Section 139(9): Defective Return Notice

Indian Tax law is quite complex and most taxpayers may not be aware of all the rules while filing their ITR. As a result, it is common for taxpayers to encounter errors while filing the ITR. When the ITD conducts verification and identifies such errors or discrepancies they issue a defective return notice under section 139(9) of the Income Tax Act. If the taxpayers do not respond to this notice within the specified time frame then it could lead to undesirable consequences. To avoid this and promote voluntary compliance ITD provides various documents such as 26AS, AIS, TIS, etc. which should be checked before filing the ITR.

• What is 139(9) – Defective Income Tax Return Notice?
• Reasons for Defective Return Notice u/s 139(9) of Income Tax Act
• Sample Notice u/s 139(9)
• How will I Receive Notice u/s 139(9)?
• How to respond to notice u/s 139(9)?
• Consequences of Non-response
• FAQs

What is 139(9) – Defective Income Tax Return Notice?

A defective return notice is issued when an income tax return contains errors, omissions, or inconsistencies, preventing accurate processing. Common reasons include missing or incomplete information, undisclosed income, or not following filing guidelines. It allows the taxpayer to correct and resubmit the return for compliance. The taxpayer has to respond within 15 days of receiving the notice.

Reasons for Defective Return Notice u/s 139(9) of Income Tax Act

The common reasons for defective return notice u/s 139 (9) of the Income Tax Act are as follows:

Mismatch in TDS and Income Details

The department issues a defective return notice under section 139(9) when they identify a mismatch between the income details filed in the return and the TDS deducted as per Form 26AS.

For Example:

Ajay earned income from freelancing during FY 2022-23. Freelancing income is considered professional income, and TDS is deducted u/s 194J of TDS. However, he reported the income under the Income Head Salary. Here, he would receive a defective return notice with a mismatch in TDS and Income Details.

Mismatch in Tax Dues

The department issues a defective return notice under section 139(9) when there is a disparity between the total taxes paid and the total taxes payable in the filed return.

Return filed without P&L and Balance Sheet

Individuals are required to maintain their P&L and Balance Sheet under the following two conditions:

• Books of accounts are required to be maintained u/s 44AA.
• An individual is not eligible to opt for the presumptive taxation scheme u/s 44AD, 44ADA, and 44AE.

The IT Department issues a notice u/s 139(9) if the return is filed without P&L and Balance Sheet details. You can check the Schedule P&L and Schedule Balance Sheet in the filed ITR to know the defect.

For Example:

Aman is a general commission agent and he earns commission income from different companies during FY 2022–23. In this case, his income falls under the head of Business and Profession. He did maintain the P&L and Balance Sheet. But while filing his return for FY 2022–23, he forgot to fill in details in the Balance Sheet. In this case, he would receive a defective return notice for a return filed without a P&L and Balance Sheet.

Return is filed without Tax Audit Report

Section 44AB of the Income Tax Act has prescribed the criteria for a tax audit. If taxpayers fulfill such criteria then they have to submit a tax audit report along with an income tax return. In case they had not filed the tax audit report then the department can issue a notice under section 139(9).

For Example:

Bharat is a salaried individual who also does F&O Trading. His turnover from trading is INR 10 crore. Here, he is required to get his books of accounts audited as per section 44AB. But while filing ITR-3 for FY 2022–23, he did not get his books of accounts audited. In this case, he would receive a defective return notice for the return filed without a tax audit report.

Not eligible for Presumptive Taxation Scheme

If the taxpayer had opted into the presumptive scheme of taxation while filing the return, but he had not provided all the relevant information or had provided any inaccurate data then they may receive a defective return notice.

Furthermore, as per 44AB, if you opt out of the presumptive taxation scheme before the completion of five assessment years, and do not get a tax audit done then a defective return notice may be received.

Mismatch in Name and PAN

If there is a mismatch between the name as per the PAN database and the name as per the ITR filed, the taxpayer might receive a defective return notice.

Sample Notice u/s 139(9)

How will I Receive Notice u/s 139(9)?

