Revised Return

This query is : Resolved

imkdm (Querist)
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13 June 2009 In one case, the firm has credited sale of asset to its Profit & Loss A\c. Firm doesn't want return to be revised due to fear of unnecessary scrutiny as the refund payable shall be of substantial amount.

Does revise of return leads to Scrutiny?
Is there any way to rectify the error through current or subsequent returns?

Late CA Sampat Jain

Late CA Sampat Jain (Expert)
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13 June 2009 IF INCOME HAS BEEN CORRECTLY COMPUTED , WHATEVER BE THE ENTRY IS P AND L ACCOUT.....NO NEED TO REVISE.

imkdm

imkdm (Querist)
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18 June 2009 Thank you!

But I am afraid that income is computed without deducting capital receipt credited to P & L A\c from business income.

Hence, returned income is not correct.

Kindly advice.

Thanking you...

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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22 July 2025 Here’s a clear answer based on your situation:

🔍 Situation:
Sale of an asset was incorrectly credited to the Profit & Loss Account instead of adjusting it against the capital gains or the asset account.
Because of this, the income computation is incorrect — income is overstated.
The firm does not want to revise the return due to fear of triggering scrutiny, especially since refund amount may be substantial.
✅ Can Revising Return Lead to Scrutiny?
Filing a revised return may attract scrutiny if the income declared is significantly different or if the department suspects manipulation.
But revising the return to correct genuine mistakes is allowed under law.
The department uses various filters for scrutiny — a revised return alone does not automatically trigger scrutiny, but large changes or refunds may attract attention.
✅ What Can Be Done?
Revised Return (Recommended):
Since the income is incorrectly computed, the correct and proper way is to file a revised return under Section 139(5).
This will correct the mistake and ensure proper tax calculation.
Rectification Application:
If you have already filed the return and got an intimation under Section 143(1), you can file a rectification request under Section 154 to correct the mistake.
This works if the mistake is related to tax computation or omission.
Adjust in Current or Subsequent Return:
It’s generally not advisable to carry forward or adjust such fundamental errors in later returns, as this can lead to more complications.
If you try to adjust in subsequent returns, it can invite scrutiny for misreporting or inconsistency.
✅ Summary:
Action Impact & Advice
Revised Return Correct method, may attract scrutiny but justified
Rectification under 154 Possible if intimation received
Adjust in future returns Not recommended; may complicate matters
No action Incorrect income reported; risk of notice later
Final Suggestion:
It’s best to correct the mistake by filing a revised return or rectification application rather than avoid it due to fear of scrutiny. Being proactive helps in maintaining clean records and reduces risk of future notices or penalties.

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