Tag: income tax notice under section 139(9)

Defective Income Tax Return Notice Under Section 139(9) of the Income Tax Act, 1961

Making a mistake or two is completely normal when you’re doing something you don’t often do or are not used to doing – like filing income tax returns. Sometimes we may miss entering certain information. Sometimes there could be an error. In these situations, your return is labelled as a ‘defective return,’ and the income tax department will issue a notice of defective return as per Section 139(9). This notice aims to help you correct any mistakes. However, if these issues aren’t fixed promptly, they could lead to some undesirable consequences. In this article, we will discuss scenarios that can result in your return being marked as defective, along with how to respond to the defective return notice u/s 139(9).

What is a section 139(9)?

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 daystime 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 portaland check if you have earned any income on which tax has been deducted, for e.g.:

  • interest income from term deposits;
  • dividend income or 
  • any other income 

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. 

Step 3: Steps on how to respond to defective notice u/s 139(9) on income tax portal
1.  Log in on the e-filing website with your user ID (PAN/Aadhaar number) and password.
2. Click on ‘Pending Actions’ and then select ‘E-proceedings’. 

3. Click on the ‘View Notices’. Here, you can view the notice and submit your response. After reading the notice, click on ‘Submit Response’.

4. You can see the error description to understand the defect and its probable resolution is also mentioned alongside.
If you agree with the error details, select the ‘Agree’ option and ‘Offline utility’ as the mode of response.

5. Complete the ITR filing by uploading the JSON file that you downloaded from Cleartax.
6. If you disagree with the defect, you can proceed by selecting the ‘Disagree’ option. You will also have to give reasons for disagreement in the text box provided.

7. Check the box ‘Response cannot be modified after submission’ and then click on ‘Submit‘.
8. Now click on the ‘Proceed to e-verify‘ button to e-verify your response for defective notice u/s 139(9). You can e-verify by any of the methods.
9. You will see a confirmation message with an acknowledgement number on the screen upon successful uploading.

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.

Response to Defective Notice against Updated Return FAQs

Question 1: I filed an Updated ITR u/s 139(8A). I received a defective communication against the same. How to respond against such defective notice ?

Response: Tax payer can submit response against the defective notice triggered against updated return in the same manner as 139(9) by navigating through below path : https://www.incometax.gov.in/iec/foportal/ → Login → Pending actions → e-proceedings → submit response by selecting respective notice.

Question 2: While preparing XML/JSON for submitting response to defective notice triggered against updated return filed u/s 139(8A), which section dropdown should I select in ITR ?

Response: Tax payer is required to select section as 139(8A) while responding to defective notice triggered against 139(8A) section in ITR.

Question 3: Is it mandatory to fill “DIN” and “Date of Notice” while submitting responding to defective notice triggered against “updated return filed u/s 139(8A)”?

Response: It is not recommended to enter DIN and Date of Notice.

Question 4: Can I submit response to defective notice triggered for any other ITR apart from the filed u/s 139(8A) by selecting 139(8A) and vice versa ?

Response: No. While submitting response to defective notice triggered against “any other ITR apart from 139(8A)”, tax payer should select section as 139(9) and while submitting response to defective notice triggered against 139(8A) return, tax payer should select section as 139(8A).

Question 5: Can I submit multiple responses to defective notice triggered against Updated return filed u/s 139(8A)?

Response: No, tax payer should submit only one response against one defective notice.

Question 6: I didn’t file any prior ITR apart from 139(8A) for AY 20XX. While preparing XML/JSON for submitting response to defective notice triggered against updated return filed u/s 139(8A), which option should I select in A5 of Part A General 139(8A) ?

Response: Tax payer should select same option in“A5 of Part A General 139(8A)” as what he selected while filing 139(8A) ITR which means, if tax payer didn’t file prior ITR u/s 139(1)/139(4), then answer for A5 will be “No” in both return i.s.,139(8A) return and in response to defective notice triggered against 139(8A) return and so no need to fill “Original Date of filing” and “Acknowledgement number” of Original ITR in both the returns.

Question 7: I filed prior ITR apart from 139(8A) for AY 20XX. While preparing XML/JSON for submitting response to defective notice triggered against updated return filed u/s 139(8A), which option should I select in A5 of Part A General 139(8A) and which details need to be provided in “Original Date of filing and Acknowledgement number” fields ?

Response: Tax payer should select same option in“A5 of Part A General 139(8A)” as what he selected while filing 139(8A) ITR which means, if tax payer filed any prior ITR u/s 139(1) / 139(4) apart from 139(8A), then answer for A5 will be “Yes” in both return i.e.,139(8A) return and in response to defective notice triggered against 139(8A) return and so he needs to fill same “Original Date of filing” and “Acknowledgement number” of such previously filed Original ITR in both the returns.

Question 8: I filed updated return u/s 139(8A) and post that I submitted response to defective notice triggered for other than 139(8A) which is pending from long time. Which one will be considered as latest?

Response: Updated Returns may prevail over other applicable sections . So, updated return will be treated as latest return

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.

How to Rectify a Notice Under Section 139(9) of the Income Tax Act; Income Tax Return is declared as ‘defective’ by the Assessing Officer (AO)

An individual might get a notice under section 139(9) of the Income Tax Act, 1961 in case his/her income tax return (ITR) is declared as ‘defective’ by the Assessing Officer (AO). For instance, say you had filed your ITR but the spelling of your name in your PAN card does not match with the name in the ITR form. This will cause your ITR to be classified as defective. Once the ITR has been termed defective, the income tax department will send you notice for the same.

