Recieved Scrutiny Notice for Political Donation? Can you file ITR-U Now
Recieved Scrutiny Notice for Political Donation? Can you file ITR-U Now
Many Taxpayers who have recieved Scrutiny Notice for Political Donation or incorrect Exemptions/Deductions want to know if they can file ITR-U and get relief.
The government allows taxpayers to update their income tax return (ITR-U) if they forgot to include some income or made an error in their initial return. This awards taxpayers with a second chance to correct their mistakes and avoid chances of penalties. However, there are specific situations where filing an updated return is not allowed.
Below is a comprehensive guide on when you are not eligible to file an updated return for any assessment year.
1. If an Updated Return is a Return of Loss
If the updated return you are filing shows your total income as negative, then you are not eligible to file it. The rule does not allow updated returns that reflect an overall loss. However, if you have a loss under one specific head, like “Capital Gains,” but your total income is still positive, then you’re allowed to file the updated return.
2. If Updated Return Results in Lower Tax Liability
A taxpayer cannot use an updated return to reduce the amount of tax he/she had to pay in an earlier return. The updated return is only filed to report extra income, not for the purpose of saving tax.
3. If You Are Trying to Reduce Tax or Increase Refund
An updated return cannot be filed to reduce your tax liability compared to the original or revised return or to claim a refund or increase an already claimed refund. Meaning, you cannot use ITR-U to save tax or get more money back. It is only meant for disclosing additional income and paying more tax, not less.
4. If a Search Was Conducted Against You
If the Income Tax Department has conducted a search or raid (Section 132) in your case, you cannot file an updated return for the year in which the search was done, and you also cannot file for any earlier year.
5. If Your Books or Assets Were Requisitioned
If the tax authorities have requisitioned (officially taken possession of) your books of accounts, documents, or any assets under Section 132A, then you are not allowed to file an updated return for the year in which the requisition happened or for any earlier year.
6. If a Survey Was Conducted at Your Premises
If the department has conducted a survey under Section 133A (usually done to check compliance or stock), then you cannot file an updated return for that assessment year or any year before that. However, if the survey was only for TDS or TCS compliance, then this restriction does not apply. In such cases, you can file an updated return.
7. If Documents or Money Linked to You Were Found in Another Person’s Search
If the department searched someone else (like your business partner) and found documents, cash, jewellery, or books of accounts that belong to you, and they officially notified you about this, then you cannot file an updated return for that year and any year before that. This rule applies even though the search wasn’t on you directly, but because the items were linked to you, you are treated the same way as the searched person.
8. If You Have Already Filed an Updated Return Once
You are allowed to file an updated return for a particular year only once. That means once you’ve filed ITR-U for a year, you cannot revise it again, even if you find more errors later. There is no second chance for the same year under this provision.
9. If Your Assessment Is Ongoing or Completed
If the Income Tax Department has started or completed any of the Assessment, Reassessment, Recomputation or Revision for a specific year, then you cannot file an updated return for that year. This means that once the tax officer has taken up your case for checking or has already passed an order, you are no longer eligible to file ITR-U for that year.
10. If AO Has Info About You Under Certain Special Laws
If the Assessing Officer (AO) already has information about you under any of the following laws and has informed you before filing the updated return, then you cannot file ITR-U for that year:
- Prevention of Money Laundering Act (PMLA), 2002
- Black Money (Undisclosed Foreign Income and Assets) Act, 2015
- Prohibition of Benami Property Transactions Act, 1988
- Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976
These are serious offences related to illegal money, foreign income, and black money, so anyone caught under these laws cannot regularise their income using ITR-U.
11. If Information Was Received from a Foreign Country (DTAA or TIEA)
If the Indian tax authorities have received information about your income under a Double Taxation Avoidance Agreement (DTAA) or a Tax Information Exchange Agreement (TIEA), and the AO has already informed you about it, then you cannot file an updated return for that year. This usually relates to undisclosed income or assets abroad.
12. If Prosecution Has Been Started Against You
If prosecution proceedings (criminal cases under the Income Tax Act) have already been started against you for that year, then you’re not eligible to file an updated return for that year. This rule ensures that people already caught in legal action cannot use ITR-U as a way to escape consequences.
13. If You Received a Notice Under Section 148A
If the department has issued a show-cause notice under Section 148A after 36 months from the end of the relevant year, then you cannot file an updated return for that year. Here is one exemption: if the AO passes an order under Section 148A(3) saying your case doesn’t require a notice under Section 148, then you are allowed to file ITR-U.
14. Other Notified Cases by CBDT
The Central Board of Direct Taxes (CBDT) has notified certain individuals or classes who are not permitted to file an updated return, even if they don’t fall under any of the above categories.