Income Tax Act

Official PDF pages 351–355

SOURCE PDF PAGE 351
(6) In sub-section (5), “assessed tax” means the tax on the total income as declared
in the return as reduced by the amount of,—
( a )   tax deducted or collected at source, as per the provisions of Chapter
XIX-B, on any income which is subject to such deduction or collection
and which is taken into account in computing such total income;
( b )   any relief of tax claimed under section 157;
( c )   any relief of tax or deduction of tax claimed under section 159(1) or
section 160 on account of tax paid in a country outside India;
( d )   any relief of tax claimed under section 159(2) on account of tax paid in
any specified territory outside India referred to in that section; and
50
[ ( e )   any tax credit claimed to be set off as per the provisions of section 206(2)
( e ) to ( h ) and 206(3) and (4). ]
(7) After a regular assessment under section 270 or 271 or an assessment under
section 294 has been made, any amount paid under sub-section (1) shall be deemed
to have been paid towards such regular assessment or assessment.
(8) If any assessee fails to pay the whole or any part of such tax, interest or fee as
per the provisions of sub-section (1), he shall be deemed to be an assessee in default
in respect of the tax, interest or fee remaining unpaid and all the provisions of this
Act shall apply accordingly.
(9) The provisions of sub-section (8) shall apply without prejudice to any other
consequences which the assessee may incur.
Tax on updated return.
267.   (1) Where no return of income under section 263(1) or (4) has been furnished
by an assessee and, after taking into account the amounts referred to in
sub-section (2), tax is payable on the basis of return to be furnished by such assessee
under section 263(6), then—
( a )   the assessee shall be liable to pay such tax together with interest and fee
payable under any of the provisions of this Act for any delay in furnishing
the return or any default or delay in payment of advance tax;
( b )   such tax, interest and fee shall be payable along with the payment of
additional income-tax computed as per sub-section (5), before furnishing
the return; and
( c )   the return shall be accompanied by proof of payment of such tax, addi -
tional income-tax, interest and fee.
(2) The amounts referred to in sub-section (1) shall be,—
( a )   the amount of tax, if any, already paid as advance tax;
( b )   any tax deducted or collected at source;
50.   Substituted by the Finance Act, 2026, w.e.f.   1-4-2026 . Prior to its substitution, clause ( e ) read
as under :
“( e )   any tax credit claimed to be set off as per the provisions of section 206(1)( m ) to ( p )
and 206(2)( e ) to ( h ).”

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( c )   any relief of tax claimed under section 157;
( d )   any relief of tax or deduction of tax claimed under section 159(1) or
160on account of tax paid in a country outside India;
( e )   any relief of tax claimed under section 159(2)on account of tax paid in
any specified territory outside India referred to in that section; and
51
[ ( f )   any tax credit claimed to be set off as per the provisions of section 206(2)
( e ) to ( h ) and 206(3) and (4). ]
(3) Where, return of income under section 263(1) or (4) or (5) (referred to as earlier
return) has been furnished by an assessee and, after taking into account the amounts
referred to in sub-section (4) [as increased by the amount of refund, if any, issued in
respect of such earlier return], tax is payable on the basis of return to be furnished
by such assessee under section 263(6)then—
( a )   the assessee shall be liable to pay such tax together with interest payable
under any provision of this Act for any default or delay in payment of
advance tax;
( b )   such tax, interest and fee shall be payable along with the payment of
additional income-tax, as computed as per sub-section (5), as reduced
by the amount of interest paid under the provisions of this Act in the
earlier return, before furnishing the return; and
( c )   the return shall be accompanied by proof of payment of such tax, addi -
tional income-tax, interest and fee.
(4) The amounts referred to in sub-section (3) shall be the following,—
( a )   the amount of relief or tax referred to in section 266(1), the credit for
which has been taken in the earlier return;
( b )   tax deducted or collected at source, as per the provisions of Chapter
XIX-B, on any income which is subject to such deduction or collection
and which is taken into account in computing total income and which
has not been included in the earlier return;
( c )   any relief of tax or deduction of tax claimed under section 159(1) or 160
22
on account of tax paid in a country outside India on such income which
has not been included in the earlier return;
( d )   any relief of tax claimed under section 159(2)
23  
on account of tax paid in
any specified territory outside India referred to in that section on such
income which has not been included in the earlier return; and
52
[ ( e )   any tax credit claimed, to be set off as per the provisions of section 206(2)
( e ) to ( h ) and 206(3) and (4) which has not been claimed in the earlier
return. ]
51.   Substituted by the Finance Act, 2026, w.e.f.   1-4-2026 . Prior to its substitution, clause ( f ) read
as under :
“( f )   any tax credit claimed to be set off as per the provisions of section 206(1)( m ) to ( p )
and 206(2)( e ) to ( h ).”
52.   Substituted by the Finance Act, 2026, w.e.f.   1-4-2026 . Prior to its substitution, clause ( e ) read
as under :
“( e )   any tax credit claimed, to be set off as per the provisions of section 206(1)( m ) to ( p )
and 206(2)( e ) to ( h ) which has not been claimed in the earlier return.”