Although any notice from the income tax department might give one a shock, this notice can be easily rectified. Here is how you can fix the issue related to defective ITR.

What is a defective ITR?

According to Dr Suresh Surana, Founder, RSM India, a tax and audit company, “Notice under section 139(9) may be issued to an individual in case his/her income tax return has been declared as defective by the assessing officer on account of incomplete or inconsistent information.

There could be many reasons why an ITR filed can be tagged as defective by the income tax department. For example: , a taxpayer might use the wrong ITR form to file his return, or it could happen that the taxpayer miscalculated his income, etc.

What mistakes can lead to defective ITR?

Here is a look at few reasons why an ITR filed could be termed as defective.

Wrong information in AIS: It may so happen that you mistakenly entered the wrong challan number while filing your ITR or you paid your advance tax for the wrong assessment year or maybe your employer filed a wrong TDS return and as a result your Form 26 AS, AIS, TIS auto populated the wrong information and, thus the error. Sometimes it could also happen that the bank deducted the TDS amount had put in a wrong entry in their TDS returns.

Like this, there could be numerous ways you could mistakenly input wrong tax information in your filed ITR. Hence, the best practice would be to always check the challans properly and reconcile your bank statements with the TDS information in your AIS (Annual Information Statement). If you still think that the information in one’s AIS is incorrect, then you may request the tax department to correct it. Otherwise, if the AIS is wrong and you said nothing, it will be assumed that every information in the AIS is correct.

TDS deducted but income not declared: “Mismatch in income and TDS reported in return with details reflected in Form 26AS of the taxpayer is a common reason for treating a return as defective,” said Vijay Bharech from Deloitte Haskin & Sells LLP, a tax, audit and business consulting firm.

He added, “Do keep in mind that TDS being deducted from income but income not being declared would not be considered as concealment of income. Section 143 provides that the taxpayer should be intimated before an adjustment is made on account of income appearing in Form 26AS. However, in practice, following are few instances where tax authorities are treating a filed tax return as defective:

For example, crypto exchanges in India deduct TDS on every sell transaction. But if for any reason someone neither declared this Virtual Digital Assets (VDA) crypto income nor did they file ‘schedule VDA’ while filing their ITR, then the ITR will be termed as defective.

Another example is in case of equity shares. Companies will deduct TDS on dividend payments if they exceed Rs 5,000 in a financial year provided form 15G/H is not submitted. Additionally, all dividends are taxable in the hands of shareholders. So however small the dividend amount may be, one must declare these incomes in their filed ITR.

Tax audit was required but not done: Those who have a business income, must file their income tax audit report by September 30, 2023 for FY 2022-23 (AY 2023-24). “Despite having to do an audit by a qualified CA, if someone does not do it, then the ITR will be tagged as defective. Further, a penalty under Section 271B may be imposed if he fails to get his accounts audited or fails to furnish a report of audit under Section 44AB in Form 3CA and Form 3CB or Form 3CD, as the case may be, by the due date,” said Naveen Wadhwa, deputy general manager (DGM) of Taxmann, a Delhi-based book publishing company..

Partial payment of tax: If the taxpayer has made a partial payment of tax against the net tax liability or the tax payment amount differs from what is shown as tax payable in the tax return, then this could lead to the ITR being termed as defective.

The above list is not exhaustive and there could be other issues too which could lead to an ITR being defective.

How to correct defective ITR?

The individual can either file the income tax return as a fresh or revised return in case the time provided for filing the ITR in a particular assessment year has not lapsed,” said Bharech.

If there is no change in gross total income or deduction claimed (such as section 80C, 80D etc) ITR filed (uploaded and verified) as a response to defective notice would be considered as a fresh ITR and would replace the defective return filed earlier. This would mean that original ITR has been replaced in response to defective notice. However, in case an individual wishes to change the gross total income or deduction claimed, one will be required to file a revised ITR. Here an individual will be required to quote the Original ITR number in the revised ITR form,” Bharech added.

Do note, that the time limit for filing a revised return is December 31, 2023 for FY 2022-23 (AY 2023-24). If this time limit has passed, then the taxpayer won’t be able to file a fresh or revised return. The only option remaining at that time would be to respond to the notice. Do note that the income tax laws allow an individual to file updated ITR in certain circumstances.

The Assessing Officer may provide the individual with an opportunity to rectify the defect within 15 days from the date of receiving the notice. However, the Assessing Officer is empowered to extend the time limit if the individua; makes an application for an extension of time,” said Wadhwa.

Now if a taxpayer is unable to respond to the notice, the ITR will be treated as invalid. This would mean that an individual has not filed ITR for that assessment year.

Submitting an ITR in response to a defective ITR notice does not invite any penalties. However, if the individual fails to file a revised return rectifying the defects, the return will be deemed invalid. In such a scenario, penalties may be imposed on the individual for the non-filing of the ITR,” said Wadhwa.

Further, it must be noted that if any additional tax liability is coming due to the rectification of a mistake in the defective ITR, then interest may be levied on the outstanding amount.

For example: say Mr. A had a tax liability of Rs 1 lakh according to his filed income tax returns, but the tax department thinks he has not disclosed an income for which his tax liability should be Rs 1.2 lakh. If Mr. A accepts this mistake and agrees with his tax liability being Rs 1.2 lakh and not Rs 1 lakh, then he will be needing to file a revised ITR. Now this will result in an additional tax of Rs 20,000 and for this penal interest due to late payment of tax may be levied by the tax department.

Read more at: Common Mistakes Leading to Defective Income Tax Returns: How to Avoid and Rectify Them