All about Defective Returns u/s 139(9) and way of rectifying it

Mistakes in filing the income tax returns can make your return defective. Its not only human error but also compliance in real spirit with the provision of the Income Tax Act that can result in notice u/s 139(9).

Before knowing the consequences, let us have a look at reason when the income tax return filed can be treated as defective return.

139(9) Where the Assessing Officer considers that the return of income furnished by the assessee is defective, he may intimate the defect to the assessee and give him an opportunity to rectify the defect within a period of fifteen days from the date of such intimation or within such further period which, on an application made in this behalf, the Assessing Officer may, in his discretion, allow; and if the defect is not rectified within the said period of fifteen days or, as the case may be, the further period so allowed, then, notwithstanding anything contained in any other provision of this Act, the return shall be treated as an invalid return and the provisions of this Act shall apply as if the assessee had failed to furnish the return :

Provided that where the assessee rectifies the defect after the expiry of the said period of fifteen days or the further period allowed, but before the assessment is made, the Assessing Officer may condone the delay and treat the return as a valid return.

Explanation.—For the purposes of this sub-section, a return of income shall be regarded as defective unless all the following conditions are fulfilled, namely :—

(a)  the annexures, statements and columns in the return of income relating to computation of income chargeable under each head of income, computation of gross total income and total income have been duly filled in;

(aa)

(b)  the return is accompanied by a statement showing the computation of the tax payable on the basis of the return;

(bb) the return is accompanied by the report of the audit referred to in section 44AB, or, where the report has been furnished prior to the furnishing of the return, by a copy of such report together with proof of furnishing the report;

(c)  the return is accompanied by proof of—

  (i)  the tax, if any, claimed to have been deducted or collected at source and the advance tax and tax on self-assessment, if any, claimed to have been paid :

Provided that where the return is not accompanied by proof of the tax, if any, claimed to have been deducted or collected at source, the return of income shall not be regarded as defective if—

(a)  a certificate for tax deducted or collected was not furnished under section 203 or section 206C to the person furnishing his return of income;

(b)  such certificate is produced within a period of two years specified under sub-section (14) of section 155;

 (ii)  the amount of compulsory deposit, if any, claimed to have been made under the Compulsory Deposit Scheme (Income-tax Payers) Act, 1974 (38 of 1974);

(d)  where regular books of account are maintained by the assessee, the return is accompanied by copies of—

 (i)  manufacturing account, trading account, profit and loss account or, as the case may be, income and expenditure account or any other similar account and balance sheet;

(ii)  in the case of a proprietary business or profession, the personal account of the proprietor; in the case of a firm, association of persons or body of individuals, personal accounts of the partners or members; and in the case of a partner or member of a firm, association of persons or body of individuals, also his personal account in the firm, association of persons or body of individuals;

(e)  where the accounts of the assessee have been audited, the return is accompanied by copies of the audited profit and loss account and balance sheet and the auditor’s report and, where an audit of cost accounts of the assessee has been conducted, under section 233B of the Companies Act, 1956 (1 of 1956), also the report under that section;

(f)  where regular books of account are not maintained by the assessee, the return is accompanied by a statement indicating the amounts of turnover or, as the case may be, gross receipts, gross profit, expenses and net profit of the business or profession and the basis on which such amounts have been computed, and also disclosing the amounts of total sundry debtors, sundry creditors, stock-in-trade and cash balance as at the end of the previous year.

Whenever the return is defective, it does not become invalid automatically but 15 days  opportunity is given to the taxpayers to rectify the defects. Its only if assessee does not rectify the defects  within the period of 15 days or within such extended period if allowed by income tax authorities that the return would be treated as an invalid return or the return not filed by the taxpayers.

Further, it must be carefully noted that non-payment of if tax , interest and fees payable in accordance to self assessment (Sec 140A) doesn’t make the return defective after Finance act 2016 but will make the assessee as “Assessee in default”. If notice is served and the payment is not doen then only it will be a defective return. 

What if 139(9)Notice is received:

Return should be rectified by removing the defects within the stipulated time which is normally 15 days from the receipt of intimation order under section 139(9).

Procedure for Rectification of  Defective return U/s. 139(9)

1. Download the ITR Form the Income Tax Department website.
2. On the income tax return, select the option “In response to a notice under Section 139(9) where the original return filed was a defective return.
3. Enter the reference number, available on the notice, and acknowledgment number and date of filing original return.
4. Complete the income tax return including the rectification required.
5. Generate the XML File and upload it to the Income Tax Department website
6.  Select “e-File in response to notice u/s 139(9)” under the “e-File” section and upload the rectified XML using the password mentioned in the notice.
7. Confirmation message with an acknowledgment number appears on the Department on successful upload.