Finance Act 2021 shrank the time limit for filing a revised/belated return making it analogous to 3 months before the end of the relevant assessment year. Finance Act 2022 inserted Section 139(8A) wherein an assessee may file a return either for the first time or may revise an already filed normal/loss/belated/revised return within 24 months from the end of the relevant assessment year provided they pay an additional tax of 25% (for returns filed within 12 months from the end of the assessment year) or 50% (for returns filed beyond 12 to 24 months from the end of the assessment year) of the actual tax payable with interest in Form ITR - U.

Revising a return filed under sec. 139(8A) is not permitted, and the provision is available only for enhancement of income/reduction of loss and not for reduction of income/increase of loss. Section 139(8A) thus is a one-way ticket to augment tax revenues with a departmental “nudge” for omissions/non-disclosure of incomes, if any. Claiming to carry forward losses by filing the first return under Section 139(8A) is not possible. Revising normal/loss/revised return via Section 139(8A) return is permitted where the carry forward of losses would normally be available subject to the changes made in Section 139(8A).

By aligning the due dates for revised and belated returns under Sections 139(4) and (5), the law has given an assessee a much narrower window for doing corrections. In the case of Corporate/ Transfer pricing assessees, it is virtually no more than 30/60 days at best. Thus the assessees are expected to be amazingly cautious while filing their returns.

Henceforth, an assessee who files a return before the due date will get two opportunities to correct his return, one via a revised return, which can have upward/downward income vis-a-vis the original return and then only an upward revision of income via Section 139(8A).

The return revision route will be available only one once to a person who files a belated return via Section 139(8A), and it is only an upward revision.

The belated return concept might thus become obsolete due to the insertion of Section 139(8A). For AY 2023-24, the timeline for a revised/belated return is limited to Dec 31, 2023. Thus, the law provides only the route of Section 139(8A) thereafter, where an assessee has to inevitably pay 25% or 50% excess tax for his errors/time-lapse even if he has a genuine reason/error. The above certainly calls for an assessee to bootstrap his compliance timelines backwards.

Suo moto rectification is possible only for “mistakes apparent on record”, the time limit being within 4 years from the end of the relevant financial year. However, the window of suo moto rectification under Section 154(2)(b) is available for an assessee with the caveat that he/she will have to write to the Assessing officer to justify/invoke the same. The e-filing portal does not allow it to be an option for an assessee for changes in income, even if it is for genuine reasons. By shrinking the timelines on revised/belated returns, making an assessee go mandatorily via Section 139(8A) and plugging suo moto rectification route as a one-way traffic, the element of audi alteram partem (ie let the other side be heard) lost for an assessee. Belated return and rectification by the assessee might soon become history available only in the textbooks.

The above amendments, along with the department’s AIS (Annual Information Statement) information and E-campaign, will certainly be testing times for all assessees. Recently, the tax department sent salvos for AY 2021-22/2022-23/2023-24, asking filers to verify the return data with the data on AIS and correct the mismatches if required by filing return u/s 139(8A) whereever required. Readers ought to remember that the 24-month window timeline for Section 139(8A) for AY 2021-22 will expire on March 31, 2024, and for the subsequent years, it will come at a steeper cost of 25%/50% extra tax plus interest.

The writer is a Chartered Accountant

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