{"id":3676,"date":"2025-09-02T06:32:45","date_gmt":"2025-09-02T06:32:45","guid":{"rendered":"https:\/\/www.luzenta.com\/blog\/?p=3676"},"modified":"2025-09-02T06:32:45","modified_gmt":"2025-09-02T06:32:45","slug":"step-by-step-guide-to-filing-modified-income-tax-returns-for-past-business-reorganizations","status":"publish","type":"post","link":"https:\/\/www.luzenta.com\/blog\/step-by-step-guide-to-filing-modified-income-tax-returns-for-past-business-reorganizations\/","title":{"rendered":"Step-by-Step Guide to Filing Modified Income Tax Returns for Past Business Reorganizations"},"content":{"rendered":"

Business reorganizations such as mergers, demergers, and amalgamations require accurate reflection in income returns to ensure compliance with legal and financial frameworks. The Central Board of Direct Taxes has introduced a structured process allowing successor entities to file modified Income Tax Returns for assessment years impacted by business reorganizations sanctioned between June 1, 2016, and March 31, 2022. This provision is aimed at entities that were previously outside the scope of Section 170A of the Income-tax Act, 1961.<\/span><\/p>\n

Section 170A: Framework and Applicability<\/b><\/p>\n

Section 170A was incorporated through the Finance Act, 2022, and became effective from April 1, 2022. It allows entities undergoing business reorganization, as sanctioned by a tribunal, court, or Adjudicating Authority under the Insolvency and Bankruptcy Code, 2016, to furnish a modified return of income. The provision mandates that such a return should be filed within six months from the end of the month in which the competent authority issued the reorganization order. The intent behind introducing Section 170A was to ensure that restructured entities could update their income returns to align with the post-reorganization structure.<\/span><\/p>\n

Limitations of the Initial Scope<\/b><\/p>\n

While Section 170A provided relief for entities whose reorganization orders were issued after April 1, 2022, it did not cater to cases where the orders were passed before this date. Through an order under Section 119 dated September 26, 2022, CBDT extended the benefit to successor entities whose business reorganization orders were issued between April 1, 2022, and September 30, 2022, allowing them to file modified returns by March 31, 2023. However, this extension left out entities with orders dated prior to April 1, 2022, resulting in compliance challenges for a significant number of companies.<\/span><\/p>\n

Legal Precedent: Dalmia Power Ltd. v. ACIT<\/b><\/p>\n

The need to address this gap was emphasized in the case of Dalmia Power Ltd. v. ACIT. The Supreme Court ruled that revised returns filed beyond the statutory deadlines must be entertained if they are pursuant to a scheme of amalgamation sanctioned by the National Company Law Tribunal. This judgment highlighted the necessity for a procedural mechanism that would allow entities affected by business reorganizations prior to April 1, 2022, to file revised returns in accordance with their new structure.<\/span><\/p>\n

CBDT’s Special Permission for Filing Modified Returns<\/b><\/p>\n

To mitigate the genuine hardship faced by such entities, CBDT has now issued an order allowing successor companies to submit modified returns for the relevant assessment years where the business reorganization orders were sanctioned between June 1, 2016, and March 31, 2022. These modified returns are to be filed through the e-filing portal using the functionality named \u201cu\/s 119(2)(b) \u2013 after condonation of delay\/Court Order or Sanction Order of Business Reorganization of the Competent Authority issued prior to 01.04.2022\u201d.<\/span><\/p>\n

Three-Step Filing Process<\/b><\/p>\n

The CBDT has laid out a structured three-step process for filing these modified returns, which ensures that entities follow a streamlined approach:<\/span><\/p>\n

Step 1: Communication with the Jurisdictional Assessing Officer<\/b><\/p>\n

The first step mandates the assessee to initiate communication with their Jurisdictional Assessing Officer. This must be done using a specified proforma designed for this purpose. The objective is to facilitate the electronic filing of the modified return. The deadline for submitting this communication is April 30, 2024.<\/span><\/p>\n

Step 2: Verification and Enablement by JAO<\/b><\/p>\n

Upon receiving the communication, the Jurisdictional Assessing Officer will verify if the request pertains solely to the reorganization order sanctioned by a competent authority. The verification process includes assessing whether the modifications requested in the return are limited to changes arising from the business reorganization. After successful verification, the JAO will enable the return filing functionality through the Income Tax Business Application system. The taxpayer will be notified of this enablement on their e-filing portal within 30 days of the JAO receiving the initial communication.<\/span><\/p>\n

Step 3: Filing the Modified Return<\/b><\/p>\n

After receiving intimation regarding the functionality enablement, the assessee can proceed to file the modified return for the applicable assessment year through the e-filing portal. The final deadline for submitting this return is June 30, 2024. It is imperative that the return is filed within this timeframe to ensure compliance with the CBDT\u2019s procedural directives.<\/span><\/p>\n

Documentation Requirements for Filing<\/b><\/p>\n

Entities planning to file modified returns under this provision must ensure thorough documentation. The critical documents required include:<\/span><\/p>\n