A defect return notice has become one of the most commonly experienced issues by Indian taxpayers in recent times, especially with the course of e-filings and e-notices. A defective return notice is issued under Section 139(9) of the Income Tax Act, 1961, by the Income Tax Department if it finds there are some defects or errors within the taxpayer’s income tax return. Thereafter, it becomes the duty of the taxpayer to rectify the defects in the given time span. Failure to comply may void a return, with which penalties or prosecution in court may follow.
This blog outlined how to respond to defective notices, the reasons for defects, the time limit to respond and the consequences of default.
Introduction
In this Digital Age, online income tax return filing has also made taxpayers more careful about making mistakes. After filing the income tax return online, someone received a notice stating that it was defective, then do not get worried. It is common and it can also be rectified.
Having an error or omission in a tax return filed by a taxpayer leads to a defective return notice, issued under section 139(9) of the Income Tax Act, 1961.
The errors could be caused by omitting to submit certain documents or declaring certain sources of income. Then, it is required to respond within the specified time.
Knowing the Defective Return
An incomplete income tax return, either with incorrect information in the audit report, schedules, or for any other reason, is commonly referred to as a defective return. this has been dealt under Section 139(9) of the Income Tax Act.
If the Income Tax Department finds that your return is defective, it will send you a defective notice via email or post; the same can also be viewed on E-filing portal. The department will inform you about the errors and allow you a chance to rectify the same.
If taxpayers fail to rectify within the prescribed time, their filed tax return may be considered as invalid filing and may also render to other legal consequences.
Conditions where a defective return notice may be issued
While issuing a defective return notice under section 139 (9), the Assessing Officer may consider the below-mentioned grounds, mistakes, or omissions –
- Missing Tax information – Mismatch in name and incorrect details of limits of income or the turnover can lead to the issuance of notice.
- Unreported Income- All source of income must be declared, failing to declare one or more heads of source of income will lead to issue of defective return notice.
- Mismatched TDS & Income details- Any mismatch between income declared on the return and income details reported to tax authorities by financial institutions and employers.
- Incorrect deduction- Taxpayers claimed such deductions like 80C or 80D, under which he was not eligible to get the deduction.
- Incomplete documentation- Non submission of books of accounts or incomplete required documents in return filing may cause the defective return.
What to do after receiving Notice
You have two options: either file the return as revised or fresh if there remaining time to do it within the specified time frame for that assessment year or respond to Notice under Section 139 of the Income Tax Act, 1961.
However, you will not be allowed to file the return as a fresh or updated return after the deadline for filing the return for a specific assessment year has passed; thus, you must reply to the defective Notice.
Time limit to respond to defective Notice
Normally, the period for response is provided in the notice issued. However, in cases where the notice is defective, the period is 15 days from the date of the notice.
You can even ask for an extension by applying to the Assessing Officer (A.O.) asking for an extension of the date to file a revised return.
How to respond to defective return/rectify the return
To rectify the tax return or to respond to the notice, the taxpayers can easily get through this as follows-
- Navigating to the Tax filing portal- To reply to a notice for a defective return, log on to the Income Tax e-Filing Portal. There you will find all the notices issued to you, which also includes the defective return notice.
- Knowing the Defects mentioned in the Notice- Read the notice very carefully so you know which errors or omissions the income tax department has found on your filed return.
- Response to the Notice- If you believe that your return was filed correctly, a response to the notice may be submitted, or the errors identified by filing a revised tax return may be corrected.
- Prepare the additional documents- If the defects in return due to the omission of documents, there will be need of Collecting of all supporting documents and information to correct the filed tax return, which has been declared invalid.
- Rectification of Defect – For rectification of the defects in return, you can fix the errors according to the notice. For this the submission of additional income details and filling out missing information is required.
- Revised return Submission- After making all those changes, you can submit that same revised tax return with all corrections using the defective notice itself on the e-filing portal. We must also cross-verify whether all the information available is correct and complete or not.
Effects of non-responding Return Notice
It’s necessary to respond to the return notice. If you neither file the return nor respond to the notice within the 15-day or extended time, your return will be treated as invalid. It will be considered as non-filing your tax return and hence, the impact of penalty, interest, loss of carry forward of loss and some special exemptions may occur.
Conclusion
Dealing with a defective return notice appears to be very stressful at first instance, but once you understand the process, it’s quite manageable. The procedure for replying to a defective return notice under the Income Tax Act is covered under Section 139(9). It is a procedure that demands considerable care and caution. Rectification of defects in time and through the proper procedure will help the taxpayers not to be delayed in return or for unnecessary penalties.
On the other hand, taxpayers should be more careful at the initial stage about mistakes in their returns by providing complete and accurate information. If you ensure that you file your tax return correctly and check for common errors, then the chances of getting a defective return notice in the future will be very low.
Bibliography
The Income Tax Rules, 1962
The Income-Tax Act, 1961 (Act No. 43 of 1961)
