Can I reduce current year tax burden by revising previous year returns for RBI bond interest?

I have a query regarding my HUF tax submission. I want to know about filing returns for previous years with additional income. I had invested in RBI taxable bonds 6 years back and they all matured in the current year as it was interest on maturity though interest was accumulated and compounded semi-annually.

By lapse, I did not mention my income as income in previous years and was within the tax-free limit. This year, I am ending up with very high income if I include all the interest of previous years and paying more taxes. So, can I revise my previous years returns with applicable interest for that year and pay the penalty(if applicable) and accordingly reduce the majority interest burden for current year.

- Sadhak
 

Reply by CA (Dr.) Suresh Surana

As per Section 139(5), an individual can file a revised return, if the original return u/s 139(1) is filed. The time limit to file a revised return shall be up to 3 months before the end of the relevant assessment year (AY) or on or before the completion of the assessment, whichever is earlier. Practically any revision of the income-tax return is to be done within 9 months from the end of the financial year i.e. before 31 December. As such, the window for revision of the income-tax return for the period ended March 2024 is till 31 December 2024.

Further, such taxpayers may still be eligible to file an updated return u/s Section 139(8A) of the IT Act within 24 months from the end of the relevant assessment year. However, the updated return cannot be filed if such an updated return is in certain cases where it constitutes a loss return or a nil return, in case of pendency of any assessment or reassessment proceedings, in case of initiation of search or survey or prosecution proceedings, etc.

However, it is pertinent to note that the taxpayer would be required to pay an additional tax of 25% of the aggregate of tax and interest payable u/s 140B of the IT Act. Such additional tax would be further enhanced to 50% wherein the updated return is furnished after the expiry of 12 months from end of the relevant assessment year but before completion of the period of 24 months from end of the relevant assessment year. Thus, the ITR pertaining to 4th and 5th years can be filed as updated return by paying the additional income tax.

The income tax returns pertaining to 1st 2nd and 3rd year of bond investment cannot be revised under any provision of the IT Act.

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