Tag: defective ITR notices

Appeal against income tax notice order u/s 139(9) of the Income Tax Act

When any important information is missing or reported wrongly on the return, it is known as a defective return. In any of the above cases, the income tax department issues a defective notice u/s 139(9) to the taxpayers, intimating them about the same and asking them to correct the inaccuracies present in the return.

You are required to make the necessary corrections in the return within 15 days of receiving the notice. If you fail to correct the ITR on time, it might have certain consequences in the future.

The defective return notice u/s 139(9) is issued via email to your registered email ID. You can also access the notice on the income tax e-filing portal.

What is the Reason for Defective Notice 139 9?

Assesses can receive a defective return notice for various reasons. Some of the major reasons for a defective return notice are listed below –

Incomplete ITR –

Need to fill the annexure, statements, and columns in the income tax return. It must be duly filled wherever required. For example, while claiming deduction u/s 80G, the details in its schedule need to be filled or correctly filled.

Missing Tax Information –

Tax, together with interest, if any, is paid before filing the return, and all the details relating to it are not filled in. For example, the BSR code, Date of challan, and challan serial number should be correctly filled in.

Mismatch in Information –

The tax actually paid does not match with the tax payable in the income tax return, or taxes are not paid in full.

Presumptive Taxation Scheme –

While filing ITR 4, if total presumptive income is shown as less than 8% or 6% of gross turnover or receipts, as the case may be, then in that case, ITR 3 should have been filed. The Gross receipts are not mentioned in the Profit & Loss A/c, Or the Gross receipt or income u/s 44AD is shown as more than Rs. 2 Crore in ITR 4.

If you have filed your return u/s 44ADA with a gross receipt of more than 50 Lakhs without a Balance sheet and Profit & Loss, then a notice will be received for filing ITR-3 with audited B/s and P&L Statement.

In budget 2023, this limit for presumptive taxation has been increased. For 44AD it is increased to 3 Crores and for 44ADA it is increased to 75 lakhs. This increase in limit is subject to the condition that 95% of receipts must be through online sales.

Maintaining books of accounts –

You’re required to maintain regular books of account such as Balance Sheets and Profit and Loss statements, but they have not been filled in the return while filing it.

TDS Claimed but Income not Mentioned –

The tax deducted has been claimed as a refund, but no income details are provided in return.

Related to Income Tax Audit –

When the books of accounts have been audited, but a copy of the audit report and audited financial statements have yet to be filled in the return while filing it.

Cost Audit Requirements –

If the entity is required to conduct a cost audit but fails to provide detailed information of the same.

Mismatch in Name –

Name mismatch between PAN and Income Tax Return.

What Shall I do After Receiving Notice u/s 139(9)?

Once you’ve received income tax notice u/s 139(9), you must correct your return by revising it within 15 days from receipt by the Income Tax Department. You can also apply for an extension by writing an application to the Assessing Officer (A.O.) requesting an extension of the deadline for filing a revised return. Practically, it is seen that even if a taxpayer rectifies the defect after the expiry of fifteen days. Still, before the assessment is made, the Assessing Officer may condone the delay and treat the return as valid.
However, if the response is not filed within 15 days, you can demand an additional time extension to complete the revisions. If you are not granted the additional time for filing your response then, the original return filed is treated as an invalid return.

What Will Happen if I Don’t do Anything After Receiving Notice for Defective Return u/s 139(9)?

If you fail to file a response to a defective return notice u/s 139(9) or revise your ITR within the specified time frame, your defective return will be treated as a non-filed or invalid return. This means the Income Tax Department will consider it as if you’ve not filed a return for the year. Consequently, your refund will also not be processed by the Income Tax Department, if any.

How Will I Receive Notice u/s 139(9)?

You will receive notice u/s 139(9) from the income tax department on the email ID entered while filing your ITR. Usually, these notices are received from CPC, and the subject line is ‘Communication u/s 139(9) for PAN AWZXXXXXXX for the A.Y.2023-24’. The notice is attached to the email and protected with a password. The password to open the notice is PAN in lower case and the date of birth in the format DD/MM/YYYY.

How to Respond to Notice u/s 139(9)?

