Erroneous Form 29B Demand Notices: System Glitch Triggers MAT Notices for Non-MAT Companies

The Income Tax Department recently issued large quantities of adjustment notices under Section 143(1)(a) to the companies that did not file Form 29B, a general reminder. One strange thing here was that these notices were also issued to companies where Section 115JB (MAT) does not apply. Basically, these are the companies that do not have any book profit or normal taxable income, yet they are being asked to furnish a form (Form 29B) meant only for MAT calculation.

The issue here is that Form 29B is used only for MAT calculation. The form is filled by Chartered Accountants (CAs) to calculate the book profits of companies under Section 115JB. Companies are only required to fill this form in case MAT applies to them (i.e., when their taxable income is less than the MAT rate), and companies possessing normal taxable income above the MAT limit or not having book profits are not required to furnish Form 29B.

It seems like, due to some error in the system, several such notices are automatically being sent to companies where MAT does not apply. This problem has caused unnecessary tension and pressure for companies, taxpayers, and professionals.

Another strange thing is that these notices are being released by the tax department just before the due date of filing revised ITR, i.e., December 31, 2025; hence, taxpayers are left with a very limited time to respond to these notices.

🚨 Systemic Error in 143(1)(a) Processing? 🚨

Income Tax Dept has issued mass 143(1)(a) adjustment notices for non-filing of Form 29B — even where Sec 115JB (MAT) is clearly NOT applicable and there is no book profit / taxable income under normal provisions.

❓ When MAT doesn’t… pic.twitter.com/P5jZCs1xuD

— CA Avinash Kumar Rao (@theavinashrao) December 24, 2025

NOTE: According to Section 115JB, if a company’s taxable income is less than 15% of its book profit, then its book profit is treated as taxable, and in that case, MAT applies to the company. In this case, the company is liable to furnish Form 29B only to compute book profits for MAT purposes.

The issue discussed above is not minor; penalising companies unnecessarily is not fair. Technology should assist compliance. In the present case, taxpayers are receiving notices even when they are not liable for MAT, which is creating undue stress. Therefore, the Income Tax Department should now review these released notices and withdraw erroneous notices and provide clear guidance.