ITR Filing: Do you know about defective income tax return filing? Can it be corrected?

Filing an Income Tax Return (ITR) is a significant yearly event for taxpayers. Sometimes, these returns get tagged as 'defective' by the Income Tax Department due to errors or discrepancies. When such mistakes are spotted, the department issues a notice under Section 139(9) of the Income Tax Act.

Common reasons for a defective return notice include errors in format, missing tax proofs, incomplete account statements, or the absence of mandatory audit reports for certain entities. Other reasons can be the usage of the incorrect ITR form, miscalculation of income, or provision of incomplete or inconsistent information. 

Common reasons for defective ITR

The Income Tax Act, section 139(9), sends a 'defective' notice when there's an issue with your income tax return (ITR). Section 139(9) can be used for many reasons. Some reasons include using the wrong ITR form or miscalculating income. Let's look at some more reasons.

First, you might enter wrong information in your Annual Information Statement (AIS). You may use the wrong challan number, pay advance tax for the wrong year, or your employer might file the wrong TDS return. 

Your Form 26 AS, AIS, TIS may then have the wrong information. Sometimes the bank might make a wrong TDS return entry. There are many ways you could make a mistake in your ITR. It is good to always check challans and match your bank statements with the TDS information in your AIS. If your AIS is wrong, you can ask the tax department to correct it.

Another common issue is if your income and TDS reported do not match with Form 26AS details. Not reporting income where TDS has been deducted is not hiding income. You should be informed before any adjustments are made because of income appearing in Form 26AS. 

Some cases where the tax return is seen as defective are when credit for TDS is claimed but the related income is not reported, when 'Gross Total Income' and all income types are 'nil' but tax has been paid, and when the taxpayer's name in the ITR does not match the PAN database.

If you have a business income, you should file your tax audit report by September 30, 2023 for FY 2022-23 (AY 2023-24). If you don't, your ITR may be seen as defective. Another issue is if you only partly pay your tax. If the payment is not equal to the net tax liability or the tax payable shown in the tax return, your ITR may be seen as defective.

Correcting a defective return

You can correct a defective ITR by filing a new or revised return, as long as it is still within the filing period. For FY 2022-23 (AY 2023-24), the last date to file a revised return is December 31, 2023. If this date has passed, you cannot file a new or revised return. The only option is to respond to the notice. Please remember, you can file an updated ITR in certain situations according to income tax laws. If you don't make the corrections within this period, the previous filing becomes invalid. You can request an extended period by writing to the Local Assessing Officer for certain extenuating circumstances. 

To revise a defective return, you should log in to the 'e-Filing' portal. Go to the 'e-File' menu, and click 'Response to Notice u/s 139(9)'. The portal will display details of the notice and identified defects in the filed ITR. Here, you can agree or disagree with the defects and provide necessary remarks. For any revisions made, it is recommended to use the latest ITR utility to generate the XML accordingly.