You can respond to an income tax notice by directly visiting the income tax department’s website and logging in using your credentials. Here’s how you can respond to income tax notices –

Step 1: Click on pending actions on the dashboard and then on e-proceedings.

Step 2: If you have not received any notice, you will see No e-proceedings records

Step 3: If there is any proceeding, you will see it in your pending actions.’ Click on ”For your action and view Notices“

Step 4: Click on ‘Notice/ Letter pdf’ to view the notice.

Step 4 (A): After you have viewed your notice, click on submit a response.

Step 5: After you have clicked on submit a response, you will see a response page where you will have to agree or disagree with the notice.

Step 6: If your response is ‘agree,’ you will see a screen where you will have to provide a response for the said defect.

Step 6 (A): If you disagree with the notice, you can select disagree in the given column and give reasons for the disagreement in the text box provided.

Step 7: Now, if you have selected the agree-on option and offline utility as the mode of response, submit the attachment file for rectifying the defect.

Time limit to respond to defective notice

If you receive a defective notice, you will get 15 days of time from the date of receiving the notice or as the time limit specified in the notice to rectify the defect in the return filed by you.

Can I Withdraw the Response to Defective Notice u/s 139(9)?

Earlier, it was possible to withdraw your response submitted to the defective notice under section 139(9). But this functionality is no longer available. Hence, you cannot withdraw the response made; instead, you can update or view it.

How to Revise your Income Tax Return in Response to the Notice?

One should understand that receiving a tax notice should not necessarily be a cause for panic or worry. Instead, you must view it as a chance to amend mistakes made in your original income tax return. Under Section 139(5) of the Income Tax (IT) Act, taxpayers are entitled to revise their IT returns. This provision allows taxpayers to rectify any unintentional errors or omissions in their IT returns, even after receiving a tax notice u/s 139 9 of the Income Tax Act. The revision can be made prior to the expiry of one year from the end of the relevant assessment year or before the completion of the assessment year, whichever comes earlier. This flexibility provides taxpayers with the opportunity to correct discrepancies and ensure accuracy in their tax filings.

Response to Defective Notice 139(9)

FAQs

Response to Defective Notice 139(9) – FAQs

1. What is a Defective Return?
A return may be treated as defective on account of incomplete or inconsistent information in the return or in the schedules or for any other reason.

2. How do I know if my return is defective?
If your return is found defective, the Income Tax Department will send you a defective notice under section 139(9) of the Income Tax Act via an email on your registered email id or post and the same can be viewed by logging in on the e-filing portal.

3. Can I update or withdraw my response after submitting the response on the e-Filing portal?
No, you cannot update or withdraw your response once submitted.

4. Can I authorise another person to respond to my Defective Notice?
Yes, you can authorize another person to respond to the defective notice u/s 139(9).

5. Can I correct the defect in the ITR Form online?
Yes, you can submit the response by online correcting the defect in the ITR Form.

6. What is the time limit within which I can respond to a Defective Notice sent by Income Tax Department?
If your return is found defective, you will get 15 days of time from the date of receiving the notice or as the time duration specified in the notice to rectify the defect in the return filed by you. However, you may seek Adjournment and request for an extension.

7. What if I don’t respond to a Defective Notice?
If you fail to respond to the defective notice within stipulated period then your return may be treated as invalid and therefore consequences such as penalty, interest, non carry forward of losses, loss of specific exemptions may occur,as the case may be in accordance with the Income Tax Act.

8. I have been notified about defective returns u/s 139(9). Can I file the return again as fresh return for that assessment year?
Yes, You can either file the return as a fresh/ revised return incase the time provided for filing the return in a particular assessment year has not lapsed or alternatively you can also choose to respond to Notice u/s139. However, once the time provided for filing the return for a particular assessment year has lapsed, you will not be able file the return as a fresh/ revised return and you will have to respond to Notice u/s 139(9). If you are unable to respond to the notice, the return will be treated as invalid or not filed for that assessment year.

