139(9): What is Defective Notice & How to Respond to It?
Updated: Nov 5
When doing something complex like submitting income tax forms, making an error or two is very acceptable. We might occasionally forget to enter crucial information. There might occasionally be a mistake. Under certain circumstances, the income tax department will issue a notice of defective return under Section 139 and classify your return as a "defective return" (9). This message is intended to assist you in fixing any errors. But if these problems aren't resolved right away, they could have some unfavourable effects. This post will go over situations when your return could be labelled as defective and how to reply to the u/s 139(9) defective return notification.
Table of Content
What is a Defective Return under 139(9)?
A defective return under Section 139(9) refers to an income tax return with errors or missing information, flagged by the tax authorities. When discrepancies are found, a notice u/s 139(9) is sent, requesting the taxpayer to correct the issues. The objective of the notice is to ensure all necessary data and correct computations are in the return. This notice is generally sent by email and can also be accessed on the Income Tax e-filing portal.
Reasons for a Defective Notice under 139(9) of the Income Tax Act
Under section 139(9), the Assessing Officer may take into account the following justifications, mistakes, or omissions when issuing a faulty return notice:
Incomplete Income Tax Return (ITR): When an ITR is filed without all the required information in its annexures, statements, or required columns—for example, when income from all sources is not reported, etc.
Missing Tax Information: If taxes, such as advance tax, TDS, TCS, and self-assessment tax, have been paid but their specifics are missing from the ITR.
Income Mismatch and TDS: TDS is reported. Nevertheless, the ITR does not supply the corresponding income for tax.
Income Tax Audit Concerns: Missing or incomplete audit reports, including balance sheets and profit and loss accounts, as mandated by Section 44AB. The full audit report, which includes the balance sheet, auditors report, and profit and loss account, should be filed if an audit is mandated by section 44AB. You run the risk of receiving a faulty return notice if you fail to submit these papers or if your audit report is not complete.
Bookkeeping Issues: Defective return notices may result from incomplete or non-submitted required books of accounts, including trading accounts, profit and loss accounts, balance sheets, and others.
Audit of Costs Non-compliance: A faulty return notice may result from failing to submit "Cost Audit" details as mandated by the Companies Act of 2013.
Presumptive Taxation Errors: When there is presumptive taxation, a defective return notice may be issued if the presumed income is computed incorrectly, pertinent information is withheld, or the gross receipts do not match. For example, a faulty return notice will result from gross receipts that are not included in the profit and loss account or when the amount in ITR 4 exceeds Rs. 2 crore.
Inaccurate information in ITR: A defective return notice may result from filing an ITR with inaccurate information about turnover, income limitations, or improper reporting for a particular head of income.
Tax Payment Discrepancies: A defective return notice may be issued if taxes are partially paid or if the amount paid differs from the tax due shown in the ITR.
Name mismatch: When a person's name on their PAN card and their ITR are different.
What to Do After Receiving a Notice under 139(9) of the Income Tax Act?
The income tax department will send you a notice under section 139(9) to the email address you provided when filing your ITR. Notices with the subject line "Communication u/s 139(9) for PAN AWZXXXXXXX for the A.Y.2023-24" are typically received from CPC. The email has the notice attached, which is password-protected. The date of birth in the format DD/MM/YYYY is the password to unlock the notification, which is PAN in lowercase.
After receiving an income tax notification under section 139(9), you have 15 days from the date of receipt by the Income Tax Department to amend your return. An extension of the time frame for filing a revised return may also be requested by writing an application to the Assessing Officer (A.O.). In practice, it is observed that even if a taxpayer fixes the error after the fifteen-day period has passed. Nevertheless, the Assessing Officer may accept the return as legitimate and excuse the delay before the assessment is completed. However, the first return filed is regarded as invalid if the response is not filed within 15 days or if the additional time is approved.
Response to Defective Notice under Section 139(9)
The taxpayer will receive notice if the Assessing Officer finds that the return is incomplete. The notice will be sent to the taxpayer, who will have 15 days to reply.
Within 15 days, amend your return to correct the errors the Income Tax Department found.
You may request an extension if you are unable to finish these adjustments in the allotted time.
Your return could be deemed invalid if the defect is not fixed within the allotted 15 days or the extended time frame. Consequences such as interest, penalties, loss carryover prohibitions, and forfeiture of certain exemptions might result from this.
Steps to Rectify a Defective Return
Step 1: Enter the Income Tax e-Filing portal and log in. Access the e-filing Portal for Income Tax. To access your account, enter your password and PAN number.
Step 2: Go to the 'e-Proceedings' page. Navigate to the 'e-Proceedings' tab after logging in. The notice is viewable here by selecting 'View Notices/Orders'.
