Whether payment of additional tax is a condition precedent for exercising option of filing Updated Return under section 139(8A)?

 

As per the provisions of the Income-tax Act, 1961, an assessee shall be able to file an updated return to declare any additional income within the prescribed time period of one/two years from the end of the relevant assessment year, subject to certain conditions prescribed vide section 139(8A) of the Act.

Section 139(8A) inter-alia provides that the filing of the updated return should not lead to refund or increase the refund due on the basis of return furnished under section 139(1) or 139(4) or 139(5), if any.

Further, section 139(9), provides that a return filed under section 139(8A) may be treated as defective if the same is not accompanied by the proof of payment of tax as required under section 140B (i.e. additional tax payment of 25 percent or 50 percent of the tax computed in relation to the additional income/income declared, as the case may be, in the updated return).

Conjoint reading of section 139(8A), 139(9) and 140B may lead to an interpretation that the updated return should not result in refund rather should always result in payment of additional tax under section 140B. However, such an interpretation may defeat the purpose of the law of introducing the provisions of updated return which was to encourage voluntary tax compliance and reducing litigation, rather than minting the additional tax payments.

Therefore, given that there are certain aspects which still require clarity in relation to the filing of updated return, the decision of the Hon’ble Amritsar ITAT in the case of Pashora Singh ( I.T.A. No.393/Asr/2024), may be considered as a precedent.

In the said case, the assessee did not pay any additional tax and claimed a portion of the credit of the taxes deducted in the return filed. However, the same was denied by the CPC. Further, the Department Representative stressed upon the fact that the updated return should be accompanied with the proof of payment of additional tax under section 140B of the Act, which was not done in the present case. In this regard, the Hon’ble Court did acknowledge the fact that an updated return cannot result into refund of taxes, however, directed the tax authorities to allow the TDS credit to the extent claimed in the return. Therefore, analogy may be drawn from the above decision that updated return may be filed in a scenario where the same may not lead to payment of additional tax.

The above decision may not be very explanatory, however, those taxpayers who are in a dilemma of their eligibility of filing of updated return, without payment of additional taxes, may find it useful.

The Copy of the order is as under:

1724914012-ITA No. 393- Pashora Singh -section 90 denied by CIT