Whether deduction can be claimed in Updated Return after it is processed U/s 14(1)(a)

If any taxpayers has failed to furnish the belated or revised income tax return, the only option with the taxpayers is to furnish an updated return for an assessment year within 𝟮𝟰 𝗺𝗼𝗻𝘁𝗵𝘀 from the end of the relevant assessment year. This provision applies whether or not a return was filed earlier under subsections (1), (4), or (5).

Here are some key points to remember:
Eligibility
𝘈𝘯 𝘶𝘱𝘥𝘢𝘵𝘦𝘥 𝘳𝘦𝘵𝘶𝘳𝘯 𝘤𝘢𝘯 𝘣𝘦 𝘧𝘪𝘭𝘦𝘥 𝘧𝘰𝘳 𝘪𝘯𝘤𝘰𝘮𝘦 𝘵𝘩𝘢𝘵 𝘸𝘢𝘴𝘯’𝘵 𝘥𝘦𝘤𝘭𝘢𝘳𝘦𝘥 𝘦𝘢𝘳𝘭𝘪𝘳, 𝘦𝘯𝘴𝘶𝘳𝘪𝘯𝘨 𝘤𝘰𝘮𝘱𝘭𝘪𝘢𝘯𝘤𝘦 𝘢𝘯𝘥 𝘵𝘳𝘢𝘯𝘴𝘱𝘢𝘳𝘦𝘯𝘤𝘺.

Non-Applicability
The following cases are ineligible:
• 𝘍𝘪𝘭𝘪𝘯𝘨 𝘢 𝘳𝘦𝘵𝘶𝘳𝘯 𝘰𝘧 𝘭𝘰𝘴𝘴.
• 𝘙𝘦𝘥𝘶𝘤𝘵𝘪𝘰𝘯 𝘪𝘯 𝘵𝘰𝘵𝘢𝘭 𝘵𝘢𝘹 𝘭𝘪𝘢𝘣𝘪𝘭𝘪𝘵𝘺.
• 𝘊𝘭𝘢𝘪𝘮𝘪𝘯𝘨 𝘰𝘳 𝘪𝘯𝘤𝘳𝘦𝘢𝘴𝘪𝘯𝘨 𝘢 𝘳𝘦𝘧𝘶𝘯𝘥.

Restrictions
An updated return cannot be furnished if:
1. 𝘛𝘩𝘦𝘳𝘦 𝘩𝘢𝘴 𝘣𝘦𝘦𝘯 𝘢 𝘴𝘦𝘢𝘳𝘤𝘩 𝘰𝘳 𝘴𝘶𝘳𝘷𝘦𝘺 𝘶𝘯𝘥𝘦𝘳 𝘴𝘦𝘤𝘵𝘪𝘰𝘯𝘴 132/132𝘈 𝘰𝘳 133𝘈.
2. 𝘕𝘰𝘵𝘪𝘤𝘦𝘴 𝘪𝘯𝘥𝘪𝘤𝘢𝘵𝘦 𝘶𝘯𝘥𝘪𝘴𝘤𝘭𝘰𝘴𝘦𝘥 𝘢𝘴𝘴𝘦𝘵𝘴 𝘰𝘳 𝘪𝘯𝘤𝘰𝘮𝘦.
3. 𝘗𝘳𝘰𝘤𝘦𝘦𝘥𝘪𝘯𝘨𝘴 𝘧𝘰𝘳 𝘳𝘦𝘢𝘴𝘴𝘦𝘴𝘴𝘮𝘦𝘯𝘵, 𝘳𝘦𝘤𝘰𝘮𝘱𝘶𝘵𝘢𝘵𝘪𝘰𝘯, 𝘰𝘳 𝘳𝘦𝘷𝘪𝘴𝘪𝘰𝘯 𝘢𝘳𝘦 𝘱𝘦𝘯𝘥𝘪𝘯𝘨/𝘤𝘰𝘮𝘱𝘭𝘦𝘵𝘦𝘥.
4. 𝘚𝘱𝘦𝘤𝘪𝘧𝘪𝘤 𝘭𝘦𝘨𝘢𝘭 𝘰𝘳 𝘧𝘪𝘯𝘢𝘯𝘤𝘪𝘢𝘭 𝘪𝘯𝘧𝘰𝘳𝘮𝘢𝘵𝘪𝘰𝘯 𝘩𝘢𝘴 𝘣𝘦𝘦𝘯 𝘤𝘰𝘮𝘮𝘶𝘯𝘪𝘤𝘢𝘵𝘦𝘥 𝘶𝘯𝘥𝘦𝘳 𝘭𝘢𝘸𝘴 𝘭𝘪𝘬𝘦 𝘵𝘩𝘦 𝘗𝘳𝘰𝘩𝘪𝘣𝘪𝘵𝘪𝘰𝘯 𝘰𝘧 𝘉𝘦𝘯𝘢𝘮𝘪 𝘗𝘳𝘰𝘱𝘦𝘳𝘵𝘺 𝘛𝘳𝘢𝘯𝘴𝘢𝘤𝘵𝘪𝘰𝘯𝘴 𝘈𝘤𝘵, 𝘗𝘳𝘦𝘷𝘦𝘯𝘪𝘰𝘯 𝘰𝘧 𝘔𝘰𝘯𝘦𝘺 𝘓𝘢𝘶𝘯𝘥𝘦𝘳𝘪𝘯𝘨 𝘈𝘤𝘵, 𝘰𝘳 𝘉𝘭𝘢𝘤𝘬 𝘔𝘰𝘯𝘦𝘺 𝘈𝘤𝘵.
5. 𝘗𝘳𝘰𝘴𝘦𝘤𝘶𝘵𝘪𝘰𝘯 𝘱𝘳𝘰𝘤𝘦𝘦𝘥𝘪𝘯𝘨𝘴 𝘩𝘢𝘷𝘦 𝘣𝘦𝘦𝘯 𝘪𝘯𝘪𝘵𝘪𝘢𝘵𝘦𝘥.

