Understanding the Option to Furnish Updated Return

1. Option to Furnish Updated Return

Timeframe

Any individual can submit an updated return of income for the previous year relevant to the assessment year within 24 months from the end of the relevant assessment year. This option is available regardless of whether the original return was filed under section 139(1), belated return under section 139(4), or revised return under section 139(5).

Example

For instance, an updated return for Assessment Year 2023-24 can be filed until March 31, 2026.

2. Non-Applicability of Updated Return Provisions

Exceptions

Provisions related to updated returns do not apply under the following circumstances:

(i) If the updated return results in a loss return. (ii) If it decreases the total tax liability determined based on the original return. (iii) If it results in a refund or increases the existing refund.

Illustration

For instance, if Mr. A filed his ITR for AY 22-23 with a declared tax liability of Rs. 1,00,000, he cannot decrease this liability through an updated return.

3. Updated Return for Loss Return Cases

Permissible Scenario

An individual who filed a return of loss on or before the due date under section 139(1) is allowed to submit an updated return, provided it is a return of income.

Example

If Mr. C filed a return of loss for AY 2022-23 on July 31, 2022, he can submit an updated return until March 31, 2025, given it is a return of income.

4. Furnishing Updated Return for Subsequent Years

Carrying Forward Losses

If the furnishing of an updated return for a previous year reduces carried forward losses or unabsorbed depreciation, updated returns are required for subsequent years affected by this reduction.

Scenario

If Mr. D filed a return of loss for AY 2022-23 on July 31, 2022, and later realizes that an excess loss was claimed, he can file an updated return. If this affects subsequent years (e.g., AY 2023-24 and AY 2024-25), updated returns for those years are necessary.

Circumstances Restricting Updated Return

Instances of Restriction

Updated returns cannot be furnished for the assessment year relevant to the previous year in which a search, survey, or requisition is conducted. Furthermore, restrictions apply in scenarios such as pending assessments or proceedings, prosecution proceedings initiated, or information received under specific acts.

Additional Constraints

• No updated return can be filed twice for the same assessment year.
• If prosecution proceedings are initiated.
• When certain information is in possession of the Assessing Officer.

Understanding these conditions is essential for individuals contemplating the submission of updated returns, ensuring compliance with the Income Tax Act.