How to Rectify Defective ITR in India: Expert Guidance by Taxcellent’s CA Services

In India, the process of filing Income Tax Returns (ITR) is most important compliance for taxpayers. All the assessee such as individual, company, or entity that earns a taxable income must file an ITR annually. However, while filing ITR, many taxpayers inadvertently make errors or omissions in their tax returns, which result in classification of their ITR as “defective” by the Income Tax Department. Taxcellent team assist you in rectifying defective ITR.
This article provides a detailed explanation of what constitutes a defective ITR, the consequences of filing a defective return, and the steps a taxpayer can take to rectify such an issue.

1. What does Defective Income Tax Return mean?

A defective ITR is one that the Income Tax Department categorized incomplete or incorrect due to specific errors or omissions. Under the provisions of Section 139(9) of the Income Tax Act, 1961, the tax department has the authority to declare an ITR defective.
This happens when certain mandatory information is missing or incorrect, or there are discrepancies in the details provided in ITR form by the taxpayer. The department sends a notice or intimation to the taxpayer, asking them to rectify the defects by filing a revise return within a specified period.

Taxcellent team help you in filing the correct ITR in Delhi in one go.

2. What are the common reasons for Defective ITR?

There are many common reasons which can lead to an ITR being marked as defective.

a. Incomplete or Incorrect Information: This includes errors like missing details of income in comparison to details of income appearing in Annual Information Summary, incorrect PAN (Permanent Account Number), or wrong bank account details.
b. Mismatch in TDS Details: If the TDS (Tax Deducted at Source) details provided by the taxpayer do not match the records in Form 26AS or TDS has been claimed in ITR but no income has been offered by the taxpayer against such claimed TDS, the return may be considered defective.
c. Non-disclosure of Certain Incomes: If a taxpayer fails to disclose income from sources like capital gains, property, or foreign assets can lead to a defective return.
d. Non-filing of ITR in the Correct Form: Using the wrong ITR form for filing, depending on the taxpayer’s income source and other factors, can result in filing of the defective ITR.
e. Non-compliance with Audit Requirements: In case of taxpayers whose books of accounts require auditing, the failure to attach the audit report or file it on time may result in a defective return.

3. Define Provisions Under Section 139(9)

Section 139(9) of the Income Tax Act, 1961, informs about the circumstances under which a return can be treated as defective. The section provides that the Income Tax Department can issue a notice to the taxpayer if they believe that the ITR filed is defective.
The notice will specify the nature of the defect and provide the taxpayer with a time frame of 15 days (or more as specified) to rectify the defect by filing revised return. If the taxpayer fails to correct the defect within the stipulated time, the return is treated as invalid, as if it was never filed.

4. What are the Consequences of Filing a Defective ITR

The implications of filing a defective return can be significant:

1. Invalidation of Return: If the defect is not rectified within the specified period of 15 Days, the return would be considered as invalid. This means the taxpayer is treated as if they have not filed an ITR for the financial year under consideration.
2. Penalties and Interest: The taxpayer would be liable to pay penalties and interest for late or non-filing of returns if the defective return is treated as invalid.
3. Loss of Carry Forward of Losses: If the return is considered as invalid then, the taxpayer cannot carry forward any losses incurred in that financial year to subsequent years.
4. Scrutiny and Legal Action: In some cases, if a defective return is not corrected, it may invite limited scrutiny from the Income Tax Department, which may result in tax demand along with interest and penalties.

5. Describe the process of rectifying a defective ITR

If a taxpayer received a notice under Section 139(9), following steps must be follow to rectify the defective ITR:

a). Log in to the Income Tax E-filing Portal: The taxpayer should log in to the e-filing portal of the Income Tax Department.
b). Access the Notice and identify the defects: Under the ‘e-Proceedings’ or ‘My Account’ section, the taxpayer can view the notice issued under Section 139(9) and identify the defects.
c). Rectify the Error: Based on the nature of the defect, the taxpayer must correct the error by filing the revised return after correcting error.
d). Acknowledgment of Submission: Upon successful submission, the portal will generate an acknowledgment, which the taxpayer should keep for their records.

Taxcellent team assist you to rectify the defects in ITR forms as specified by the Income Tax Department.