ITR filing: Can you revise your return after receiving a tax notice from the income tax department?

Filing income tax returns can sometimes be complex and prone to errors, leading to a tax notice from the income tax department, which is often perceived negatively. However, it is essential to remember that it doesn't always signify trouble; sometimes, it might just be an indication for you to correct a mistake on your tax return. One frequently asked question is whether taxpayers can revise their income tax return after receiving a tax notice. The answer is yes.

Under Section 139(5), the Income Tax (IT) Act entitles taxpayers to revise their IT returns. Taxpayers can use this provision to correct the discrepancies in their IT returns, should there be any unintentional errors or omissions, even after receiving a tax notice. You can revise it prior to the expiry of one year from the end of the relevant assessment year or before the completion of the assessment year, whichever is earlier.

Suresh Surana, Founder, RSM India, said, “Revised return u/s 139(5) of the Income Tax Act, 1961 (hereinafter referred to as 'IT Act') can be filed by taxpayers who discovers any error, omission or any wrong statement furnished either in their original return u/s 139(1) or belated return u/s 139(4) of the IT Act. It is pertinent to note that such revised return can be furnished at any time three months before the end of the relevant assessment year (For instance, 31 December 2023 in respect of Assessment Year 2023-24, i.e. for Financial Year 2022-23) or before the completion of the assessment, whichever is earlier.”

Echoing similar views, Divakar Vijayasarathy, Founder and CEO of DVS Advisors, said, “Section 139(5) provides that a return may be revised at any time before three months before the end of the relevant Assessment Year or before the completion of the assessment, whichever is earlier. The word assessment refers to assessment under sections 143(3) and 144. Assessment is said to be completed only on the date of service of order. Mere issue of notice shall not be considered as completion of the assessment, and hence revised return shall be filed, provided the time limit of filing, i.e., December 31 of the AY, has not elapsed.”

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As a taxpayer, you must pay meticulous attention to the tax notice. Depending upon the severity of the error or omission in your original return, the tax authority may issue different notices under different sections of the Income Tax Act. For instance, a notice under Section 143(1) could be for trivial discrepancies. In contrast, a notice under Section 143(2) might indicate the need for scrutiny assessment, implying that your tax return requires comprehensive review.

Surana said, “Receipt of intimation u/s 143(1) of the IT Act does not refer to the completion of the assessment, and as such, a taxpayer would be eligible to file their revised return after receipt of such intimation. However, in the case where the taxpayer received scrutiny assessment order u/s 143(3) of the IT Act or Best judgment assessment order u/s 144 of the IT Act, the same would constitute completion of the assessment, the taxpayer would not be eligible to furnish a revised return with respect to such year in accordance with Section 139(5) of the IT Act. However, a taxpayer would be able to furnish their revised return in case only a notice u/s 143(2) is received since receipt of such notice does not constitute completion of the assessment.”

In case of a tax notice due to a mismatch of income or improper deduction of taxes, a revision of your ITR might be a good solution to rectify the error. You can revise both online and offline income tax returns, ensuring you keep a revised return receipt for reference. It’s essential to engage a tax expert if you need clarification on any aspect of revising your tax return.

Alok Agrawal, Partner at Deloitte India, said, "An "updated return" as introduced by Finance Act 2022 can be submitted within two years following the end of the relevant assessment year (AY), if there is additional income subject to taxation resulting in an increased tax liability, subject to payment of additional amount (25% or 50% of tax and interest depending upon the timelines). However, it is important to note that the updated return cannot be filed in certain situations including where any proceeding for assessment is pending for the said tax year."

Furthermore, a taxpayer gets a chance to disclose any additional income by filing return in response to a reassessment notice from the income tax officer, where the Revenue authorities believe that income has escaped assessment, added Agrawal.

However, one should understand that receiving a tax notice should not necessarily be a cause for panic or worry. Instead, you must view it as a chance to amend mistakes made in your original income tax return.