CBDT notifies Form 69 for making application for recomputation of income

Notification no. 111/2022, dated 28-09-2022

The Finance Act, 2022 inserted an Explanation 3 with retrospective effect from the Assessment Year (AY) 2005-06 providing that for Section 40(a)(ii), the term ‘tax’ shall include and be deemed to have always included ‘surcharge’ or ‘cess’. Accordingly, even for the past period, the deduction for ‘cess’ or ‘surcharge’ shall not be available.

Section 155 contains provisions for the amendments in the assessment order. The provision provides that the assessment of a person shall be modified if, due to change in certain circumstances, his income is required to be re-computed.

Consequent to the amendment made in Section 40(a)(ii), the Finance Act 2022 also inserted a new sub-section (18) to section 155 empowering the Assessing Officer to re-compute the total income for such previous year in which the assessee claimed deduction of surcharge or cess.

The income so computed shall be treated as under-reported income, and the assessee shall be liable to pay tax on it along with a penalty of 50% of the amount of tax payable on under-reported income.

However, if the assessee makes an application to AO, requesting him for recomputation of total income without allowing the claim for deduction of surcharge or cess and pays the tax amount, such claim shall not be deemed to be under-reported income.

To implement this, the Central Board of Direct Taxes (CBDT) has inserted a new Rule 132 to the Income-tax Rules, 1962 prescribing the manner for making applications before AO. Said rule provides as follows:

(a) The assessee shall make an application, in Form No. 69, requesting AO for recomputation of total income of the previous year without allowing the claim for deduction of surcharge or cess.

(b) The application shall be furnished electronically on or before 31-03-2023 to PDGIT (Systems) or other prescribed tax authorities.

(c) PDGIT (Systems) or the DGIT (Systems) shall lay down the procedures and standards for furnishing and verification of Form No. 69 and forward the application to AO.

(d) On receipt of the application, the AO shall recompute the total income by amending the relevant order. He shall issue a notice under section 156 specifying the time within which amount of tax payable (if any) is to be paid:

i. For AY in which assessee had claimed the deduction; and

ii. For the AYs subsequent to AY referred in (i), if the order of such AY results in variation in carry forward of loss or allowance for unabsorbed depreciation or credit for tax under sections 115JAA or 115JD.

(e) The assessee shall furnish the details of payment of tax in Form No. 70 to AO within 30 days from the date of making the payment.

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