Who Cannot File ITR-U and Why?

A Detailed Guide on Updated Income Tax Return under Section 139(8A)

The Indian Income Tax Act has evolved to give taxpayers more flexibility and opportunities to stay compliant. One such progressive provision is ITR-U, officially known as the Updated Income Tax Return under section 139(8A). Introduced to encourage voluntary compliance, this facility allows taxpayers to update their previously filed returns or even file a return they missed within a specified timeframe.

However, while ITR-U (Updated Income Tax Return) offers a second chance, it is not available to everyone. The law clearly defines who cannot file ITR-U and why, to prevent misuse and ensure fairness in the tax system.

In this comprehensive guide, we’ll break down:

• What ITR-U is
  
  


• The intent behind Updated Income Tax Return under section 139(8A)
  
  


• Categories of taxpayers not eligible to file ITR-U
  
  


• Practical examples for clarity
  
  


• Important checks before considering ITR-U
  
  


• How to proceed with income tax e-filing responsibly
  
  

This article is designed to give you complete clarity before you attempt to file an Updated Income Tax Return.

 

What Is ITR-U (Updated Income Tax Return)?

ITR-U stands for Updated Income Tax Return, a special return introduced under section 139(8A) of the Income Tax Act. It allows taxpayers to voluntarily update their income details even after the original or revised return filing deadlines have passed.

A taxpayer can file an Updated Income Tax Return under section 139(8A):

• Within 24 months from the end of the relevant assessment year
  
  


• By declaring additional income or correcting errors
  
  


• By paying applicable additional tax, interest, and penalties
  
  

The intent is simple:
  Encourage honest disclosure of income and reduce prolonged litigation.

 

Why the Government Restricts ITR-U for Certain Taxpayers

While ITR-U promotes voluntary compliance, it is not meant to be a loophole for tax evasion, dispute avoidance, or manipulation of ongoing proceedings.

That’s why the Income Tax Act clearly defines who cannot file ITR-U, ensuring:

• No misuse once tax authorities have already detected non-compliance
  
  


• No reduction of declared tax liability using ITR-U
  
  


• No interference with assessment, search, or survey proceedings
  
  

Understanding these restrictions is critical before attempting to file an Updated Income Tax Return.

 

Who Cannot File ITR-U and Why?

Below are the key categories of taxpayers who are not eligible to file ITR-U, along with detailed explanations and examples.

 

1. Taxpayers Against Whom Search or Survey Proceedings Have Been Initiated

Why Filing ITR-U Is Not Allowed

If the Income Tax Department has already initiated:

• A search under section 132, or
  
  


• A survey under section 133A
  
  

then filing an Updated Income Tax Return is strictly prohibited for the relevant assessment year and certain preceding years.

This restriction exists because:

• The department has already detected possible undisclosed income
  
  


• Allowing ITR-U would undermine enforcement actions
  
  

Practical Example

If a business premises is surveyed and unaccounted cash is found, the taxpayer cannot later use ITR-U to disclose that income voluntarily.

 

2. Taxpayers Facing Ongoing or Completed Assessment Proceedings

What the Law Says

You cannot file ITR-U if:

• An assessment, reassessment, or re-computation is pending, or
  
  


• An assessment order has already been passed for that assessment year
  
  

Reason for Restriction

ITR-U is designed for voluntary correction, not for modifying income once the tax officer has already examined your case.

Example

If you receive a notice under section 143(2) and assessment proceedings are underway, you lose eligibility to file an Updated Income Tax Return under section 139(8A).

 

3. Cases Where Information Is Already Received Under International Agreements

Explanation

If the Income Tax Department has received information about your income from:

• Foreign tax authorities
  
  


• International agreements such as FATCA or CRS
  
  

then ITR-U cannot be filed for that income.

Why This Matters

Once third-party or international data has been received:

• The income is no longer “voluntarily disclosed”
  
  


• The department is already aware of the non-reporting
  
  

 

4. Taxpayers Seeking a Refund or Reduction in Tax Liability

A Very Important Restriction

ITR-U cannot be filed if it results in:

• A refund
  
  


• An increase in refund already claimed
  
  


• A reduction in total tax liability
  
  

Purpose of This Rule

The Updated Income Tax Return under section 139(8A) is meant to:
  Declare additional income
  Not revise figures to lower tax

Example

If you forgot to claim deductions earlier and now want a refund, ITR-U is not the correct route.

 

5. Taxpayers Who Have Already Filed an Updated Return for That Assessment Year

One-Time Opportunity Only

The law allows only one ITR-U per assessment year.

Once an Updated Income Tax Return is filed:

• No second update is permitted
  
  


• Even if another mistake is discovered later
  
  

This ensures finality and prevents repeated revisions.

6. Taxpayers Involved in Prosecution Proceedings

Legal Consequences

If prosecution proceedings have been initiated under the Income Tax Act:

• Filing ITR-U is not allowed
  
  


• The matter moves beyond voluntary compliance
  
  

This includes cases involving:

• Wilful tax evasion
  
  


• Fraud or misrepresentation
  
  

 

7. Taxpayers Attempting to Declare Losses or Increase Existing Losses

Key Limitation

You cannot file ITR-U if the objective is to:

• Declare a loss
  
  


• Increase carried-forward losses
  
  


• Reduce taxable income through revised loss figures
  
  

The Updated Income Tax Return under section 139(8A) strictly applies to additional income disclosures only.

 

8. Persons Using ITR-U to Correct Incorrect Personal Details Only

ITR-U is not meant for minor corrections such as:

• Name mismatch
  
  


• Address update
  
  


• Bank detail correction
  
  

These changes should be addressed through rectification or revised returns (if time permits), not through an Updated Income Tax Return.

 

Things to Check Before Filing ITR-U

Before opting for ITR-U, ensure the following:

•  No assessment or reassessment proceedings are pending
  
  


• No search or survey action has been conducted
  
  


•  Additional income is being disclosed (not reduced)
  
  


•  Applicable additional tax (25% or 50%) is paid
  
  


• You have not filed ITR-U earlier for the same year
  
  

Missing any of these checks may lead to invalid filing or penalties.

 

Additional Tax Payable While Filing ITR-U

Depending on when you file the Updated Income Tax Return under section 139(8A):

• Within 12 months:
  
  
  
  
  
  • 25% additional tax on tax + interest
    
    
  
  
  
  


• After 12 months but within 24 months:
  
  
  
  
  
  • 50% additional tax on tax + interest
    
    
  
  
  
  

This structure discourages delay while still allowing compliance.

 

When Should You Consider Filing ITR-U?

ITR-U is ideal if:

• You missed filing ITR entirely
  
  


• You underreported income
  
  


• You want to avoid notices and penalties
  
  


• You wish to stay compliant proactively
  
  

But remember it only works if you are eligible.

 

How to eFile Income Tax Return or ITR e-Filing Correctly

When planning to efile income tax return or ITR e-Filing, it is essential to choose the correct return type original, revised, or updated.

For taxpayers eligible for ITR-U:

• Proper calculation of additional tax is crucial
  
  


• Accurate disclosure avoids future scrutiny
  
  

Platforms like Tax2win simplify the e-filing process by guiding taxpayers through eligibility checks, computation, and compliance making efile income tax return or ITR e-Filing more accurate and stress-free.

Before you proceed to efile income tax return or ITR e-Filing, always review whether ITR-U applies to your situation or if another route is more appropriate.