“Defective Return”- De jargonized in 7 steps

The journey of Defective Return starts from the day when the return for the concerned F.Y. is filed with the IT Authorities. Its fate is decided at the time of assessment and processing by the IT department when it validates the return. On successful validation a final intimation is sent (under Section 143(1) of the Income-tax Act, 1961) containing the details of return filed by the assessee, while unsuccessful validation, the department issues a notice to the assessee under Section 139(9) of the Act stating it as a NOTICE for Defective Return.

Receiving an income tax notice is the worst nightmare for any taxpayer. But a notice from IT department does not necessarily mean that an offence big enough to be put behind bars has been committed.

Today, through this article we aim to educate our readers about:

Common cases when notice for defective return is sent.

1. Details of TDS, other paid taxes has been provided to claim refund, but have not provided the details of income.
2. Partial payment of taxes.
3. Wrong selection of ITR Form due to lack of knowledge in the constant amendments in rules and procedure related to tax filing.
4. Blank row or columns
5. Non-attaching the supporting documents (if applicable) with the return. (For religious/ charitable trust, or returns filed u/s 148 or 153A.)
6. Non-Compliance of audit procedures in case of loss return.

Ideal Response once you receive the notice

1. DON’T PANIC, PAN IT!!

First and foremost thing you should notice is the PAN details upon receiving a notice. The reason for this is income tax department has a practice of sending notices on the basis of PAN of the assessee. Thus, it is important to check and confirm whether it is actually meant for you.

2. ASK YOURSELF, WHY YOU??

Always look for the cause of the notice sent to you. It might be for various reasons enumerated above. Based on the type of defect, look for the necessary solution and rectify it. For errorless e-filing, you might want to refer these 5 handy tips. Remember, “IGNORANCE OF NOTICE WILL ATTRACT STRICT PENALTIES, PLEASE DON’T IGNORE ANY NOTICE FROM INCOME TAX AUTHORITIES.”

3. CHECK YOUR TAX CREDIT DETAILS ONLINE

The Form 26AS consist of details with regards to tax deposited with income tax departments on your behalf such as TDS, Advance Tax, Self Assessment Tax. This can be accessed online through your net banking account, if it is linked to your PAN.

Check whether the taxes paid are reflected through Form 26 AS; in case of any differences, get it rectified by the deductor and file a revised return because Form 26AS acts as the only authentic proof of taxes paid by the income tax department.

4. REVISE IT BEFORE IT’S TOO LATE!!

Once you are clear with the defects to be rectified, revise your return through income tax department portal. REMEMBER the return has to be filed within 15 days of the date of intimidation of notice or time extended by the assessing offices if he deems fit. It may be noted that if the assessee removes defect after expiry of 15 days or extended time but before the completion of assessment, the Assessing Officer can condone the delay. Failure to revise the defective return will be treated as invalid and be deemed as if no return had been filed earlier. The procedure to revise the return is as below:

STEP-1: Login and register with https://incometaxindiaefiling.gov.in

STEP-2 : Click the option e-file and select the type of return you wish to E-    file(in this case, “ in response to notice u/s 139(9)”)

STEP-3:  Fill all the details which appears in the following window.

STEP-4:  A window pops up after feeding the above data for you to rectify your mistake now and upload the revised XML file. A confirmation message with an acknowledgement number appears on successful upload.

5. BE READY WITH THE PAPERWORK 

Be proactive. Figure out the documents you require in response to notice. If you are unsure about the documents, it’s advisable to consult your tax doctors who will protect you from further injuries. The relevant documents may include bank statements, bills, vouchers, pay slips, rent receipts etc. depending on your situation.

6. GOT A NOTICE FOR WRONG REASONS?

No worry, if you think you received the notice by department unjustly then you have the option to appeal in income tax TRIBUNAL or with the income tax COMMISSIONER. There are additional costs which may be incurred if the final decision doesn’t turn in your favor. So always be sure before escalating the matter in tribunal.

7. SEEK AN EXPERT ADVICE

As a tax payer, you need to be well equipped with the latest tax amendments made by the Finance Ministry. Hence, if you are not confident on your recent knowledge, it’s better to seek an expert help than filing incorrect returns repeatedly. It would be more economical to pay your experts than paying heavy penalties to income tax department.

Lastly, it is very important to understand that the assessee looses out all the benefits of exemptions or deductions, if the defective return is not revised. Revising the defect, makes the revised return at par with the status of an original return. So if you are a honest tax payer and has complied with all the norms, you should not worry over such notices as the income tax authorities doesn’t seem to bother you but they are doing their duty.