in the earlier return;

(iv) any relief of tax claimed under section 90A on account of tax paid in any specified territory outside India referred to in that section on such income which has not been included in the earlier return;

(v) any tax credit claimed, to be set off in accordance with the provisions of section 115JAA or section 115JD, which has not been claimed in the earlier return; and

(b) as increased by the amount of refund, if any, issued in respect of such earlier return.

(5) If any difficulty arises in giving effect to the provisions of this section, the Board may, with the approval of the Central Government, by notification in the Official Gazette, issue guidelines for the purpose of removing the difficulty.

(6) Every guideline issued under sub-section (5) shall be laid before each House of Parliament.

Explanation.-For the purposes of this section,-

(i) interest payable under section 234A, for the purposes of sub-section (1), shall be computed on the amount of tax on the total income as declared in the return, under sub-section (8A) of section 139, in accordance with the provisions of sub-section (1A) of section 140A;

(ii) interest payable under section 234C,for the purposes of sub-section (2), shall be computed after taking into account the total income furnished in the return under sub-section (8A) of section 139 as the returned income;

(iii) interest payable, for the purposes of sub-section (3), shall be the interest chargeable under any provision of this Act, on the income as per return furnished under sub-section (8A) of section 139, as reduced by interest paid, in accordance with the earlier return, if any:

Provided that for the purposes of this clause, the interest paid in the earlier return shall be nil if such return is an updated return referred to in sub-section (1).]

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NOTES:-

1. Inserted vide Finance Act, 2022 w.e.f. 01-04-2022 

Notification - Income Tax - Income Tax

MINISTRY OF FINANCE

(Department of Revenue)

(CENTRAL BOARD OF DIRECT TAXES)

NOTIFICATION NO. 48/2022

New Delhi, the 29th April, 2022

G.S.R. 325(E).-In exercise of the powers conferred by sub-section (8A) of section 139 read with section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend Income-tax Rules, 1962, namely:-

1. Short title and commencement.-

(1) These rules may be called the Income-tax (Eleventh Amendment) Rules, 2022.

(2) They shall come into force from the date of their publication in the Official Gazette.

2. In the Income-tax Rules, 1962 (hereinafter referred to as the principal rules), after rule 12AB, the following rule shall be inserted, namely,––

“12AC. Updated return of income.- (1) The return of income to be furnished by any person, eligible to file such return under the sub-section (8A) of section 139, relating to the assessment year commencing on the 1st day of April, 2020 and subsequent assessment years, shall be in the Form ITR-U and be verified in the manner indicated therein.

(2) The return of income referred to in sub-rule (1) shall be furnished by a person, mentioned in column (2) of the table below in the manner specified in column (3) thereof:––

TABLE

Sl. No.	Person	Manner of furnishing return of income
(1)	(2)	(3)
1.	Individual, or Hindu undivided family or a firm or limited liability partnership or an association of persons or a body of individuals, whether incorporated or not, or a local authority or an artificial juridical person in whose case accounts are required to be audited under section 44AB of the Act or a Company or a political party required to furnish a return in Form ITR-7.	Electronically under digital signature.
2.	Individual, or Hindu undivided family, or firm, or limited liability partnership, or an association of persons or a body of individuals, whether incorporated or not, or a local authority or an artificial juridical person, or a person required to file a return under sub-section (4A) or sub-section (4B) or sub-section (4C) or sub-section (4D) of section 139, other than a person mentioned in column (2) of Sl. No. (1) above.	Electronically under digital signature; (B) Transmitting the data electronically in the return under electronic verification code.

Explanation.–– For the purposes of this sub-rule, ―electronic verification code‖ means a code generated for the purpose of electronic verification of the person furnishing the return of income as per the data structure and standards specified by Principal Director General of Income-tax (Systems) or Director General of Income-tax (Systems).

(3) The Principal Director-General of Income-tax (Systems) or Director-General of Income-tax (Systems) shall specify the procedures, formats and standards for ensuring secure capture and transmission of data and shall also be responsible for evolving and implementing appropriate security, archival and retrieval policies in relation to furnishing the return in the manners specified in column (3) of the Table.’.

3. In the principal rules, in Appendix-II, after the ITR-Ack, the following Form ITR-U (ITR for updated return) shall be inserted, namely:-

Income Tax

1[FORM

ITR-U

INDIAN INCOME TAX UPDATED RETURN [For persons to update income within twenty-four months from the end of the relevant assessment year] (Refer instructions for eligibility) (Please see rule 12AC of the Income-tax Rules, 1962)

PART A GENERAL INFORMATION - 139(8A)

(A1) PAN

(A2) Name

(A3) Aadhaar Number (12 digits)/Aadhaar Enrolment Id (28 digits) (If eligible for Aadhaar No.)

