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It is natural to make a mistake or two when you do something you don’t do often 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 such cases, your return is considered as a ‘defective return’ and the income tax department will issue a notice of defective return as per Section 139(9) to rectify the errors.These mistakes, if not rectified in time, can lead to not-so-pleasant repercussions.In this article,we shall talk about situations which render your return as defective and how to deal with the notice issued by the IT Department.
The Assessing Officer may consider the below-mentioned reasons, errors or omissions to issue a notice of defective return under section 139 (9):
1. Incomplete ITR-In case income tax return is incomplete, or there is an omission of details in the annexure, statements and columns which are mandatory. For instance, while claiming deduction under section 80D, its schedule details are not filled or wrongly filled.
2. Missing information on taxes-Taxes paid, but their details are missing in the income tax return. Details of taxes paid like TDS / TCS / advance tax or self-assessment tax should be mentioned while filing the income tax return.
3. TDS claimed but corresponding income not offered for tax-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 tax return. However, if TDS has been claimed but interest income has not been reported in the tax return you may receive a defective notice. While filing return through Cleartax portal, there is an option to upload 26AS, so as to negate this defect from the very beginning.
4. Related to books of accounts– If books of accounts are to be maintained, incomplete submission or non-submission of books of accounts including trading account, Profit and Loss account / Income or expenditure account, Balance sheet, Personal capital account (proprietor, partners, AOP, BOI), etc. as prescribed by the law will lead to defective return notice.
5. Related to Income Tax Audit– If an audit is required to be done under section 44AB, the complete audit report, including profit and loss account, Balance sheet, 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. Related to Cost Audit-If the entity has to mandatorily conduct ‘Cost Audit’ under the Companies Act, 1956, and fails to submit its details, then the return filed will be considered as defective, and notice may be issued.
7. Related to Presumptive Taxation-If regular books of accounts are not required to be maintained or if the return is filed under the provisions of presumptive income, you may receive a defective return notice if the computation of the taxable income is less than the prescribed rate of 8% or 6% of the turnover / gross receipts. Also, in such cases, non-disclosure of details related to sundry debtors, sundry creditors, stock and cash in hand will lead to notice. For instance, gross receipts not mentioned in the Profit and Loss account, or the amount mentioned is more than Rs. 2 crore is ITR 4, will lead to a notice of defective return.
8. Unpaid taxes-Partial payment of taxes against liability or if taxes paid but the amount does not match the tax payable in the income tax return, the department may issue a defective return notice.
9. Incorrect details in ITR– ITR filed is incorrect in terms of the turnover/ income limit or not applicable for the reported head of income as prescribed. Such return filed will be considered as defective, and notice shall be issued.
10. Mismatch in the name-The name mentioned on the income tax return does not match with the name on the PAN card.
If the Assessing Officer considers the return filed to be defective, then notice of defective return shall be sent and the assessee will have an opportunity to rectify the defect within a period of fifteen days from the date of receipt of such notice. This AO may consider to further allow an extended period on the ground of application.
Step 1: You must revise your return addressing the defects the Income Tax Department has pointed out within a period of 15 days from the receipt of intimation order under Section 139(9).
Step 2: You can seek an extension by writing to your local Assessing Officer if you fail to revise your income tax return within 15 days.
If the defect is not rectified within a period of fifteen days or the extended days allowed,the original return will be treated as an invalid return. This means it will be considered as if no income tax return has been filed.
Step 1: Open the income tax e-filing website and log in to your account with User ID and password.
Step 2: Click on ‘e-File’ tab and select the option ‘e-File in response to notice u/s 139(9)’. A list of defective return notices will be displayed based on your case.
Step 3: Choose an ITR form based on the assessment year and click on ‘Submit’ to view/download the defective notice issued by the assessing officer.
Step 4: Once you submit, you will be required to file the complete Income-tax return just like a normal ITR. You can do so either through ClearTax or using the Income-tax department’s utility.
Make sure you are correcting addressing the error due to which return was considered defective.
Please Note -Defective Return Notice can be issued either by the Assessing Officer( AO) or Central Processing Centre (CPC) . In both the cases, the display of the screen will be different.
(A) If Defective return notice is issued by Assessing Officer: If the defective return notice is issued by the AO, then the display on the screen will be as below
(i)Enter the details such as the document identification number (provided on the notice) and the acknowledgement number, the date of communication in the XML file to be uploaded.
(ii)Generate and upload the XML file on the ‘attach ITR XML file’ tab.
(iii)You will see a confirmation message with an acknowledgement number on the screen upon successfully uploading as below.
(B) If Defective return notice is issued by Central Processing Centre:
If the defective return notice is received by the CPC, below mentioned screen will be displayed.
(i)If you agree with the defect mentioned in the notice of defective return then you have to complete your Income Tax Return by rectifying the defect.You need to mention the document identification no/ reference number and the date of communication in the xml file to be uploaded.Once you do that then generate its xml file and upload it in the above screen.
(ii)In case you do not agree with the defect, then please select ‘ No’ and give ‘ remarks of the assessee’ as below with reason and click on ‘ submit’.
(iii)Once you submit, below mentioned screen will be displayed giving you a confirmation of return filed in response to notice u/s 139 (9)
In a nutshell, responding to a defective return notice is not time-consuming anymore like earlier thanks to the technological advancements. If you choose to file your returns with Cleartax, not only is the process quick, but we will also ensure that you do it in an error-free manner. Do not miss the D-day – 30th November 2020.
You have respond to notice with in 15 days form the date of such notice. You can ask for extension of further 15days by writing to your local assessing officer.
You if don’t rectify the return within 15 days or extended time, your return will be considered as invalid and treated as if you have not filed your return.