Answer

1. F

   Facts

   From 1 March 2026, the Finance Act 2026 allows an updated return in response to a Sec 148 notice within the time the notice allows. It costs a further 10% of tax and interest over the usual additional tax. Income offered this way is protected from the under-reporting penalty.

2. P

   Provisions and law

   • Sec 139(8A) (now Sec 263(6))An updated return (ITR-U) can be filed within 48 months from the end of the assessment year, with additional tax
   • Sec 140B (now Sec 267)Tax, interest and additional tax must be paid before an updated return is filed
   • Sec 270A (now Sec 439)Penalty of 50% of tax on under-reported income and 200% for misreporting
   • Sec 148 (now Sec 280)Before reassessing, the officer issues a notice asking for a return for that year, with the Sec 148A order and approval
3. A

   Analysis

   Normally ITR-U is barred once reassessment is pending, but the amendment opens this route under a Sec 148 notice. The additional tax under Sec 140B(3A) becomes, for example, 35% instead of 25% of tax and interest in the first year; on ₹1,00,000 of tax and interest that is ₹35,000 extra. In return, Sec 270A(11A) keeps that income out of the penalty for under-reporting. Check with a CA that the year and notice fit the conditions before paying.

4. C

   Conclusion

   1. 1Work out tax and interest on the missed income.
   2. 2Add the higher additional tax rate for the year.
   3. 3Pay everything, then file ITR-U within the notice period.
   4. 4Inform the officer through e-Proceedings.

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