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

What is a Defective Return?

A return is considered defective if any relevant information is omitted or reported incorrectly. 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.

Step 1: Check the Reason for the 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. interest income from term deposits, dividend income or any other income.

Some of the major reasons for a defective return notice are listed below –

• Incomplete Income Tax Return (ITR): An ITR is deemed incomplete if it is filed without the requisite details in its annexures, statements, or mandatory sections, such as failing to report income from all sources.
• Missing Tax Information: Prior to filing the return, the tax and any applicable interest are not paid, and all relevant information is left blank or incorrect details are filled. For instance, the challan serial number, date of challan, and BSR code should all be correctly filled in.
• Mismatch in Information - The total amount of taxes paid is either not paid in full or is less than the amount payable on the income tax return.
• Bookkeeping Issues - Regular maintenance of accounting books, including Balance Sheets and Profit and Loss statements, is required, but they were not submitted in income tax return during filing.

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 2: Once you identify the reason, log in to ClearTax and prepare the ITR u/s 139(9) 
 

1. Log in to ClearTax with your credentials

2. On the top right corner >> Click on ‘My Account’ >> Select ‘My Tax Returns’ from the dropdown menu as shown below.

3. Click on ‘View details’, scroll to the bottom, and click on ‘Mark your ITR as Revised’.

4. Add the income details you missed disclosing in your original ITR and rectify the defect.

5. After making the necessary changes, kindly check if any tax is payable. If yes, then make the payment and update the challan details. (Refer to this guide) 

6. Once done, go to ‘My Accounts’ section again >> click on ‘Prepare Rectification JSON u/s139(9)’. 

7. Click on ‘My tax return is final and ready for filing under section 139(9)’. Enter CPC Notice number and date of notice from the email you received from the department and click on download JSON.

You will have to upload this JSON file on the income tax portal. The steps are listed below.
 

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 Platform.

6. You will see a confirmation message with an acknowledgement number on the screen upon successful uploading.

7. 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

8. Check the box ‘Response cannot be modified after submission’ and then click on ’Submit’.