Section 139(9): Understanding the Defective Return Notice under the Income Tax Act

Introduction

Filing income tax returns is a crucial task for every taxpayer. However, it is not uncommon to make mistakes or overlook certain details while filing. In such cases, the income tax department may issue a notice of defective return under Section 139(9) of the Income Tax Act. This notice aims to rectify any errors or inconsistencies in the filed return. In this comprehensive guide, we will delve into the intricacies of Section 139(9) and explore the process of responding to a defective return notice.

What is a Defective Return?

A defective return refers to an income tax return that mistakes, or inconsistencies. These mistakes could range from incomplete information to incorrect calculations or failure to disclose certain income sources. When the income tax department identifies such discrepancies in a filed return, they issue a notice of defective return under Section 139(9).

Receiving the Defective Return Notice

The income tax department sends the defective return notice to the taxpayer's registered email address. The subject line of the email typically reads "Communication under Section 139(9) for PAN [Your PAN Number] for the Assessment Year [Assessment Year]." It is essential to regularly check your email and ensure that the email address registered with the income tax department is up to date.

Understanding the Defects

The defective return notice highlights the specific defects or discrepancies found in the filed return. The defects could include incomplete income tax returns, missing tax information, mismatch between TDS and income, bookkeeping issues, non-compliance with tax audits, and more. It is crucial to carefully review the notice and understand the exact nature of the defects mentioned.

Responding to the Defective Return Notice

Upon receiving the defective return notice, taxpayers have 15 days to respond and rectify the identified defects. Failure to respond within the stipulated timeframe can result in further consequences, such as penalties, interest, and non-carry forward of losses. To effectively respond to the notice, follow the steps outlined below:

Step 1: Identify the Reason for the Defect

Carefully review the defective return notice to understand the specific reason for the defect. Common reasons include incomplete income tax returns, missing tax information, TDS and income mismatch, bookkeeping issues, non-compliance with tax audits, and more. Identifying the exact reason will help you address the defect accurately.

Step 2: Revise Your Return

Log in to your Cleartax account and navigate to the "My Tax Returns" section. Locate the filed return that received the defective notice and click on "View Details." Scroll down and click on "Mark your ITR as Revised" to initiate the revision process. Add the missing income details or rectify any errors as per the defects mentioned in the notice.

Step 3: Verify and Pay Taxes (if applicable)

After making the necessary changes in your revised return, review the tax payable section. If there are any outstanding tax liabilities, ensure that you make the payment and update the challan details. This step is crucial to ensure that your revised return reflects accurate tax calculations and complies with the income tax regulations.

Step 4: Prepare Rectification JSON

Once you have finalized the changes in your revised return, navigate to the "My Accounts" section in Cleartax and click on "Prepare Rectification JSON u/s 139(9)." Select the option stating that your tax return is final and ready for filing under Section 139(9). Enter the CPC notice number and date of the notice provided in the defective return email. Download the JSON file generated by Cleartax.

Step 5: Respond on the Income Tax Portal

Log in to the income tax e-filing portal using your user ID and password. Access the "Pending Actions" section and select "E-proceedings." Click on "View Notices" to view the defective return notice. Read the error description and select the appropriate response option - "Agree" or "Disagree." If you agree with the defect, choose the "Offline utility" mode of response and upload the JSON file downloaded from Cleartax. If you disagree, provide the reasons for disagreement in the text box provided.

Step 6: E-verify your Response

After submitting your response, proceed to e-verify it using any of the available methods on the income tax portal. This step ensures the authenticity and validity of your response to the defective return notice. Once successfully e-verified, you will receive a confirmation message with an acknowledgement number.

Conclusion

Section 139(9) of the Income Tax Act plays a crucial role in rectifying defects and ensuring accurate income tax returns. If you receive a defective return notice, it is essential to respond within the designated timeframe and rectify the identified defects. By following the steps outlined in this guide, you can effectively address the defects and comply with the income tax regulations. Remember, timely response and rectification will help you avoid penalties, interest, and other undesirable consequences. Stay informed, be proactive, and ensure the accuracy of your income tax returns.