[2025 Give tax relief to individual taxpayers.

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ii.Extended time with additional tax for updated return.
iii.Increase in threshold limit for TDS provisions and omitting section
206C (1H).
iv. Clarity in compliance
With regard to extended time with additional tax for updated return, one of the important
amendments proposed relates to furnishing of updated return up to 48 Months.

In the Memorandum explaining the amendment proposed are as under:-

1. Sub-section (8A) of section 139 of the Act, relates to furnishing of

updated return. As per the present provisions, an updated return can be
filed up to 24 months from the end of the relevant assessment year. The
facility of updated return has promoted voluntary compliance against
payment of additional income-tax of 25% of aggregate of tax and interest
payable for updated return filed up to 12 months from the end of the
relevant assessment year. For updated return filed after expiry of 12
months and up to 24 months from the end of the relevant assessment
year, the additional income-tax of 50% of aggregate of tax and interest is
to be paid.
2. With a view to further nudging voluntary compliance, it is proposed to
amend the said sub – section so as to extend the time-limit to file the
updated return from existing 24 months to 48 months from the end of
relevant assessment year. Rate of additional income-tax payable for
updated return filed after expiry of 24 months and up to 36 months from
the end of the relevant assessment year shall be 60% of aggregate of tax
and interest payable. The additional income-tax payable for updated
return filed after expiry of 36 months and up to 48 months from the end
of the relevant assessment year shall be 70% of aggregate of tax and
interest payable.
3. It is further proposed to provide that no updated return shall be
furnished by any person where any notice to show-cause under section
148A of the Act has been issued in his case after thirty-six months from
the end of the relevant assessment year. However, where subsequently
an order is passed under sub-section (3) of section 148A of the Act
determining that it is not a fit case to issue notice under section 148 of
the Act, updated return may be filed up to 48 months from the end of the
relevant assessment year.
 4. These amendments will take effect from the 1st day of April, 2025.
As per Finance bill 2025 amendment, no updated return shall be furnished by any person
where any notice to show – cause under section 148A has been issued in his case after
thirty-six months from the end of the relevant assessment year.

However, where subsequently an order is passed under sub- section (3) of section 148A
determining that it is not a fit case to issue notice under section 148, updated return may
be filed up to 48 Months from the end of the relevant assessment year.

This is a welcome step by the Central Government but if we see under what
circumstances, updated return cannot be filed which are as under:-

A taxpayer cannot file updated return in certain cases, some of which are listed below:-

Where updated return is return of loss

Has the effect of decreasing the total tax liability determined on the
basis of return furnished under section 139(1), 139(4) or 139(5) of the
Act.
Results in refund or increased the refund due on the basis of return
furnished under section 139(1), 139(4) or 139(5) of the Act.
If search has been initiated under section 132 of the Act etc.
1a. where the assessee [other than an assessee referred to in clause (aa)] is
—
(i) a company [***]; or
(ii) a person (other than a company) whose accounts are required to be
audited under this Act or under any other law for the time being in
force; or
(iii) partner of a firm whose accounts are required to be audited under this
Act or under any other law for the time being in force 6[or the spouse of
such partner if the provisions of section 5A applies to such spouse], the
7[31st day of October] of the assessment year;
(aa) in the case of an assessee [ including the partners of the firm or the
spouse of such partner (if the provisions of section 5A applies to such
spouse), being such assessee,] 10[who] is required to furnish a report
referred to in section 92E, the 30th day of November of the assessment
year;]
b. in the case of a person other than a company, referred to in the first
proviso to this sub-section, the 31st day of October of the assessment
year;
c. In the case of any other assessee, the 31st day of July of the assessment
year.
If we look at the explanation 2 regarding due date of filing of return then for audited
assessee it is 31

Date of Publishing: February 7, 2025

Budget 2025 extends the time for updated returns but ignores defective,
belated, or revised ITRs impacting refunds
image
MUKESH KOHLI
 FCA

The Finance Bill, 2025 has about 86 proposals for amending various provisions of the
Income Tax Act, including schedules forming part of it 1961.

The Amendments are mainly relates to:-

st
, 2nd and 3rd proviso of section 139(8A) of the Act provides restriction on filing updated
return.
From the above, it is clear that where the updated return has of result in refund or
increased the refund due on the basis of return furnished under section 139(1), 139(4) or
139(5) of the Act then the Assessee cannot file the updated return.

Now a question arisewhether the same facility is available to the assessee who is
claiming refund in return of Income instead of paying tax?

We all know that assessee can file belated return of income or revised return of income
before three months prior to the end of the assessment year after the Finance Act 2021
and not thereafter.

The Explanation 2 to Section 139 (1) relating due date is as under:-

Explanation 2.—In this sub-section, "due date" means,—

st
October and the last date for revision of income tax return is 31 st December or for
belated return of income it is 31st December. The time gap between due date of filing of
income tax and last date for filing of belated return or revision of income tax return is
very little and if there is refund arising due to revision of income tax return or filing of
belated return then there is no provision in the Income Tax Act which allows the assessee
to file return of income after expiry of specified period except with the permission of the
CBDT as per the provision given in section 119(2) (b)
Similar difficulty is there in the case of defective return u/s 139(9) of the Income Tax Act
1961because if the assessee does not respond to the notice issued under section 139 (9)
within 15 days or time allowed and there is refund arising due to rectification of defect
then also there is no provision in the Income Tax Act which allows the assessee to file
return of income after expiry of specified period except by the CBDT as per the provision
given in section 119(2)(b) OR as per proviso to Section 139(9) of the Income Tax Act at
the mercy of the AO.

Consequences of defective return

Where an assessee fails to rectify the defects within the time allowed for same, he can
apply to Assessing Officer for condonation of delay in removing the defects. If such
condonation is allowed and the assessee has removed the defects, the return filed by him
will be treated as a valid return.

However, where such condonation is not allowed, Assessing Officer is required to

proceed against the assessee by passing an order for Best Judgement Assessment, as if
no return was filed by the assessee. Assessing Officer is required to follow all the steps
required for passing such order.

Conclusion

The Government has proposed to extend the time limit to file updated return from 24
months to 48 months from the end of the relevant assessment year. This is a welcome
step by the Government. It would have been better if the Government has also amended
some provisions relating belated / revised / defective return so that assessee can get their
refunds even by paying some penalty for their faults of not responding in time.

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