Unlimited but repeated ITR revisions may cause scrutiny, say experts

Business Standard

6 days ago

Revising income tax returns (ITR) multiple times by taxpayers in case of an error or discrepancy may invite scrutiny. Experts warn that careless or excessive revisions might not go unnoticed by the tax department's AI-driven systems.
No cap on revisions, but a clear deadline
There is no limit to the number of times an ITR can be revised under the Income Tax Act. As long as you're within the time frame, December 31 of the relevant assessment year, or before the assessment is completed, whichever is earlier, one can file multiple revisions.
'Section 139(5) does not limit how many times a return can be revised,' explains Shefali Mundra, chartered accountant and tax expert at ClearTax. 'But each revision must happen within the deadline, else it becomes invalid.'
Niyati Shah, chartered accountant and vertical head of personal tax at 1 Finance, adds, 'Each revised return supersedes the last. So accuracy becomes extremely important, because your final filed version is what matters.'
Frequent changes could raise red flags
While the law allows multiple revisions, experts caution against overuse, especially when the revisions lead to significant changes in reported income, deductions, or tax paid. 'The Income Tax Department uses AI-based anomaly detection,' says Kumarmanglam Vijay, partner and head of practice, direct tax at JSA Advocates & Solicitors. 'Multiple revisions without valid reasons could delay refunds or trigger scrutiny under CASS.'
Sujit Bangar, founder of TaxBuddy.com, adds a caveat: 'If revisions are due to minor issues and don't impact your tax calculations, the number of revisions isn't a concern. But material changes must be justifiable and documented.'
Can you revise after receiving a notice?
It depends on the type of notice.
· Section 143(1) (intimation): A revised return can still be filed, as long as the time limit hasn't lapsed.
· Section 143(2) (scrutiny notice): Opinions vary.
-Mundra says, 'Yes, but only before the assessment is completed.'
-Shah adds: 'After 143(2), the door for revision closes and explanations must be provided during the scrutiny.'
-Vijay, referencing judicial precedent, notes that a revised return is possible if the assessment isn't completed and the statutory deadline hasn't expired.
When should you actually revise?
Revising your return makes sense if:
· You forgot to report income (interest, rent, capital gains)
· You used the wrong ITR form
· You missed claiming deductions (like 80C or HRA)
· There's a mismatch in TDS or Form 26AS data
However, it's not advisable to revise for minor spelling errors or cosmetic details. 'For such cases, it's better to file a rectification under Section 154,' says Mundra.
Updated return option (Section 139-8A)
Taxpayers also have the option to file an updated return within 48 months from the end of the assessment year under Section 139(8A), introduced in the Finance Act, 2022.
'This is useful if you missed filing a return entirely or need to declare additional income later,' says Vijay. 'But remember, it comes with a cost, an additional 25–50 per cent tax over and above your dues.'
Bottom Line: Revise only if there's a genuine error that affects your tax liability. Keep documentation ready, and don't treat the revision window as a casual edit tool. The tax department may be watching