Revised Return After Compensation: Your Rights Under Income Tax Law
Filing your income tax return (ITR) accurately is crucial. But what if you receive legitimate compensation after filing your original return? Can you submit a revised return to update your income details?
Yes — and tax authorities must accept it if your claim is genuine.
This important clarification comes from a recent High Court decision that protects taxpayers from unfair rejection of revised returns. Let’s break it down.
When Can You File a Revised Return?
Under Section 139(5) of the Income Tax Act, 1961:
- A taxpayer can revise their return if they discover any omission or wrong statement.
- The revised return must be filed before the end of the relevant assessment year or before the completion of assessment, whichever is earlier.
If you receive legitimate compensation after filing your original return, it qualifies as new information and justifies revision.
What the High Court Held
In the case discussed (source: Tax Management India):
- Facts: The taxpayer received compensation after filing the original return. They submitted a revised return, reflecting this new income.
- Issue: Tax authorities rejected the revised return, saying the compensation was not disclosed initially.
- Ruling: The High Court ruled that if compensation was received after the original filing and revised return was filed correctly under Section 139(5), tax authorities must accept it. Arbitrary rejection violates taxpayers’ rights.
Legal Provisions You Must Know
| Provision | Details |
|---|---|
| Section 139(5) | Allows filing a revised return for any omission or wrong statement. |
| CBDT Circulars | CBDT clarifies that revisions based on new income are allowed if genuine. |
| Relevant Case | HC upheld taxpayer’s right when compensation came after original filing. |
Step-by-Step Guide to Filing a Revised Return After Compensation
- Confirm Timing
Ensure compensation was received after the original ITR filing date. - File Within Deadline
Submit the revised return before the end of the assessment year. - Use Correct Form
Use the same ITR form as your original filing but select Revised Return option. - Keep Documents Ready
Maintain proof of compensation receipt (agreements, bank statements). - Disclose Clearly
Mention revised income details separately and explain the reason if needed.