Special Provisions
• 𝘙𝘦𝘵𝘶𝘳𝘯𝘴 𝘰𝘧 𝘪𝘯𝘤𝘰𝘮𝘦 𝘤𝘢𝘯 𝘣𝘦 𝘶𝘱𝘥𝘢𝘵𝘦𝘥 𝘦𝘷𝘦𝘯 𝘪𝘧 𝘢 𝘳𝘦𝘵𝘶𝘳𝘯 𝘰𝘧 𝘭𝘰𝘴𝘴 𝘸𝘢𝘴 𝘧𝘪𝘭𝘦𝘥 𝘸𝘪𝘵𝘩𝘪𝘯 𝘵𝘩𝘦 𝘢𝘭𝘭𝘰𝘸𝘦𝘥 𝘵𝘪𝘮𝘦.
• 𝘓𝘰𝘴𝘴𝘦𝘴 𝘤𝘢𝘳𝘳𝘪𝘦𝘥 𝘧𝘰𝘳𝘸𝘢𝘳𝘥, 𝘶𝘯𝘢𝘣𝘴𝘰𝘳𝘣𝘦𝘥 𝘥𝘦𝘱𝘳𝘦𝘤𝘪𝘢𝘵𝘪𝘰𝘯, 𝘰𝘳 𝘵𝘢𝘹 𝘤𝘳𝘦𝘥𝘪𝘵𝘴 𝘮𝘢𝘺 𝘳𝘦𝘲𝘶𝘪𝘳𝘦 𝘶𝘱𝘥𝘢𝘵𝘦𝘥 𝘳𝘦𝘵𝘶𝘳𝘯𝘴 𝘧𝘰𝘳 𝘴𝘶𝘣𝘴𝘦𝘲𝘶𝘦𝘯𝘵 𝘺𝘦𝘢𝘳𝘴 𝘪𝘧 𝘢𝘥𝘫𝘶𝘴𝘵𝘮𝘦𝘯𝘵𝘴 𝘢𝘳𝘦 𝘯𝘦𝘤𝘦𝘴𝘴𝘢𝘳𝘺.

Why This Matters
This provision is a step towards enhancing voluntary compliance and ensuring taxpayers can rectify mistakes or omissions in their filings, while maintaining the integrity of the tax system.

The question arises as to whether the return can be revised so as to reduce the tax determined under section 143(1)(a). This may happen that the taxpayers have failed to furnish the details of a few deductions in the original ITR and now after processing u/s 143(1)(a) taxpayers want to claim the same by offering meager say Rs. 1000/- as additional income.

In such a scenario, it may be noted that an updated return cannot be filed if it has the effect of reducing the tax liability. The first proviso to section 139(8A) reads as under:

Provided that the provision of this sub-section shall not apply, if the updated return,—

(a) is a return of a loss; or

(b) has the effect of decreasing the total tax liability determined on the basis of return furnished under sub-section (1) or sub-section (4) or sub-section (5); or

(c) results in refund or increases the refund due on the basis of return furnished under sub-section (1) or sub-section (4) or sub-section (5),of such person under this Act for the relevant assessment year:

It means that so long as the final tax liability is not less than the tax determined under section 143(1)(a), Assessee can opt and file updated returns under section 139(8A).