Page 19 - Union Budget, 2022

Union Budget, 2022

Filing of Updated Returns

• New sub-section 8A is proposed to be inserted in Sec 139 to provide that any person can file an updated return
within 24 months from end of relevant AY (whether an original or belated or revised return has been filed, or
not).
• The above provision is not applicable if:
- it is a return of loss, or, based on the return furnished earlier, decreases tax liability or results in tax
refund or it increases the refund.
- it pertains to the AY relevant to the PY in which a search is initiated, or survey is conducted, or
requisition is made and to two AYs preceding such AY.
- updated return has already been furnished once for a relevant AY.
- Proceedings relating to assessment or re-computation or reassessment or revision of income is pending
or has been completed for the relevant AY.
- AO has information under PMLA, Black Money Act or similar Acts or has received information under
an agreement u/s 90 or 90A and has communicated the same to the assessee prior to date of furnishing
of updated return, or
- any prosecution proceedings under Chapter XXII have been initiated for the AY prior to date of
furnishing updated return.
The updated return must be accompanied by the proof of payment of tax (computed in a manner similar to self-
assessment tax u/s 140A), interest and fee for delayed filing or delayed payment, as the case may be + additional tax
computed as follows:

Date of filing updated return u/s 139(8A) Additional tax payable
Before completion of 12 months from end of relevant AY 25% of (tax + interest as mentioned above)
After 12 months but before 24 months from the end of the 50% of (tax + interest as mentioned above)
relevant AY

It shall be noted that the computation of the “tax + interest” shall be as if the income, which is now being offered for
tax, has been disclosed earlier in the original return. Interest u/s 234A and 234C shall not be calculated on additional
tax payable separately.
Additional tax = 25% or 50% of such “tax + interest” mentioned supra.
• Further, Sec 153 has been proposed to be amended, thereby stipulating that assessment u/s 143 or 144, has
to be completed within 9 months from the end of the FY of furnishing of updated return.
• Sec 276CC has been proposed to be amended to provide that penalty and punishment for failure to file
return of income shall not be imposed if updated return is filed within the stipulated time therein.

AY 2022-23 and subsequent AYs

• The proposal is an affirmative step in the direction of encouraging voluntary tax compliance and provides more
time to the assessee to declare the income that was omitted in the erstwhile returns. However, an ambiguity still

remains as to whether penalty in relation to concealment of income shall be levied in case the assessee files an
updated return.
• The time period for completing the scrutiny assessment is 9 months from the end of relevant AY and in cases
where assessment procedure is initiated or completed, updated returns cannot be filed by the assessee. In this
scenario, even though the time period of 24 months is provided, most of the assessees would not be eligible to
file the updated return. Hence, it would be pertinent to allow assessees for whom original assessment is initiated
or completed, to furnish updated returns.

Insights from NES

The realisable value of the assets available with the 421 Corporate Debtors (CDs) rescued when they entered
the CIRP, was only Rs. 1.48 lakh crore, though they owed Rs. 7.94 lakh crore to creditors. The resolution plans
realised Rs. 2.55 lakh crore, which is more than 172% of the realisable value of these CDs.

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