[Opinion] Updated Return – A Close Study

V. K. Subramani – [2022] 144 taxmann.com 217 (Article)

The time limit for filing the ITR is given in section 139(1) which also contains list of persons who have to file ITR mandatorily based on certain specified criteria. Section 139(3) mandates filing of loss return in order to be eligible for carry forward of such loss to subsequent assessment years for set off. Section 139(4) provides the outer time limit for filing ITR and section 139(5) is meant for filing revised ITR where the assessee discovers any omission or any wrong statement therein. Section 139(4) previously permitted filing of ITR up to the end of the relevant assessment year. The Finance Act, 2021 however has curtailed the time limit by prescribing “three months prior to end of the relevant assessment year”. Thus, for the assessment year 2022-23, the ITR has to be filed under section 139(4) or section 139(5), before 31st day of December, 2022.

In this background, the legislature perhaps to tone down the rigour of the legal provision introduced the concept of ‘updated return’ by inserting sections 139(8A), 140B and 153(1A). This refresher takes note of the legal provisions newly brought in and with some simple examples how the tax liability is not as perceived prima facie when the legal provisions were announced vide the Finance Bill, 2022.

Updated return – section 139(8A)

Any taxpayer whether filed a return of income under section 139(1) or section 139(4) or section 139(5) or who has omitted to file his ITR for an assessment year may opt to file an updated return. The prescribed form for filing the updated return is ITR-U. The time limit for filing an updated return in ITR U is 24 months from the end of the relevant assessment year. Section 139(8A) was inserted by the Finance Act, 2022 w.e.f. 01.04.2022 which means updated return can be filed up to 31.03.2023 both for the assessment year 2020-21 and assessment year 2021-22 with differential tax liability.

Going further since the time limit for filing the return under section 139(4) or section 139(5) for the assessment year 2022-23 would expire on 31.12.2022, one may be tempted to file updated return for the assessment year 2022-23 immediately after 31st December, 2022. As the outer time limit for filing updated return is prescribed and there is no embargo in filing such return immediately after the lapse of time under section 139(4) / 139(5). Thus, the updated return would be operative for the assessment year 2020-21 to 2022-23 (3 assessment years) for a limited period up to 31.03.2023. However, such possibility is practically viable only if the schema for filing the same is enabled immediately after 31st December of each assessment year, commencing from 31st December, 2022.

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