The system auto-generates the notice u/s 139(9) of the Income Tax Act and communicates it to the assessee via the registered email address. The sender of these emails is CPC i.e., the Central Processing Center. The notice is attached to the email, and it is password-protected. The password to open is PAN in lower case and the date of birth in DDMMYYYY format. e.g., aagpr1212a02101980 for PAN: AAGPR1212A and DOB: 02/10/1980.

How to respond to notice u/s 139(9)?

Here’s how you can submit a response to the notice u/s 139(9) of the income tax act.

1. Login to the e-filing portal and Navigate to Pending Actions > E-Proceedings from the dashboard.
2. Click on View Notices You will be able to view the proceeding name [Defective notice u/s 139(9)] and your return acknowledgment number here.
   
3. Submit Response After understanding the notice, click on the submit response option. Make sure to submit a response before the response due date mentioned here.
   
4. Agree or Disagree Choose from the options provided as to whether you agree or disagree with the notice.
   
5. Agree with the Notice If you agree with the notice, you can file a corrected return by attaching a JSON file here.
   
6. Disagree with Notice If you disagree with the discrepancy mentioned by the ITD, you will have to provide a reason for disagreement here.
   
7. After entering the reason click on Submit and it is done you will see a confirmation message with an acknowledgment number on the screen upon successful uploading.

Consequences of Non-response

If the taxpayer fails to file a response to the notice issued within a 15-day time frame, then the department will consider their original return as an Invalid return. Hence, it will be considered as the taxpayer hasn’t filed the return for such a financial year. Further, the interest and penalties may be levied for non-filing of return.

FAQs

No, there is no option to change or withdraw the response after submitting it.

You can file the revised return. However, this return is to be filed u/s 139(5) and not under 139(9) with details of the original return. The due date to file a revised ITR is 31st December of the relevant assessment year.

You will receive an acknowledgment of the email you mentioned in return. You can also download the same from your account on the income tax e-filing portal.

No. There is no need to e-verify the ITR filed in response to a defective return notice.

The password to open is PAN in lower case and the date of birth in DDMMYYYY format. e.g., aagpr1212a02101980 for PAN: AAGPR1212A and DOB: 02/10/1980.

Yes, you can ask for an extension of time and seek an adjournment to submit a reply to the defective notice u/s 139(9).

Got Questions? Ask Away!

Originally published at: How to Respond to 139(9) of Income Tax Act - Learn by Quicko

The obligation to file an Income Tax Return (ITR) annually is a universal mandate for all individuals. However, given the intricate nature of tax laws and the infrequency with which most taxpayers engage with them, filing errors and discrepancies are very common. Hence, in such situations, Income Tax issues a defective return notice under Section […]

I have received a defective return notice for non-filing of the audit report. How to respond to that?

1. Submit a Tax Audit Report prepared by CA,
2. Prepare a revised return,
3. File response on Income Tax E-filing Website.

Hope this helps!

I filed my return with tax dues and got notice u/s 139(9). What should I do if the time limit has expired for response u/s 139(9) and I wish to file a response?

I forgot to mention balance sheet details in ITR-3 and received a notice. What is the solution?

1. Prepare a revised return including balance sheet details,
2. File response on Income Tax E-filing Website for the notice.

You can file the revised return from your login on Income Tax E-filing Website. File this return u/s 139(5) and not under 139(9) with details of the original return

Hey @emmy You can file the revised return from your login on Income Tax E-filing Website. File this return u/s 139(5) and not under 139(9) with details of the original return.

It has a note saying “An opportunity was given to you to correct the defects of the return in accordance with section 139(9) and the present communication is being sent after taking into consideration taxpayer response, if any.”

• Should I file a new return ? OR
• Whether to raise a query on grievance portal regarding non receipt of defective notice ?

Hey, Firstly, you will have to log in to the e-filing portal. Go to pending actions>response to outstanding demand. Here, you will be able to see the date on which the notice was issued to you. Now, in case the notice was issued and you were unable to reply on time, you will have to file a new ITR. But, if you did not receive any notice, you can raise a grievance. Hope this helps!