9. What are some of the common errors that make a return Defective?
Some of the common errors that make a return defective are as follows:

  • Credit for TDS has been claimed but the corresponding receipts/income has been omitted to be offered for taxation,
  • The gross receipts shown in Form 26AS, on which credit for TDS has been claimed, are higher than the total of the receipts shown under all heads of income, in the return of income.
  • Gross Total Income” and all the heads of income is entered as “nil or 0” but tax liability has been computed and paid.
  • Name of taxpayer in ITR does not match with the “Name” as per the PAN data base.
  • Taxpayer having income under the head “Profits and gains of Business or Profession” but has not filled Balance Sheet and Profit and Loss Account.

Taxpayers received defective ITR notice from income tax department

More Taxpayers Receiving Defective ITR Notices from Tax Department This Year

This year defective ITR notices are being received in larger numbers than before

Chartered accountants report that many of their clients have received defective ITR notices this year and the number of such notices received is more than last year.

Due to the faster processing of income tax returns (ITR) this year, a larger volume of tax notices are being sent out at once. In previous years, ITR processing took a longer time, resulting in notices being spread out over several months. One primary reason for the high number of defective ITR notices this year is the transition to a new default tax regime, as opposed to the previous default tax regime. This change has led to confusion among some taxpayers regarding the tax regime chosen.

Some of our clients have received defective ITR notices due to discrepancies between the income shown in AIS/Form 26AS and the ITR, despite the two actually matching. In another instance, the tax department claimed that a specific income cannot be reported in ITR-1, even though it can be according to the explicit provisions of the law.

This rise is primarily attributed to errors such as incorrect selection of ITR forms, difficulties encountered by individuals filing their own returns, etc. The confusion with respect to the deductions in the new regime is also a major factor for these defects

The tax authority sends out a defective return notice when they find mistakes or inconsistencies in your ITR. These mistakes might involve missing or conflicting information, errors in calculations, or other issues. The purpose of this notice is to prompt taxpayers to correct these errors and make sure that their tax return provides precise and complete information.

Defective return notice is issued under section 139(9) via an email to your registered email id. You can also access the same on the income tax e-filing portal.

How will I receive notice u/s 139(9)? 

IT Department will issue the notice u/s 139(9) to your email ID registered with the income tax department. The subject of the email will be ‘Communication under section 139(9) for PAN AWZXXXXXXX for the Assessment Year 2023-24.

What is the password for 139(9) notice?

The defective return notice is attached in the email and password protected. The password to open defective return notice u/s 139(9) is PAN in lowercase followed by date of birth in DDMMYYYY format. 
Example: if your PAN is MNOPQ1212C and your date of birth is 12/10/1987, the password would be: mnopq1212c12101987

Time limit to respond to defective notice

If you receive a defective return notice, you must respond within 15 days of receiving the notice. If the response is not filed within 15  or the extended days allowed, the original return filed is treated as an invalid return. Consequently, your refund will also not be processed, if any.

Situations in which defective return notice will be issued

The Assessing Officer may consider the below-mentioned reasons, errors or omissions while issuing a defective return notice under section 139(9):

1. Incomplete income Tax Return (ITR): If the ITR lacks necessary details in its annexures, statements, or mandatory columns, such as income from all sources are not mentioned, etc.

2. Missing Tax Information: If taxes have been paid but their details are omitted in the ITR, including information about TDS, TCS, advance tax, or self-assessment tax.

3. TDS and Income Mismatch: TDS is claimed. but corresponding income is not offered for tax in the ITR. 

Example: If you have earned interest income from term deposits and tax has been deducted by the bank, both interest income and tax deducted should be reported in the ITR. However, while filing a return through Cleartax, all your income details will be auto-populated from the income tax department and there is also an option to upload 26AS which will help in preventing such discrepancies right from the start.

4. Bookkeeping Issues: Incomplete or non-submission of mandated books of accounts, such as trading accounts, Profit and Loss accounts, Balance sheets, and others may lead to defective return notice.

5. Income Tax Audit Concerns: If an audit is required to be done under section 44AB, the complete audit report, including profit and loss account, Balance sheet and auditors report, should be submitted. In the absence of these documents or submission of an incomplete audit report, you may invite a defective return notice.

6. Cost Audit Non-compliance: Failure to submit ‘Cost Audit’ details as required by the Companies Act, 2013, can lead to a defective return notice.

7. Presumptive Taxation Inaccuracies: In cases of presumptive taxation, providing inaccurate computation of presumptive income, non-disclosure of relevant details, or mismatched gross receipts can trigger a defective return notice. 

