By CA Surekha Ahuja
The statutory timelines under the Income-tax Act, 1961 for AY 2025–26 have expired:
- Tax Audit (Section 44AB): 10 November 2025
- Return of Income (Section 139(1)): 10 December 2025
- Transfer Pricing Report (Section 92E): 30 November 2025
Further:
- Belated Return (Section 139(4)) was permissible up to 31 December 2025 — now closed
Accordingly, taxpayers are now within a post-default compliance regime, where filing survives only through the updated return mechanism under Section 139(8A).
Available Statutory Remedy (Current Position)
| Particular | Section | Time Limit | Status |
|---|---|---|---|
| Belated Return | 139(4) | 31 December 2025 | Closed |
| Updated Return (ITR-U) | 139(8A) | 31 March 2028 | Available |
Legal Position:
Post lapse of Section 139(4), filing is no longer a right but a restricted statutory concession with additional tax implications.
Year-wise Availability of Updated Return (Section 139(8A))
| Assessment Year | End of AY | Last Date for ITR-U (24 months) |
|---|---|---|
| AY 2023–24 | 31 March 2024 | 31 March 2026 |
| AY 2024–25 | 31 March 2025 | 31 March 2027 |
| AY 2025–26 | 31 March 2026 | 31 March 2028 |
| AY 2026–27 | 31 March 2027 | 31 March 2029 |
Professional Insight:
Section 139(8A) operates on a rolling 24-month window from the end of the relevant assessment year, making it critical to track year-specific expiry to avoid irreversible loss of compliance opportunity.
Immediate Consequences of Default
Interest Liability (Mandatory)
- Section 234A: Delay in filing
- Section 234B: Shortfall in advance tax
- Section 234C: Deferment
Interest is mandatory and compensatory as held in Anjum M.H. Ghaswala v. CIT.
Late Filing Fee (Section 234F)
- ₹5,000 (₹1,000 where income ≤ ₹5 lakh)
- Statutory and non-waivable
Substantive Legal Impact
- Loss of carry forward of losses (Section 80 r.w.s. 139(3))
- Exposure to best judgment assessment (Section 144)
Penalty Exposure Matrix
| Default | Section | Quantum |
|---|---|---|
| Tax Audit Failure | 271B | 0.5% of turnover (max ₹1.5 lakh) |
| TP Report Non-Filing | 271BA | ₹1,00,000 |
| TP Documentation Failure | 271G | 2% of transaction value |
| Under-reporting | 270A | 50%–200% |
Waiver of Tax Audit Penalty (Section 271B read with Section 273B)
Penalty may be waived where reasonable cause is established.
Indicative Grounds
- Auditor resignation or death
- Technical or portal failure
- Medical emergency
- Data loss or unavoidable disruption
Documentation
- Supporting evidence
- Affidavit with chronology
- Audit report (subsequently completed)
Penalty is not automatic where default is bona fide (CIT v. Bisauli Tractors).
Foreign Asset Disclosure (Schedule FA)
Mandatory for resident taxpayers.
Non-Disclosure Consequences
- Applicability of the Black Money Act, 2015
- Penalty up to ₹10 lakh per asset
- Prosecution exposure
Remedy
Available only through Updated Return under Section 139(8A).
Updated Return – Section 139(8A)
| Parameter | Details |
|---|---|
| Time Limit | Up to 31 March 2028 |
| Basis | 24 months from end of AY |
| Additional Tax | 25% (within 12 months), 50% thereafter |
Restrictions
- Cannot declare loss
- No refund claim permitted
- Not allowed where proceedings are pending
Interpretation:
A statutory compliance window for voluntary correction with additional tax cost.
Transfer Pricing Compliance (Section 92E)
Applicable to international and specified domestic transactions.
Documentation Requirements
- FAR analysis
- Benchmarking (TNMM/CUP)
- Transaction-level records
Penalty Exposure
- ₹1,00,000 (Section 271BA)
- 2% of transaction value (Section 271G)
Trusts/NGOs (ITR-7) – Specific Implications
- Denial of exemption under Sections 11 and 12
- Registration exposure under Section 12AB
-
Penalties:
- Section 234G: ₹200 per day
- Section 271K: ₹10,000 to ₹1,00,000
Tax Audit Documentation (Section 44AB)
Essential records:
- Forms 3CA / 3CB / 3CD
- Financial statements
- GST and TDS reconciliation
- Bank, inventory and fixed asset registers
Practice Note:
Documentation forms the primary evidentiary base in assessment and penalty defence.
Recommended Action Framework
Immediate
- Upload pending audit / transfer pricing reports
- Compute and discharge tax liability
Execution
- File Updated Return under Section 139(8A) within prescribed timeline
Parallel
- Prepare and file waiver application under Section 271B with supporting evidence
Litigation Exposure (If Not Addressed)
| Risk | Section | Consequence |
|---|---|---|
| Best Judgment Assessment | 144 | Arbitrary determination |
| Penalty | 270A | Up to 200% of tax |
| Prosecution | 276CC | Imprisonment up to 7 years |
Key Professional Takeaways
- Section 139(4) window has closed on 31 December 2025
- Section 139(8A) remains the sole operative compliance route
- Year-wise tracking of ITR-U deadlines is critical for practice
- Interest and penalties are statutory and unavoidable
- Defence depends on documentation and reasonable cause
Year-wise Updated Return (ITR-U) Availability
| Assessment Year | Financial Year | Last Date to File ITR-U |
|---|---|---|
| AY 2023–24 | FY 2022–23 | 31 March 2026 |
| AY 2024–25 | FY 2023–24 | 31 March 2027 |
| AY 2025–26 | FY 2024–25 | 31 March 2028 |
| AY 2026–27 | FY 2025–26 | 31 March 2029 |
| AY 2027–28 | FY 2026–27 | 31 March 2030 |
Concluding Note
For AY 2025–26, the compliance framework has shifted from deadline adherence to structured legal recovery.
Timely utilisation of Section 139(8A), supported by robust documentation and strategic execution, is essential to mitigate exposure to penalty, prosecution, and prolonged litigation.
Final Professional Line
“In the post-deadline landscape, compliance is no longer about filing—it is about controlled correction within the statutory window.”
