Defective ITR : Reasons for treating ITR defective, Section 139(9)

As per section 139(9) of the Income Tax Act, the Assessing Officer has the power to call upon the assessee to rectify a defective return.

Procedure in case of Defective ITR:-

(i) 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 15 days from the date of such intimation. The Assessing Officer has the discretion to extend the time period beyond 15 days, on an application made by the assessee.

(ii) If the defect is not rectified within the period of 15 days or such further extended period, then the return would be treated as an invalid return. The consequential effect would be the same as if the assessee had failed to furnish the return.

(iii) Where, however, the assessee rectifies the defect after the expiry of the period of 15 days or the further extended period, but before assessment is made, the Assessing Officer can condone the delay and treat the return as a valid return.

Reasons for treating a return as defective:-

A return of income shall be regarded as defective unless all the following conditions are fulfilled, namely:-

• The annexures, statements and columns in the return of income relating to computation of income chargeable under each head of income, computations of gross total income and total income have been duly filled in.

• The return of income is accompanied by the following, namely:-

(i) a statement showing the computation of the tax payable on the basis of the return.

(ii) the report of the audit obtained under section 44AB (If such report has been furnished prior to furnishing the return of income, a copy of such report and the proof of furnishing the report should be attached).

(iii) the proof regarding 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. (However, the return will 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 2 years.

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

• Where regular books of account are maintained by an assessee, the return of income is accompanied by the following:-

(a) copies of manufacturing account, trading account, profit and loss account or income and expenditure account, or any other similar account and balance sheet;

(b) the personal accounts as detailed below:-

• Where the accounts of the assessee have been audited, the return should be accompanied by copies of the audited profit and loss account and balance sheet and the auditor’s report.

• Where the cost accounts of an assessee have been audited under section 148 of Companies Act, 2013, the return should be accompanied by such report.

• Where regular books of account are not maintained by the assessee, the return should be accompanied by :-

(a) a statement indicating –

i. the amount of turnover or gross receipts,
ii. gross profit,
iii. expenses; and
iv. net profit of the business or profession;

(b) the basis on which such amounts mentioned in (1) above have been computed,

(c) the amounts of total sundry debtors, sundry creditors, stock-in-trade and cash balance as at the end of the previous year.

Hence, if the above conditions are not satisfied, it would amount to a good Reasons for treating ITR defective return. Consequently, the procedures as stated above would apply and the assessee is required to respond accordingly.

Note – Many of these particulars are now required to be incorporated as part of the relevant return form, for example, details of tax deducted at source, advance tax paid, self-assessment tax paid, amount of turnover/gross receipts etc. 

Tags : Section 143, section 139(9), Income Tax Act, Defective return,Reasons for notice of defective return in Income Tax