(A4) Assessment Year [Please see instruction]

A5) whether return previously filed for this assessment year? - Yes - No

(A6) If yes, Whether filed u/s -- 139(1) -- Others

(A7) If applicable, enter form filed, Acknowledgement no. or Receipt No. and Date of filing original return (DD/MM/YYYY)

(Please select ITR type from dropdown)

Ack no and date of filing

//

(A8) Are you eligible for filing an updated return as per the conditions laid out in first, second and third provisos to section 139(8A)? - Yes - No

(A9) Please choose the ITR form for updating your income (ITRs 1-7 to be selected from drop-down and filled as per the details made available by e-filing utility - see instruction)

(A10) Reasons for updating your income: - Return previously not filed - Income not reported correctly - Wrong heads of income chosen - Reduction of carried forward loss - Reduction of unabsorbed depreciation - Reduction of tax credit u/s 115JB/115JC - Wrong rate of tax - Others

(A11) Are you filing the updated return during the period - upto 12 months from the end of the relevant assessment year - between 12 to 24 months from the end of the relevant assessment year

(A12) (a) Are you filing the updated return to reduce carried forward loss or unabsorbed depreciation or tax credit? – Yes - No (b) If yes, please specify the assessment years where carried forward loss or unabsorbed depreciation or tax credit is being affected because of this updated return. (Please select from drop down menu) - Whether revised return has been filed for the AY in (b) above – Yes - No - Whether updated return has been filed for the AY in (b) above – Yes - No

PART B - ATI COMPUTATION OF TOTAL UPDATED INCOME AND TAX PAYABLE
1.	A	Head of income under which additional income is being returned as per Updated Return	Amount in Rs
		Head of income (If yes, Please specify additional income)
	a	Income from Salary
	b	Income from House Property
	c	Income from Business or Profession
	d	Income from Capital gains
	e	Income from other Sources
	f	Total additional income (a+b+c+d+e)
	B.	Total income as per last valid return (only in cases where the Income Tax Return has previously been filed)
2.		Total income as per Part B-TI (Please see instruction)
3.		Amount payable, if any (To be taken from the "Amount payable" of Part B-TTI of the updated ITR) (Please see instruction)
4.		Amount refundable, if any (To be taken from "Refund" of Part B-TTI of the updated ITR) (Please see instruction)
5.		Amount payable on the basis of last valid return (only in applicable cases)
6.		(i) Refund claimed as per last valid return, if any (Please see instruction)
		(ii) Total Refund issued as per last valid return, if any (including interest u/s 244A received) (Please see instruction)
7.		Fee for default in furnishing return of income u/s 234F
8.		Regular Assessment Tax, if any (in applicable cases)
9.		Aggregate liability on additional income,
		(i) in case refund has been issued [3 + 6ii- (5 + 8)])
		(ii) in case refund has not been issued [3 + 6i - (5+8)]
10.		Additional income-tax liability on updated income [25% or 50% of (9-7)]
11.		Net amount payable (9+10)
12.		Tax paid u/s 140B
13.		Tax due (11-12)

14.

TAX PAYMENTS (ONLY as per Updated Return)

A

Details of payments of tax on updated return u/s 140B

TAX PAID U/S 140B

Sl No

BSR Code

Date of Deposit (DD/MM/YYYY)

Serial Number of Challan

Amount (Rs)

(1)

(2)

(3)

(4)

(5)

i

ii

iii

iv

NOTE ►

Enter the totals of tax paid u/s 140B at Sl. No.11 of Part B-ATI

TAX PAYMENTS

B

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) )

ADVANCE/SELF ASSESSMENT/ REGULAR ASSESSMENT TAX

Sl No

BSR Code

Date of Deposit (DD/MM/YYYY)

Serial Number of Challan

Amount (Rs)

(1)

(2)

(3)

(4)

(5)

i

ii

iii

iv

NOTE ►

Credit for above is not to be allowed again under section 140B(2)

15. Relief u/s 89 which is not claimed in earlier return [relief for the same is not to be allowed under section 140B(2)]

Rs.

VERIFICATION

I, son/ daughter of solemnly declare that to the best of my knowledge and belief, the information given in the return is correct and complete and is in accordance with the provisions of the Income-tax Act, 1961. I further declare that I am making this return in my capacity as ___________(drop down to be provided in e-filing utility) and I am also competent to make this return and verify it. I am holding permanent account number .(Please see instruction).

Date:

Signature:]

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NOTES:-

1.	Inserted vide NOTIFICATION NO. 48/2022 dated 29-04-2022