INTRODUCTION:
Section 139 of the Act is related to the provisions for filing Income Tax returns by taxpayers. The object of section 139 is to give reasonable time to the taxpayers to file a correct statement of their income within the duration specified under the Act. Hence, it is proposed, in the finance bill 2022, that the taxpayers may be given some more time under the Act to file particulars of their income of the previous year in an UPDATED RETURN. The objective of the proposed updated return is to realize additional revenue and a litigation free environment. The condition attached to the updated return is that
additional tax needs to be paid, and
payment of an amount equal to 25% or 50% as additional tax on the tax and interest due on the additional income furnished would be required to be paid.
A new Sub-section (8A) in section 139 is proposed to be introduced to provide for the furnishing of updated return under the new provision:
1. The updated return is to be filed within a period of 24 months from the end of the assessment year for the relevant previous year.
2. The updated return cannot be filed if the updated return is a return of loss or has the effect of decreasing the total tax liability determined based on the return furnished earlier.
3. A person shall not be eligible to file the updated return, if:
Search has been initiated u/s 132, or books of account, other documents, or any assets re-questioned u/s 132A.
A survey has been conducted u/s 133 other than subsection (2A) of the section.
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 previous assessment years preceding such assessment year.
4. Also, no updated return shall be furnished by any person for the relevant assessment year, were,
An updated return has already been furnished for the relevant assessment year
Any proceeding under the Act is pending or has been completed for the relevant assessment year in his case, for assessment or reassessment or re-computation or revision of income under the Act.
The assessing officer has information in respect of such a person for the relevant assessment year is in possession and the same has been communicated to him, prior to the date of filing of the updated return, under the
i.The prevention of money laundery Act, 2002
ii.The black money (undisclosed Foreign Income and Assets) and imposition of Tax Act, 2015
iii.The prohibition of Benami property transaction act, 1988
iv.The smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976.
Information for the relevant assessment year has been received under an agreement under sections 90 and 90A of the Act and the same has been communicated to him before the date of filing his updated return.
Any prosecution has been initiated against such a person before the date of filing his updated return.
If he is a person or belongs to a class of person as notified by the board in this regard
5. The updated return is considered to be defective unless such a return is accompanied by proof of payment of tax as required under section 140B of the Act.
A new section 140B has been proposed to provide for the tax required to be paid for opting to file an updated return:
The updated return shall also be accompanied by proof of payment of tax, additional tax, interest, and fee at the time of filing the return shall be equal to
a. Twenty-five per cent of the tax, additional tax, interest, and fee
If the updated return is filed before the expiry of 12 months for the end of the relevant assessment year
b. Fifty per cent of the tax, additional tax, interest, and fee
If the updated return is filed after the expiry of 12 months but 24 months before the end of the relevant assessment year.
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