What is a Defective Return? What Mistakes Can Lead to Defective Tax Return & How to Avoid It?

If an individual's income tax return (ITR) is deemed 'defective' by the Assessing Officer (AO), they may receive a notice under section 139(9) of the Income Tax Act, 1961. For example, let's say you have filed your ITR, but the spelling of your name on the PAN card does not match the name provided in the ITR form. 

This discrepancy would lead to the classification of your ITR as defective. Subsequently, the income tax department will issue a notice regarding the defective ITR.

While receiving a notice from the income tax department can be alarming, it is important to note that rectifying a notice regarding a defective ITR is typically straightforward. Let's explore the steps you can take to address the issue related to a defective ITR.

What is a Defective Return?

A defective Income Tax Return (ITR) refers to a situation where the assessing officer of the income tax department identifies certain discrepancies, errors, or inconsistencies in an individual's filed ITR. When such issues are identified, the assessing officer has the authority to declare the ITR as defective.

The concept of a defective ITR is governed by Section 139(9) of the Income Tax Act, of 1961. This section empowers the assessing officer to issue a notice to an individual if their ITR is found to be defective. The notice serves as a means to inform the taxpayer about the discrepancies found and allows them an opportunity to rectify the errors within a specified timeframe.

Several factors can contribute to the classification of an ITR as defective. Some common reasons include:

Incomplete or inconsistent information: If the information provided in the ITR is incomplete or shows inconsistencies, such as mismatched figures or incorrect calculations, the assessing officer may deem it defective.

Usage of incorrect ITR form: The ITR forms are categorized based on the type of taxpayer and their income sources. If an individual uses an incorrect ITR form that does not align with their income profile, it can lead to the ITR being declared defective.

Non-disclosure of income: Failure to disclose all relevant sources of income, such as rental income, interest income, capital gains, or income from other investments, can result in the ITR being categorized as defective.

Discrepancies in personal information: Inconsistencies in personal details, such as name, address, or PAN (Permanent Account Number), between the ITR and other official records can lead to a defective ITR.

Non-compliance with tax provisions: If the taxpayer fails to adhere to specific tax provisions, such as not filing the ITR within the due date or not fulfilling the mandatory reporting requirements, the ITR can be declared defective.

When an ITR is classified as defective, the assessing officer issues a notice to the taxpayer under Section 139(9) of the Income Tax Act. The notice specifies the discrepancies found and provides a designated period within which the taxpayer must rectify the errors and submit a revised ITR. It is essential to respond to the notice promptly and rectify the defects as per the instructions provided to avoid any penalties or further consequences.

What Mistakes Can Cause Defective ITR?

Several mistakes or discrepancies in an income tax return (ITR) can lead to its classification as defective by the assessing officer. Some common mistakes that can result in a defective ITR include:

Incorrect or incomplete information: Providing incorrect or incomplete information in the ITR, such as inaccurate figures, wrong calculations, or missing details, can lead to the ITR being deemed defective.

Usage of the wrong ITR form: Each ITR form is specifically designed for different types of taxpayers and income sources. Filing the ITR using an incorrect form that does not match the taxpayer's income profile can result in the ITR being classified as defective.

Non-disclosure of income: Failure to report all sources of income, such as rental income, interest income, capital gains, or income from other investments, can lead to a defective ITR. It is essential to include all income earned during the financial year in the ITR.

Discrepancies in personal information: Inconsistencies in personal details like name, address, or Permanent Account Number (PAN) between the ITR and other official records can cause the ITR to be classified as defective. It is crucial to ensure that all personal information is accurate and consistent across all relevant documents.

Failure to comply with tax provisions: Non-compliance with tax provisions, such as not filing the ITR within the specified due date or not fulfilling mandatory reporting requirements, can result in a defective ITR. It is important to adhere to all tax regulations and fulfill the necessary obligations.

Mistakes in tax calculations: Errors in calculating tax liability, deductions, exemptions, or other tax-related computations can lead to a defective ITR. It is crucial to double-check all calculations and ensure accuracy before filing the ITR.

Inconsistencies with tax documents: Discrepancies between the information provided in the ITR and supporting tax documents, such as Form 16 (TDS certificate), Form 26AS (tax credit statement), or other relevant documents, can result in the ITR being declared defective. It is important to ensure that all information is consistent and properly aligned.

How to avoid these mistakes & correct ITR?

To correct a defective Income Tax Return (ITR), you need to follow the necessary steps outlined by the income tax department. Here is a general guide on how to rectify a defective ITR:

Review the notice: Carefully read the notice received from the income tax department regarding the defective ITR. The notice will specify the discrepancies or errors found in your original ITR filing.

Understand the issues: Understand the specific issues highlighted in the notice. It could be related to incomplete or inconsistent information, incorrect calculations, or non-disclosure of income sources.

Gather supporting documents: Collect all relevant supporting documents, such as Form 16 (TDS certificate), Form 26AS (tax credit statement), bank statements, investment proofs, or any other documents required to rectify the identified errors.

Revise the ITR: Make the necessary corrections or amendments to rectify the errors in your ITR. You may need to revise specific sections or fields, update figures, correct calculations, or provide missing information.

Use the correct ITR form: Ensure that you are using the correct ITR form based on your income sources and taxpayer category. Using the wrong form can lead to further complications and may result in another defective ITR.

File a revised ITR: Prepare and file a revised ITR using the updated and corrected information. You can file the revised ITR online through the income tax department's e-filing portal or seek the assistance of a tax professional to help you with the process.

Respond within the specified time: It is crucial to respond to the notice and submit the revised ITR within the time limit mentioned in the notice. Failure to comply within the specified timeframe may lead to penalties or further consequences.

It is advisable to seek professional guidance from a tax advisor, chartered accountant, or tax expert to ensure accurate rectification of the defective ITR and compliance with all necessary procedures and regulations.

Also Read: PAN-Aadhaar Linking Deadline Gone: What To Do In Case Your PAN Became Incorporative

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