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[ (5)( i ) For the purposes of sub-sections (1) and (3), the additional income-tax payable
at the time of furnishing the return under section 263(6) shall be equal to, —
( a )   25% of aggregate of tax and interest payable, as determined in sub-section
(1) or (3), as the case may be, if such return is furnished after the expiry
of the time available under section 263(4) or (5) and before completion of
twelve months from the end of the financial year succeeding the relevant
tax year; or
( b )   50% of aggregate of tax and interest payable, as determined in sub-section
(1) or (3), as the case may be, if such return is furnished after the expiry of
twelve months but before completion of twenty-four months from the end
of the financial year succeeding the relevant tax year; or
( c )   60% of aggregate of tax and interest payable, as determined in sub-section
(1) or (3), as the case may be, if such return is furnished after the expiry of
twenty-four months, but before the completion of thirty-six months, from
the end of the financial year succeeding the relevant tax year; or
( d )   70% of aggregate of tax and interest payable, as determined in sub-section
(1) or (3), as the case may be, if such return is furnished after the expiry of
thirty-six months, but before the completion of forty-eight months, from
the end of the financial year succeeding the relevant tax year.
( ii ) Where an updated return is filed in pursuance of a notice issued under section
280 within the period specified in the said notice, the additional income-tax payable
under sub-section (5)( i ) shall be increased by a further sum of 10% of the aggregate of
tax and interest payable, as determined in sub-section (1) or (3), as the case may be. ]
(6) For the purposes of computation of “additional income-tax” under this section,
tax shall include surcharge and cess, by whatever name called, on such tax.
(7) Irrespective of anything contained in section 424(2), for the purposes of sub-sec -
tion (3), interest payable under section 424 shall be computed on an amount equal to
53.   Substituted by the Finance Act, 2026, w.e.f.   1-4-2026 . Prior to its substitution, sub-section
(5) read as under :
“(5) For the purposes of sub-sections (1) and (3), the additional income-tax payable at the
time of furnishing the return under section 263(6) shall be equal to,—
( a )   25% of aggregate of tax and interest payable, as determined in sub-section (1) or
(3), as the case may be, if such return is furnished after expiry of the time available
under section 263(4) or (5) and before completion of twelve months from the end
of the financial year succeeding the relevant tax year; or
( b )   50% of aggregate of tax and interest payable, as determined in sub-section (1) or
(3), as the case may be, if such return is furnished after the expiry of twelve months
but before completion of twenty-four months from the end of the financial year
succeeding the relevant tax year; or
( c )   60% of aggregate of tax and interest payable, as determined in sub-section (1) or
(3), as the case may be, if such return is furnished after the expiry of twenty-four
months, but before completion of thirty-six months, from the end of the financial
year succeeding the relevant tax year; or
( d )   70%   of   aggregate   of   tax   and   interest   payable,   as   determined   in   sub-
section (1) or (3), as the case may be, if such return is furnished after the expiry of
thirty-six months, but before completion of forty-eight months, from the end of the
financial year succeeding the relevant tax year.”

