If you received a defective return notice from the tax department, you must move quickly to update your income tax return. This blog will go through how to reply to a defective return notification as well as the distinction between defective and void returns. We will also provide you with some pointers on how to prevent receiving similar alerts in the future.

Filing tax return scares many. You may get a notice from the tax department about a faulty return despite taking precautions. It can worry you, but you need to respond promptly and take action.

What is a Defective Return Notice?

A defective return notification is a message from the tax department informing you that your income tax return has errors or omissions. This notice gives you the option to remedy the errors and file a corrected return within the timeframe specified. If you fail to react to this notice, the tax department may reject your return. As a result, it is essential to act promptly and accurately in response to a defective return notification.

Difference Between Defective and Invalid Return:

The primary distinction between a defective and an invalid return is that a faulty return can be remedied by filing a revised return, whereas an invalid return cannot be fixed or re-filed. A defective return has errors or omissions that must be corrected, but an invalid return has not been filed by the due date or has other major faults that make it undesirable.

If you receive a defective return notification, you still have the opportunity to remedy the errors and file a revised return within the time frame given. If your return is deemed invalid, you may face penalties and other consequences from the law. To avoid obtaining an invalid return notice, it is critical to file your income tax return on time and accurately.

What Is the Reason for Defective Notice 139 9?

• Incomplete ITR – Filing the Income Tax Return: You need to complete the annexures, statements, and columns in the income tax return accurately. For instance, when claiming a deduction under Section 80G, the relevant details must be properly filled in its schedule.
• Missing Tax Information: If tax, along with any applicable interest, is paid before filing the return, ensure that all related details are correctly entered. For example, the BSR code, date of challan, and challan serial number must be accurately filled in.
• Mismatch in Information: Ensure that the tax actually paid matches the tax payable as per the income tax return. If there is a discrepancy or if taxes are not fully paid, it needs to be addressed.
• Presumptive Taxation Scheme: When filing ITR 4, if the presumptive income shown is less than 8% or 6% of gross turnover or receipts, you should file ITR 3 instead. Also, ensure that gross receipts are mentioned in the Profit & Loss Account. If the income under Section 44AD exceeds ₹2 Crore in ITR 4, the correct form should be used.
• Filing Under Section 44ADA: If you filed your return under Section 44ADA with gross receipts exceeding ₹50 lakhs without a Balance Sheet and Profit & Loss statement, you will receive a notice to file ITR 3 with audited financials.
• Budget 2023 Presumptive Taxation Limits: The presumptive taxation limit has been increased to ₹3 Crore for Section 44AD and ₹75 lakhs for Section 44ADA, subject to 95% of receipts being through online sales.
• Maintaining Books of Accounts: You are required to maintain regular books of account, including Balance Sheets and Profit & Loss statements, and these must be filled in the return.
• TDS Claimed but Income Not Mentioned: If tax deducted at source (TDS) has been claimed as a refund, ensure that the corresponding income details are provided in the return.
• Income Tax Audit Requirements: If your books of accounts have been audited, include a copy of the audit report and audited financial statements with your return.
• Cost Audit Requirements: If your entity is required to conduct a cost audit, provide detailed information in the return.
• Mismatch in Name: Ensure there is no name mismatch between your PAN and the Income Tax Return.

What Shall I Do After Receiving Notice u/s 139(9)?

Upon receiving an income tax notice under Section 139(9), you must correct and revise your return within 15 days from the date of receipt. If needed, you can request an extension by writing to the Assessing Officer (A.O.). Practically, even if the defect is rectified after 15 days but before the assessment is made, the Assessing Officer may condone the delay and consider the return as valid. However, if the response is not filed within 15 days or any granted extension, the original return will be treated as invalid.

Can I Withdraw the Response to Defective Notice u/s 139(9)?

Previously, you could withdraw your response to a defective notice under Section 139(9). However, this functionality is no longer available. Now, you cannot withdraw the response; instead, you can only update or view it.

How to Respond to a Defective Return Notice:

Follow these steps to react to a defective return notice:

• Examine the Notice: Read the notice sent by the tax department carefully and comprehend the cause of the defect.
• Make the appropriate revisions to your income tax return and file a revised return to correct any errors. Make certain that you correct all of the errors listed in the notification.
• Submit the Revised Return: Once you’ve made the modifications, file the revised return on the IRS website or through a tax professional.
• Keep track of your updated return and make sure it is handled by the tax department.

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Tips to Avoid Defective Return Notices:

Here are some tips to avoid receiving defective return notices in the future:

1. Take Your Time: When filing your income tax return, take your time to ensure that you have submitted the proper information.
2. Check: Before submitting your income tax return, double-check all of the facts.
3. Be on Time: To avoid late filing penalties, file your income tax return before the due date.
4. Seek specialist Assistance: If you are unsure about submitting your income tax return, seek the assistance of a tax specialist.

Conclusion:

It can be distressing to get a defective return notice, but it is not the end of the world. To avoid future penalties or consequences, take prompt action, repair the errors, and file a revised return. Furthermore, follow the advice given above to avoid receiving such notices in the future. Remember that completing income tax returns is not only a legal requirement, but it is also an important step toward financial planning and management.

To summarize, receiving a defective return notice can be concerning, but it is critical to take prompt action and respond appropriately. At Vakilsearch, we understand the necessity of tax compliance and the implications of noncompliance. Our team of specialists can help you file income tax returns and respond to defective return letters, avoiding penalties and legal ramifications. Furthermore, we can offer you useful insights and pointers on how to avoid receiving similar alerts in the future. Trust Vakilsearch with all of your tax-related concerns and put your financial planning and management in capable hands.

Frequently Asked Questions

How to reply for a defective return?

To reply to a defective return, log in to the income tax e-filing portal, navigate to the 'e-Proceedings' section, and select the notice. Review the error details, make the necessary corrections in your return, and submit the revised return within the specified deadline.

What if I don't respond to a defective notice?

If you don't respond to a defective notice within the given timeframe, your original return will be treated as invalid. This means it will be considered as if you never filed a return, which could result in penalties and loss of benefits associated with timely filing.

How do I respond to my ITR notice?

To respond to your ITR notice, log in to the income tax e-filing portal, go to the 'e-Proceedings' or 'Compliance' section, select the relevant notice, and follow the instructions provided. Ensure you provide all requested information and submit any required documents within the stipulated timeframe.

What to do in case of a defective return?

In case of a defective return, carefully read the notice to understand the errors identified. Correct the mistakes in your return, ensuring all required details are accurate, and submit the revised return through the income tax e-filing portal within the specified deadline.

What is the penalty for defective return?

There is no specific penalty for filing a defective return. However, if the defect is not rectified within the given timeframe, the original return will be treated as invalid, leading to potential penalties for non-filing or late filing, along with interest on any unpaid taxes.

What happens if you don't respond to a notice?

If you don't respond to a notice from the Income Tax Department, you may face penalties, interest on unpaid taxes, and other legal consequences. The return may be treated as invalid, and you could miss out on benefits and deductions, potentially resulting in higher tax liability

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