According to Ankit Jain, partner, Ved Jain & Associates, a CA firm, “Once the ITR-U deadline is over, the option to make any further corrections are not available to the taxpayer.”
Can you go to jail for not filing ITR-U though being eligible?
In a recent case, Delhi High Court gave a judgment where a woman was sentenced to imprisonment on account of non-filing of income tax return (ITR). The lady was liable to file ITR but had failed to do so. “The tax authorities had sought the imprisonment as a means to deter other taxpayers from non-compliance. Under the tax laws, a person can be sentenced to imprisonment for deliberate acts of failure to file a return, concealment of income, making false statements, etc. So, a person who has filed his ITR but does not file an ITR-U cannot be imprisoned since filing of ITR-U is not mandatory. However, if any underreported income is discovered, the tax authorities may seek imprisonment for concealment of income,” says Jain.
According to Alay Razvi, Partner, Accord Juris LLP, a Hyderabad-based law firm, the income-tax department can issue a notice to the taxpayer for not filing ITR, or mis/underreporting of income, among other issues. “Upon failure to act upon it, the tax department can issue a notice of attachment of the properties which are in the name of the individual. In the event, the tax department is unable to recover the money, a request for the arrest can be made. Imprisonment is the last resort,” says Razvi.
ITR-U or revised ITR?
Both ITR-U and revised ITR allow you to revise the declared incomes, however, the difference lies in two aspects: tax penalty and time limit to file. ITR-U can only be filed in certain specified cases and after paying a penalty of up to 50% of the tax evaded. Revised ITR has no penal tax to be paid at the time of filing it. Further, revised ITR can be filed up to nine months after the year in which the original ITR was filed.
According to Jain, a taxpayer today has around nine months after the end of the financial year to file a revised ITR. Once this window to revise a filed ITR had ended, there was no option for him to correct or rectify the return. This led to a situation where if any underreported income came to light to the tax authorities, he would be liable to a high rate of tax and penalty. Hence the Government introduced ITR-U for any taxpayer who notices that any such income has been underreported or any excess deduction has been claimed. He now has the option to declare that additional income in ITR-U. This will also help reduce tax litigation. The deadline for filing ITR-U, if eligible, is within 24 months from the end of the relevant assessment year for which ITR-U is intended to be filed.
When can ITR-U be filed even after deadline for doing so is over
Tax lawyers say that there are few cases where an individual may be able to file ITR-U even after the deadline to do so is over.”There are cases where individuals may have missed on filing ITR-U though eligible for filing it. Under these circumstances and with a valid reason, an individual can file ITR-U along with a condonation form under section 119(2)(b),” says Razvi.
The important point to note here is that the condonation application request must be given at the time of filing of ITR-U. “In cases where the deadline to file ITR-U is over it must be remembered that If ITR-U is not filed along with the condonation form, the concerned officer can issue notice under section 148. After this either the tax can be paid or disputed, but, once the notice is issued, the case would fall under scrutiny and shall be treated differently,” says Razvi.
Is it possible to go to jail if you didn’t file your updated ITR by March 31?
Ankit Jain, a partner at Ved Jain & Associates, a CA firm, stated, “Once the deadline for ITR-U has passed, taxpayers cannot make any further corrections.”
In a recent case, the Delhi High Court sentenced a woman to imprisonment for failure to file an income tax return (ITR) even though she was required to do so. Taxpayers can face imprisonment for deliberate acts of non-compliance with tax laws, such as failure to file a return, concealment of income, or making false statements. Filing ITR-U is not mandatory, but failure to report income accurately may lead to imprisonment.
According to Alay Razvi, a partner at Accord Juris LLP, the income tax department can issue notices for non-filing of ITR or misreporting of income. If the taxpayer does not respond, the department can attach their properties and even request their arrest as a last resort.
ITR-U and revised ITR both allow for revision of declared incomes, but the key differences lie in tax penalties and time limits. ITR-U requires a penalty of up to 50% of the evaded tax in certain cases, while revised ITR has no penal tax. Revised ITR can be filed up to nine months after the original ITR filing, providing more flexibility for corrections.
Taxpayers have around nine months after the end of the financial year to file a revised ITR. After this window closes, there is no opportunity to correct the return, potentially leading to high tax and penalty liabilities. ITR-U was introduced to allow taxpayers to declare additional income or correct deductions to reduce tax disputes. The deadline for filing ITR-U, if eligible, is within 24 months from the end of the relevant assessment year.
Tax lawyers suggest that in exceptional cases, individuals may still be able to file ITR-U after the deadline with a valid reason and a condonation form under section 119(2)(b). Failure to file ITR-U with the form may result in a notice under section 148, triggering a different process under scrutiny.
