Filing income tax returns can sometimes be a daunting task, especially if it’s not something you do frequently. It’s common to make errors, miss certain details, or submit incomplete information, leading to your return being classified as defective. To help rectify such issues, the Income Tax Department may issue a notice under Section 139(9). Failing to address these errors promptly can lead to significant consequences. This guide will walk you through the scenarios that can cause your return to be marked as defective and how to effectively respond to a defective return notice under Section 139(9).
What is a Defective Return?
A defective return is identified when your filed Income Tax Return (ITR) contains errors, inconsistencies, or missing information that prevent the proper assessment of your tax liability. The Income Tax Department issues a notice under Section 139(9) to notify taxpayers of these defects, providing them an opportunity to correct the return to ensure accuracy and compliance.
Receiving the Notice Under Section 139(9)
The notice under Section 139(9) is typically sent to your registered email address with the Income Tax Department. You can also access it through the income tax e-filing portal under your account. The email’s subject line will usually read something like, “Communication under section 139(9) for PAN [Your PAN Number] for the Assessment Year [Year].”
Accessing the Notice
The notice comes as a password-protected attachment in the email. To open it, use your PAN in lowercase followed by your date of birth in the DDMMYYYY format. For instance, if your PAN is “MNOPQ1212C” and your date of birth is October 12, 1987, the password would be “mnopq1212c12101987.”
Timeframe to Respond
Once you receive the defective return notice, you must respond within 15 days from the date of receipt. If you do not rectify the defects within this timeframe or an extension if granted, your original return will be deemed invalid, which can result in delays or denial of any refunds due.
Common Reasons for Receiving a Defective Return Notice
The Assessing Officer may issue a defective return notice under Section 139(9) for various reasons, including but not limited to:
Incomplete Return: Missing essential details such as income from all sources, or failure to fill out mandatory fields in the return or its annexures.
Missing Tax Information: Instances where the return does not include details of taxes paid, such as TDS, TCS, advance tax, or self-assessment tax.
Mismatch Between Income and TDS: If TDS is claimed, but the corresponding income is not reported in the ITR, a defective return notice can be issued.
Example: If you’ve earned interest income from fixed deposits and the bank has deducted TDS, both the interest income and the deducted tax must be reported in the ITR.
Incomplete Financial Statements: For businesses, failure to submit complete financial statements such as trading accounts, profit and loss accounts, and balance sheets can lead to a defective return notice.
Audit Report Discrepancies: If your return is subject to an audit under Section 44AB, it must include a complete audit report along with the profit and loss statement and balance sheet. Missing or incomplete reports can trigger a defective return notice.
Non-Compliance with Cost Audit Requirements: Companies required to submit ‘Cost Audit’ details under the Companies Act, 2013, must do so; failure to comply can result in a defective return notice.
Errors in Presumptive Taxation: For taxpayers using the presumptive taxation scheme, inaccuracies in the computation of presumptive income, incomplete disclosures, or mismatched gross receipts can lead to a defective return notice.
Example: If your gross receipts in the profit and loss account are not reported correctly or exceed Rs. 2 crore in ITR 4, this can cause a notice to be issued.
Discrepancies in Tax Payments: Inadequate or incorrect tax payments relative to the declared liability in the return can also lead to the issuance of a notice.
Incorrect Reporting of Income or Turnover: Filing an ITR with incorrect turnover details, income limits, or wrong categorization of income heads can result in a defective return notice.
Name Mismatch: If the name on the ITR does not match the name on your PAN card, this inconsistency can trigger a notice.
How to Address a Notice Under Section 139(9): A Step-by-Step Guide
Receiving a notice under Section 139(9) means the Income Tax Department has identified issues with your tax return. Prompt action is required to address these concerns. Here’s a comprehensive guide on how to respond effectively:
Step 1: Access the E-Portal
Begin by logging into the Income Tax Department’s e-filing portal using your credentials. Navigate to the dashboard and select “Pending Actions” followed by “E-Proceedings.”
Step 2: Check for Notices
If you haven’t received any notices, you’ll see a message stating “No e-proceedings records.” If a notice is present, it will be listed under your pending actions.
