Defective Return

What is Defective Return?

Sometimes when Income Tax Return is filed, we may miss to furnish certain information or they could be an error. Nonetheless, in such circumstances, a Defective Return Notice is issued by the Income Tax Department as per sec 139(9) to rectify them.

When can a notice for Defective Return be issued?

  • When return is not submitted in the prescribed form with all annexure and statement duly filled.
  • When the details of taxes paid are provided in the return but the income details are not provided.
  • The name mentioned on the Income-tax Return does not match with the name on the PAN card.
  • When you are required to maintain Balance Sheet and Profit & Loss statement, but have not filed the same.
  • When you have not paid your taxes in full and filed the return.
  • Some other reason as considered by the Income-tax department.

What is the maximum time limit to rectify?

Return should be revised within the stipulated time period addressing the defects within 15 days from the receipt of intimation order under section 139(9). Assessee can seek extension in the time period by writing to the concerned Assessing Officer. 

How to revise income tax return in response to notice of Defective return U/s. 139(9)

Step 1: Login to e-filing portal

Step 2: Now click on “e-File” and choose “e-File in response to Notice u/s 139(9)” from the dropdown options.

Step 3: On successful validation, if there is any defective notice raised by either CPC/AO, the below screen will be displayed, click on “Submit” to reply to notice.

Step 4: On submit you will be redirected to below screen,

If you agree with the defect then select “Yes” and upload the revised/rectified xml.

If you disagree with the defect then select “No” and you need to provide the reason for disagree. And click on “Submit” to complete the process.

Risk Management Process – confirmation for claim of refund

What is it?

It is just a confirmation from the taxpayer that the refund claimed by them is correct to the best of their knowledge. And the response should be made within 30 days of receipt of this e-mail.

How to submit the response?

An assessee is required to submit their response in the e-Filing Portal post login by selecting either of the following options:

  • The claim of refund is correct to the best of my knowledge and belief
  • Return of Income is being revised wherein, correct claim of refund shall be made.

To submit the above mentioned response, please login to e-Filing portal, Go to Worklist->For Your Action-> Response for Refund Confirmation.

What is Intimation u/s 143(1)?

Intimation under Section 143(1) of the Income Tax Act can be issued to begin a summary assessment without calling the taxpayer. In a summary assessment, the tax officer would not call for additional information or documents as requested in a scrutiny assessment.
An income tax notice under Section 143(1) will be issued in any of the following scenarios:

  • Additional tax is payable by the assessee, after making adjustments mentioned below and giving credit to the taxes and interest paid. In such a case, the taxpayer will be asked to pay the amount due within 30 days.
  • Tax is refundable to the assessee, after making adjustments mentioned below and giving credit to the taxes and interest paid.
  • There is an increase/decrease in the loss declared by the assessee and no tax or interest is payable by the assessee and no interest is refundable to the assessee.

The total tax payable, refund applicable or loss can be recomputed due to any of the following reasons:

  • Any arithmetical error in the return.
  • An incorrect claim, if such incorrect claim is apparent from any information in the return.
  • Disallowance of loss claimed, if a return of the previous year for which set-off of loss is claimed was furnished beyond the due date specified under section 139(1).
  • Disallowance of expenditure indicated in the audit report but not taken into account in computing the total income in the return.
  • Disallowance of deduction claimed u/s 10AA, 80IA to 80-IE, if the return is furnished beyond the due date specified under section 139(1).
  • Addition of income appearing in Form 26AS or Form 16A or Form 16 which has not been included in computing the total income in the return

Intimation under section 143(1) shall be sent before the expiry of one year from the end of the financial year in which the return is made. For example if the return is filed on 25.07.2018, then the intimation u/s 143(1) can be sent on or before 31st March 2020.

Intimation u/s 143(1) is sent in the following cases:

  1. When there is no mismatch:
    It’s likely that all of the fields are matching and there is refundable or no tax due – in such a case you can safely assume the intimation to be an acknowledgement of your tax return. No further action is required from your side.
  2. When there is a Demand and you agree with it:
    You need to make payment of this tax due to the income tax department. Once you make a payment of the tax due, no further action is required from your end.
    The Taxes can be paid by a taxpayer through any one of following modes:
    • Through Bank (physical)
    • Online payment
  3. Where there is a Demand and you do not agree with it:
    It can be corrected through two ways.
    • Rectification Request: A rectification request under section 154(1) is allowed by the Income Tax Department for correcting mistakes when there is an apparent mistake in your ITR
    • Revised Return: Revised Return under Section 139(5) of the Income Tax Act can be filed only if you have made any mistakes in your original income-tax return.

What does communication under section 143(1)(a) means?

Notice u/s 143(1)(a) is an intimation from the Central Processing Centre (CPC) seeking clarification of the mismatch between the Income and deduction when compared to Form 16, Form 16A or Form 26AS.

How to provide response to Communication u/s 143(1)(a)?

Step 1: Login to the Income tax portal
Step 2: Go to e- Proceeding tab and select e-Assessment/Proceedings.

Step 3: After clicking on “e-Proceeding”, you will see a screen as given below. Click on Adjustment u/s 143(1)(a)’.

Step 4: After selecting the proceeding name for the respective Assessment year, the following screen will be displayed. Click on Reference ID to view the notice and to provide the response please select the submit option.

Step 5: Now you have to select whether you ‘Agree’ or ‘Disagree’ with the adjustments in the notice and accordingly you have to select the same.

Step 6: If you Select ‘Agree or Partial Agree’, you have to file a revise return after providing necessary adjustments. If you select Disagree the following screen will be displayed and then you will have to mention the reasons for your disagreement. The reasons are same as those mentioned above. 
Enter the necessary details and click on ‘submit’ and once you submit your response, you will see an acknowledgement screen.