How to respond to defective income tax return

It is quite possible that a taxpayer will make mistake while filing his income tax return. This will be considered as a defective return. Income Tax Department will send you a defective notice under section 139(9) of the Income Tax Act via an email on your registered email id or post and the same can be viewed by logging in on the e-filing portal.

What is a defective return?
A return may be treated as defective on account of incomplete or inconsistent information in the return or in the schedules or for any other reason. Upon return being defective, the income tax department issues a notice and provides resolutions to correct the mistakes pertaining in the income tax return. 

What makes a return defective?
There are certain common factors that make a return defective. To avoid return being defective, following scenarios are required to be avoided:

• Credit for TDS has been claimed but the corresponding income has not been offered for taxation.
• The gross receipts shown in Form 26AS, on which credit for TDS has been claimed, are higher than the total of the receipts shown under all heads of income, in the return of income.
• "Gross Total Income" and all the heads of income is entered as "nil or 0" but tax liability has been computed and paid.
• Name of taxpayer in ITR does not match with the "Name" as per the PAN data base.
• Taxpayer having income under the head “Profits and gains of Business or Profession” but has not filled Balance Sheet and Profit and Loss Account.
• Incorrect Income tax return form has been chosen.
• Incomplete income tax returns
• Return filed with outstanding tax liability 
• In case of Audit applicability, details of such audits are not mentioned.

Notice u/s 139(9):
IT Department will issue the notice u/s 139(9) on your registered email ID. If your return is found defective, you will get 15 days of time from the date of receiving the notice or as the time duration specified in the notice to rectify the defect in the return filed by you. However, you may seek Adjournment and request for an extension. If you fail to respond to the defective notice within stipulated period then your return may be treated as invalid and therefore consequences such as penalty, interest, non-carry forward of losses, loss of specific exemptions may occur.

Filing fresh return:
There are two options to respond to such notices. You can either file the return as a fresh or revised return, in case the time provided for filing the return in a particular assessment year has not lapsed or alternatively you can also choose to respond to Notice u/s 139. However, once the time provided for filing the return for a particular assessment year has lapsed, you will not be able file the return as a fresh or revised return and you will have to respond to Notice u/s 139(9). If you are unable to respond to the notice, the return will be treated as invalid or not filed for that assessment year. The response submitted cannot be updated or withdrawn afterwards.

How to respond to Defective Return Notice u/s 139(9)?
Assessee will have to respond to such notice within 15 days’ time.

Two options to respond:

1. Revise return:

File a Revised return addressing the defects pointed out by the Income Tax Department within 15 days as a fresh revised return or in response to notice u/s 139(9).

2. Extension:

Due to certain unavoidable circumstances, you can apply for extension to respond.

This response has to be submitted online. A revised return will be filed as a fresh return which will replace the original return. Whereas, if you wish to respond to notice u/s 139(9), then a return has to be prepared and the JSON file of the same has to be uploaded as a response to such notice.

Preparing return in the TaxBase software will take you directly to the final verification stage of submitting the response. It will be redirected through the income tax portal as shown below:

Response in case of Notice regarding updated returns:
Tax payer can submit response against the defective notice triggered against updated return in the same manner as 139(9). Tax payer is required to select section as 139(8A) in response while responding to defective notice triggered against 139(8A) section in ITR.

Conclusion:
Response to defective return notice can be filed within 15 days of notice or as ordered. It can be done by revising the return or submitting the response as a JSON file correcting all the errors. While preparing ITR the factors that make a return defective shall be taken care of in a cautious manner.