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the assessed tax where, “assessed tax” means the tax on the total income as declared
in the return to be furnished under section 263(6),—
( a )   after taking into account,—
( i )   the amount of relief or tax referred to in section 266(1), the credit
for which has been claimed in the earlier return, if any;
( ii )   tax deducted or collected at source, as per the provisions of Chap -
ter XIX-B, on any income which is subject to such deduction or
collection and which is taken into account in computing such total
income, which has not been included in the earlier return;
( iii )   any relief of tax or deduction of tax claimed under section 159(1)
or 160 on account of tax paid in a country outside India on such
income which has not been included in the earlier return;
( iv )   any relief of tax claimed under section 159(2) on account of tax paid
in any specified territory outside India referred to in that section
on such income which has not been included in the earlier return;
54
[ ( v )   any tax credit claimed, to   be set off as per section 206(2)( e ) to ( h )
and 206(3) and (4), which has not been claimed in the earlier return;
and ]
( b )   as increased by refund, if any, issued in respect of such earlier return.
(8) If any difficulty arises in giving effect to the provisions of this section, the Board
may, with the previous approval of the Central Government, by notification, issue
guidelines for the purposes of removing the difficulty.
(9) Every guideline issued by the Board under sub-section (8) shall be laid before
each House of Parliament while it is in session for a total period of thirty days which
may be comprised in one session or in two or more successive sessions, and if,
before the expiry of the session immediately following the session or the successive
sessions aforesaid, both houses agree in making any modification in such guideline
or both Houses agree that the guideline, should not be issued, the guideline shall
thereafter have effect only in such modified form or be of no effect, as the case may
be; so, however, that any such modification or annulment shall be without prejudice
to the validity of anything previously done under that guideline.
(10) For the purposes of this section,—
( a )   interest payable under section 423, for the purposes of sub-section (1),
shall be computed on the amount of tax on the total income as declared
in the return under section 263(6), as per section 266(4);
( b )   interest payable under section 425, for the purposes of sub-section (3),
shall be computed after taking into account the total income furnished
in the return under section 263(6) as the returned income;
( c )   interest payable, for the purposes of sub-section (5), shall be the interest
chargeable under any provision of this Act, on the income as per return
54.   Substituted by the Finance Act, 2026, w.e.f.   1-4-2026 . Prior to its substitution, sub-clause
( v ) read as under :
“( v )   any tax credit claimed, to be set off as per section 206(1)( m ) to ( p ) and 206(2)( e ) to
( h ), which has not been claimed in the earlier return; and”

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furnished under section 263(6), as reduced by interest paid, as per the
earlier return, if any.
(11) For the purposes of sub-section (10)( c ), the interest paid in the earlier return
shall be   nil   in case of an updated return referred to in sub-section (1).
CHAPTER XVI
PROCEDURE FOR ASSESSMENT
A. — Procedure for assessment
Inquiry before assessment.
268.   (1) For the purpose of making an assessment under this Act, the Assessing
Officer may serve on any person who has made a return under section 263
or in whose case the time allowed under section 263(1) for furnishing the return
has expired, a notice requiring him, on a date to be specified therein,—
( a )   where such person has not made a return within the time allowed under
section 263(1) or before the end of the financial year succeeding the
relevant tax year, to furnish a return of his income or the income of any
other person in respect of which he is assessable under this Act, in such
form and verified in such manner and setting forth such other particulars
as may be prescribed;
( b )   to produce, or cause to be produced, such accounts or documents as the
Assessing Officer may require;
( c )   to furnish in writing and verified in the manner as may be prescribe
information in such form and on such points or matters (including a
statement of all assets and liabilities of the assessee, whether included
in the accounts or not) as the Assessing Officer may require.
(2) For the purposes of sub-section (1),—
( a )   the previous approval of the Joint Commissioner shall be obtained by the
Assessing Officer before requiring the assessee to furnish a statement of
all assets and liabilities not included in the accounts;
( b )   the Assessing Officer shall not require the production of any accounts
relating to a period more than three years prior to the relevant tax year.
(3) A notice under sub-section (1)( a ) may also be served by the prescribed income-
tax authority.
(4) For the purposes of obtaining full information in respect of the income or loss of
any person, the Assessing Officer may make such inquiry as he considers necessary.
(5) If, at any stage of the proceedings before him, the Assessing Officer, having
regard to—
( a )   the nature and complexity of the accounts; or
( b )   volume of the accounts; or
( c )   doubts about the correctness of the accounts; or
( d )   multiplicity of transactions in the accounts; or