THE CONCEPT OF “UPDATED RETURN”
Finance Bill – 2022 has introduced a new set of return concepts by the name “Updated Return”.
So far, there were Original Return, Revised Return & Bleated Return which will be continued as it is. Now, there is one more return concept which will be referred to as “Updated Return”. A new sub-section (8A) in section 139 is proposed to be introduced to provide for furnishing of updated return under the new provisions by the Finance Bill 2022.
The object of section 139 of the Act is to give reasonable time to the taxpayer to file a correct statement of his income within the duration specified under the Act. But now this time department gathers information from different sources. So everybody needs more time to file their return correctly. Hence, it is proposed to introduce a new provision in section 139 of the Act for filing an updated return of income by any person, whether he has filed a return previously for the relevant assessment year, or not. A new sub section 8A inserted via this finance bill 2022.
In section 139 of the Income-tax Act,––
(i) after sub-section (8), the following sub-section shall be inserted, namely:––
(8A) Any person, whether or not he has furnished a return under sub-section (1) or sub-section (4) or subsection (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 subsection (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 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 two assessment years 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 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 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.”;
(ii) in sub-section (9), in the Explanation, after clause (c), the following clause shall be inserted, namely:––
“(ca) the return is accompanied by the proof of payment of tax as required under section 140B, if the return of income is a return furnished under sub-section (8A);
In this section a new provision for additional payment of tax, for this a new section 140B is introduced.
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 section139, 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 subsection (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 subsection (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 subsection (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 subsection (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 subsection (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 subsection (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).