Step 3: View the Notice
Locate the relevant notice under “For Your Action” and click on “View Notices.” This will direct you to the details of the notice.
Step 4: Review the Notice
Step 5: Provide Your Response
Once you’ve reviewed the notice, click on “Submit a Response” to initiate the response process. You will be prompted to either agree or disagree with the notice. If you agree, you’ll need to provide detailed information addressing the defect mentioned.
Step 6: Disagreeing with the Notice
If you disagree with the notice, select “Disagree” and provide your reasons in the designated text box.
Step 7: Submit the Required Documents
For those agreeing with the notice, if you choose “Offline Utility” as the mode of response, you’ll need to attach the corrected file addressing the defects. Ensure that all necessary documents are included.
Time Frame for Response
You have 15 days from the date of receipt of the defective notice to rectify the errors and respond. This time frame is crucial to avoid your return being deemed invalid.
By following these steps, you can effectively address any issues with your tax return and ensure compliance with the Income Tax Department’s requirements.
Final Thoughts
Receiving a defective return notice under Section 139(9) can be intimidating, but it’s crucial to act promptly. By understanding the defects and correcting them within the stipulated time, you can ensure your return is processed correctly, avoid penalties, and safeguard any refunds due. If you find the process challenging, consulting a tax professional can provide guidance and help streamline the rectification process.
Frequently Asked Questions
A: You must address and rectify the defects mentioned in the notice within 15 days from the date of receipt. If needed, you can request an extension, but it’s crucial to act within the given timeframe to avoid your return being treated as invalid.
A: If you fail to correct the defects within the 15-day period or any extended time allowed, your return will be deemed invalid, essentially treated as though it was never filed. This could lead to penalties, interest charges, disallowance of loss carryforwards, and loss of specific tax exemptions.
A: No, once you have submitted your response on the e-filing portal, it cannot be modified or withdrawn.
A: If your return is identified as defective, the Income Tax Department will issue a notice under Section 139(9) to your registered email address. You can also view this notice by logging into the e-filing portal.
A: Yes, you are allowed to authorize another person, such as a tax professional or representative, to respond to your defective notice on your behalf.
A: Error code Rule 37BA often appears in notices under Section 139(9) and indicates a discrepancy where the total income reported in your ITR is less than the gross receipts reflected in your Form 26AS.
A: Yes, you can either file a fresh or revised return as long as the filing deadline hasn’t passed. Alternatively, you can address the notice directly by responding to it under Section 139(9). If the filing deadline has expired, your only option is to respond to the notice. Ignoring the notice will result in your return being treated as invalid or unfiled for that assessment year.
A: Common mistakes that may result in a defective return include:
- Omitting Income: Claiming Tax Deducted at Source (TDS) credits without reporting the corresponding income in the ITR.
- Income Discrepancies: Reporting gross receipts in Form 26AS that exceed the income declared in the ITR.
- Incorrect Income Reporting: Declaring “Gross Total Income” and all income categories as “nil or 0” while still calculating and paying tax.
- Name Mismatch: Discrepancy between the name listed in the ITR and the name on the PAN card.
- Incomplete Documentation: Earning income under “Profits and Gains of Business or Profession” but failing to provide a Balance Sheet and Profit and Loss Account.
A: This status indicates that your return has been reviewed, all issues have been addressed, and it is now being processed without any further action needed from your side.
About The Author
Gagan Gupta
Founder & CEO
Gagan Gupta is a distinguished authority in the realm of accounting and tax compliance. With extensive expertise in managing comprehensive tax compliance procedures—ranging from income tax and GST to TDS and TCS filings across various industries—Gagan has established himself as a pivotal figure in the field. His proficiency extends to meticulously teaching the intricacies of the filing process, elucidating even the most minute details, and identifying common errors along with their resolutions.
Gagan Gupta’s profound understanding of every facet of taxation and accounting enables him to share invaluable insights through industry-specific blogs. These blogs serve as a rich resource for fellow industry professionals, including advocates and Chartered Accountants (CAs). By imparting his extensive knowledge and practical experience, Gagan Gupta not only enriches his readers but also contributes significantly to the broader discourse in the taxation and finance community.
