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

Under section 139(9) of the Income Tax Act, 1961, if the filed Return has discrepancies or missing information, it is called a defective return. The Assessing Officer will send the taxpayer a notice about the defective return, requiring the taxpayer to rectify the issue that makes the return non-compliant with the Income Tax Act, 1961 provisions. The taxpayer is provided 15 days to fix the problem from the date of the defect return notice issued by the Income Tax department. If the issues in the tax return are not corrected within the stipulated time, the Income Tax return (ITR) will be considered as not filed, and all the consequences of non-filing ITR will be binding on the taxpayer. This article will describe how we can respond to a Defective Return notice under section 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.

Action Taken by Taxpayer on Receiving Defective Notice

When the taxpayer receives the defective return notice under section 139(9), the taxpayer should respond to the Income Tax Department after correcting the earlier return within 15 days. The taxpayer can also request an extended filing date by writing to the assessing officer and providing condonation for the delay. The income tax department accepts the condonation of delay and considers the revised ITR valid beyond 15 days before the assessment.

Consequences of Not Responding to the Defective Return Notice

If the taxpayer does not respond to the defective return notice of the Income Tax Department within 15 days or the extended time provided by the Assessing Officer, his ITR will be considered invalid as if it were not filed. All the consequences of ITR non-filing will apply to the taxpayer. These consequences include a delay in tax refund, interest on unpaid taxes, disallowance to carry forward losses, etc.

How will the Notice be Received Under Section 139(9)?

The Centralised Payment Centre (CPC), Bengaluru, sends the defective return notice to the taxpayer at their registered email address with the Income Tax Department. The password to open the notice is PAN in lower case and Date of Birth in the DDMMYYY format.

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

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’.