Step 3: Recognise the issues raised in the notice. To comprehend the precise mistakes or omissions noted by the Income Tax Department, carefully read the notice.
Step 4: Get the required documents ready. To fix the problems, collect all the necessary paperwork and data. This can entail updated bank information, other revenue streams, or missing TDS certifications.
Step 5: Respond to the notice. To send your answer, click the notice and choose the appropriate option. You'll be taken to a particular section.
Step 6: Answer the notification. To send your answer, click the notice and choose the appropriate option. You'll be taken to a place where you can upload files and edit them as needed.
Step 7: Fix the errors. As instructed in the notice, fix the mistakes. This could entail updating income details, uploading required documentation, or filling in any blanks.
Step 8: Send in the updated return. Once all the adjustments have been made, use the e-Filing Portal to submit the updated return. To prevent more problems, make sure the information you offer is correct and comprehensive.
Step 9: The Income Tax Department will confirm receipt of your amended return with an acknowledgement after it is filed.
Difference between detective and invalid return
Features | Detective Return | Invalid Return |
Definition | A return that is suspected of being incorrect. | A return that is incorrect or incomplete. It can be corrected without any further investigations |
Cause | The causes are many like errors in data entry, fraudulent activities, tax laws misunderstandings. | It is caused by simple mistakes like incorrect calculations and missing information |
Investigation needed | A proper investigation is needed to check the accuracy and validity of the return. | No investigation is needed. |
Impact | Can have financial and legal consequences for the taxpayer if found to be fraud. | It may result in penalties and interest charges but have less impact than the defective return. |
Implications of Not Rectifying a Defective Return
There are potentially severe repercussions if a defective return is not fixed within the allotted 15 days (or any longer period of time). Initially, the return is deemed invalid, essentially indicating that it was never submitted. Penalties for failure to file and interest on any unpaid taxes result from this. You also forfeit the ability to roll over any losses to the following fiscal year. Prolonged non-compliance may result in legal notices and additional investigation by the Income Tax Department. In addition to making future tax returns more difficult, this might harm your creditworthiness and financial situation.
Conclusion
Not everything is lost when you receive a notice under Section 139(9). Correcting the errors as soon as possible will guarantee that your return is accepted, assist you in avoiding fines, and preserve your compliance with tax laws. Taking swift action to respond to the notice maintains a hassle-free and spotless financial record.
FAQ
Q1. What is section 139(9) of the Income Tax Act?
If an assessee files an income tax return with inaccurate or missing information, they will receive notice under section 139(9) of the Income Tax Act. You have fifteen days from the date of this notice to respond. The assessee may request an extension of the deadline by submitting a letter to the department if they are unable to reply to the notification.
Q2. By which mode will I get the defective notice?
The IT department will send you an email with the subject "Important - Fix the error in your income return." The tax filer receives an SMS alert from the department notifying them that the notification has been delivered to their registered email address.
Q3. How do I respond to a notice under section 139(9) when the tax payable exceeds the tax paid in return?
If the tax payable in the submitted return is more than the tax paid, this mistake happens. The tax must be paid in full, with interest, to the income-tax department in the amended return in order to correct this error.
Q4. What happens if one does not respond to the defective return notice?
You may face penalties, interest, loss carryover, and loss of certain exemptions if you fail to make corrections to your return within the allotted 15 days or more. Your return will be deemed invalid and handled as if it was never submitted.
Q5. How do I know if my income tax return is defective?
The IT Department will send you a defective notification under section 139(9) on your registered email address if your return is flawed. You can also read the defective notice by visiting the e-filing site.
Q6. What is error code rule 37BA in return notice under Section 139(9)?
When replying to notice u/s 139, error code rule 37BA is frequently observed(9). This code indicates that the gross receipts on your Form 26AS are greater than the total receipts reported under all of your income heads in your ITR.
Q7. How should a taxpayer respond to a defective notice under Section 139(9)?
A taxpayer must log in to the Income Tax e-filing portal, review the errors mentioned in the notice, correct the defects in the return, and submit the revised return online within the specified time frame, usually 15 days from the date of notice.
Q8. What happens if a taxpayer fails to respond to a defective notice under Section 139(9)?
If a taxpayer does not respond or rectify the errors within the stipulated time, the original return may be treated as invalid, resulting in the taxpayer being considered as not having filed a return, which could lead to penalties and loss of refund claims.
Q9. Can a defective return be corrected multiple times under Section 139(9)?
Yes, a taxpayer can correct the defective return multiple times within the given period until all defects are resolved. However, it is advisable to ensure accuracy in the first corrected return to avoid further complications.
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