Example: For instance, gross receipts not mentioned in the Profit and Loss account, or the amount mentioned is more than Rs. 2 crore in ITR 4, will lead to a defective return notice.

8. Tax Payment Discrepancies: If taxes are partially paid or the paid amount doesn’t align with the tax liability in the ITR, a defective return notice may be issued.

9. Incorrect details in ITR: Filing an ITR with incorrect details regarding turnover, income limits, or inappropriate reporting for a specific head of income can lead to a defective return notice.

10. Mismatch in the name: When the name mentioned in the ITR does not match the name on the PAN card.

How to Respond to Defective Return Notice u/s 139(9)?

If the Assessing Officer considers the return to be defective, then a notice will be sent to the taxpayer. The taxpayer will have 15 days time to respond to the notice.

  • Revise your return addressing the defects pointed out by the Income Tax Department within 15 days.
  • If you are unable to complete these revisions within the given timeframe, you have the option to seek an extension.

If the defect is not rectified within a period of 15 days or the extended days allowed, your return may be treated as an invalid return. This could potentially lead to consequences like interest, penalty, non-carry forward of losses and forfeiture of specific exemptions.

How to revise your income tax return in response to the notice

Step 1: Check the reason for defective notice.

An income tax return (ITR) may be marked defective for various reasons. Say you have received a defective notice because there is a mismatch between Form 26AS and your ITR. Download Form 26AS from the IT portal and check if you have earned any income on which tax has been deducted, for e.g.:

Ideally, you should have reported both your income and the tax deducted in your ITR. However, if you claim only TDS but miss out on reporting the income, you may receive a defective notice. 

Response to Defective Notice 139(9)- FAQs

Response to Defective Notice 139(9) – FAQs

1. What is a Defective Return?
A return may be treated as defective on account of incomplete or inconsistent information in the return or in the schedules or for any other reason.

2. How do I know if my return is defective?
If your return is found defective, the Income Tax Department will send you a defective notice under section 139(9) of the Income Tax Act via an email on your registered email id or post and the same can be viewed by logging in on the e-filing portal.

3. Can I update or withdraw my response after submitting the response on the e-Filing portal?
No, you cannot update or withdraw your response once submitted.

4. Can I authorise another person to respond to my Defective Notice?
Yes, you can authorize another person to respond to the defective notice u/s 139(9).

5. Can I correct the defect in the ITR Form online?
Yes, you can submit the response by online correcting the defect in the ITR Form.

6. What is the time limit within which I can respond to a Defective Notice sent by Income Tax Department?
If your return is found defective, you will get 15 days of time from the date of receiving the notice or as the time duration specified in the notice to rectify the defect in the return filed by you. However, you may seek Adjournment and request for an extension.

7. What if I don’t respond to a Defective Notice?
If you fail to respond to the defective notice within stipulated period then your return may be treated as invalid and therefore consequences such as penalty, interest, non carry forward of losses, loss of specific exemptions may occur,as the case may be in accordance with the Income Tax Act.

8. I have been notified about defective returns u/s 139(9). Can I file the return again as fresh return for that assessment year?
Yes, You can either file the return as a fresh/ revised return incase the time provided for filing the return in a particular assessment year has not lapsed or alternatively you can also choose to respond to Notice u/s139. However, once the time provided for filing the return for a particular assessment year has lapsed, you will not be able file the return as a fresh/ revised return and you will have to respond to Notice u/s 139(9). If you are unable to respond to the notice, the return will be treated as invalid or not filed for that assessment year.

9. What are some of the common errors that make a return Defective?
Some of the common errors that make a return defective are as follows:

  • Credit for TDS has been claimed but the corresponding receipts/income has been omitted to be offered for taxation,
  • The gross receipts shown in Form 26AS, on which credit for TDS has been claimed, are higher than the total of the receipts shown under all heads of income, in the return of income.
  • Gross Total Income” and all the heads of income is entered as “nil or 0” but tax liability has been computed and paid.
  • Name of taxpayer in ITR does not match with the “Name” as per the PAN data base.
  • Taxpayer having income under the head “Profits and gains of Business or Profession” but has not filled Balance Sheet and Profit and Loss Account.