Introduction and Legal Framework
Recent amendments under the Finance Act, 2024, have introduced significant changes to the Income Tax filing system, particularly through Section 139(8U), which allows taxpayers to file Income Tax Returns (ITR) beyond the regular deadline, up to five years from the end of the relevant assessment year. However, this extended window comes with compliance obligations, including mandatory pre-payment of additional tax under Section 140(1B).
Additionally, this document covers prosecution risks for non-filing, key legal precedents, and compliance strategies to avoid penalties. Understanding these provisions is crucial for individuals and businesses to ensure adherence to tax laws while optimizing their compliance approach.
1. Extended ITR Filing Under Section 139(8U)
Key Provisions:
Previously, belated returns under Section 139(4) or updated returns under Section 139(8A) could be filed within three years.
Now, under Section 139(8U), taxpayers can file returns up to five years after the relevant assessment year, subject to specific conditions.
Preconditions for Filing Under Section 139(8U):
The return must be filed voluntarily by the taxpayer before any assessment is concluded.
Tax liability under Section 140(1B) must be pre-paid before submission.
The return cannot be filed if prosecution proceedings have already been initiated.
2. Additional Tax Payment Under Section 140(1B) (Applicable for ITRs Filed Under Section 139(8U))
Before filing an ITR under Section 139(8U), taxpayers must pay a Challan amount based on their taxable income:
| Taxable Income (₹) | Additional Tax Payable (₹) under Sec 140(1B) |
|---|---|
| Up to ₹5,00,000 | ₹1,000 (flat) |
| ₹5,00,001 – ₹10,00,000 | 10% of taxable income |
| ₹10,00,001 – ₹25,00,000 | 20% of taxable income |
| Above ₹25,00,000 | 25% of taxable income |
This mandatory tax payment ensures that liabilities are cleared before filing a delayed return.
3. Prosecution and Compliance for Non-Filing of ITR
Penalties Under Income Tax Act:
Failure to file returns under Section 139(1) may lead to prosecution under Sections 276CC and 276C.
Punishments:
Tax evaded exceeds ₹25 lakh – Rigorous imprisonment of 6 months to 7 years and a fine.
Other cases – Imprisonment of 3 months to 2 years and a fine.
Proviso – No Prosecution If:
Return pertains to assessment years before 1st April 1975.
Return is furnished before the expiry of the assessment year.
Tax payable (after advance tax, self-assessment tax, and TDS) does not exceed ₹25,000 (for individuals other than companies or firms).
Judicial Precedents and Case Laws:
Delhi High Court (Karan Luthra v. ITO, 2018) – Offence is independent of assessment proceedings.
Supreme Court (Sasi Enterprises v. Asstt. CIT, 2014) – Prosecution applies once the due date lapses.
Supreme Court (Prakash Nath Khanna v. CIT, 2004) – "Due time" refers only to Section 139(1).
Bombay High Court (Penang Enterprises v. CBDT, 2025) – Delay condonable if genuine hardship is proven.
Madras High Court (Mrs. Noorjahan v. DCIT, 2022) – If tax is paid before prosecution, culpable presumption does not apply.
4. Practical Insights – When ITR Cannot Be Filed Even Under Section 139(8U)
Despite the extended five-year window, an ITR under Section 139(8U) cannot be filed in the following scenarios:
Assessment Already Completed: If an assessment order is passed under Sections 143(3), 144, or 147, ITR filing under Section 139(8U) is not allowed.
Search & Seizure Cases: Returns related to Section 132 (search) or 132A (requisition of books) are ineligible.
Prosecution Initiated: If prosecution under Sections 276CC or 276C has already begun, return filing is restricted.
Non-Payment of Additional Tax: If the Challan under Section 140(1B) is not cleared before submission, the return is invalid.
5. Compliance Strategies and Best Practices
To ensure compliance and avoid legal consequences, taxpayers should:
File within the due date to avoid prosecution risks.
Pre-check assessment status before filing a return under Section 139(8U).
Ensure correct tax computation and pay the required Challan under Section 140(1B) before filing.
Seek professional guidance in case of delayed returns beyond five years.
Impact of Amendments and Future Considerations
The introduction of Section 139(8U) provides a significant opportunity for taxpayers to comply with filing obligations even after missing regular deadlines. However, this comes with structured tax obligations under Section 140(1B) and strict prosecution measures under Sections 276CC and 276C.
Taxpayers must ensure timely compliance, pre-payment of liabilities, and adherence to procedural norms to avoid penalties and prosecution. Given the evolving tax landscape, professional consultation is advised for strategic tax planning and dispute resolution.
This guidance note provides a comprehensive framework for understanding the new amendments, compliance obligations, and risk mitigation strategies related to delayed ITR filing and prosecution under the Income Tax Act.
