Income Tax Notice for Proposed Adjustment u/s 143(1)(a)

What is Notice u/s 143(1)(a)

Communication received u/s 143(1)(a) is communication for proposed adjustment u/s 143(1)(a) received from the income tax department. This notice is issued for the following reasons:

Section Reason
143(1)(a)(i) Arithmetical Error in ITR
143(1)(a)(ii) Incorrect Claim in ITR
143(1)(a)(iii) Disallowance of loss claimed in ITR
143(1)(a)(iv) Disallowance of expense claimed in ITR
143(1)(a)(v) Disallowance of deduction claimed in ITR
143(1)(a)(vi) Addition of income appearing in Form 26AS, Form 16 or Form 16A

Notice u/s 143(1)(a)(i)

Notice u/s 143(1)(a)(i) is issued when there is an arithmetical error in the filed Income Tax Return. It is sent to the registered email of the assessee. The notice mentions income head, amount reported in ITR, amount as per computation, amount of variance and description of error. The assessee must submit a response to this notice within 30 days from the date of issue.

Notice u/s 143(1)(a)(ii)

Notice u/s 143(1)(a)(ii) is issued when there is an incorrect claim in the filed Income Tax Return. It is sent to the registered email of the assessee. The notice mentions income head, amount reported in ITR, amount as per computation, amount of variance and description of error. The assessee must submit a response to this notice within 30 days from the date of issue.

Incorrect claim means:

  • An item in the ITR is not consistent with the same item or any other item in the ITR
  • Information that needs to be reported in the ITR has not been reported
  • Deduction claimed in the ITR exceeds the specified statutory limit as per the Act

Notice u/s 143(1)(a)(iii)

Notice u/s 143(1)(a)(iii) is issued when the loss has been incorrectly claimed in the ITR filed. It is sent to the registered email of the assessee. The notice mentions income head, amount reported in ITR, amount as per computation, amount of variance and description of error. The assessee must submit a response to this notice within 30 days from the date of issue.

As per the Income Tax Act, the assessee cannot carry forward the loss if he files his income tax return after the prescribed due date. When the return is filed after the due date u/s 139(1) and yet the loss has been claimed, notice u/s 143(1)(a)(iii) is issued to disallow such loss.

Notice u/s 143(1)(a)(iv)

Notice under section143(1)(a)(iv) is issued when an expense has been incorrectly claimed in the ITR filed. It is sent to the registered email of the assessee. The notice mentions income head, amount reported in ITR, amount as per computation, amount of variance and description of error. The assessee must submit a response to this notice within 30 days from the date of issue.

If an expense is disallowed under the audit report but the assessee claims it in the income tax return. Notice under section 143(1)(a)(iv) is issued to disallow such expense.

Notice u/s 143(1)(a)(v)

Notice u/s 143(1)(a)(v) is issued when a deduction has been incorrectly claimed in the ITR filed. It is sent to the registered email of the assessee. The notice mentions income head, the amount reported in ITR, amount as per computation, amount of variance, and description of the error. The assessee must submit a response to this notice within 30 days from the date of issue.

If the assessee files his Income Tax Return after the due date prescribed u/s 139(1). Thus in such case he cannot claim certain specified deductions (Sec10AA and Sec 80H to Sec 80RRB under chapter VI-A). However, if he has claimed such deductions, the tax department would issue a notice u/s 143(1)(a)(v).

Notice u/s 143(1)(a)(vi)

Income Tax Notice u/s 143(1)(a)(vi) is received when there is a mismatch in details of TDS on salary as per Form 26AS or Form 16 or mismatch in TDS as per Form 16A and income details reported in the filed Income Tax Return. The notice communicates the head of income, the amount reported in ITR, amount as per Form 16/26AS/16A, amount of variance, and the description of the error. There can be following 3 possibilities:

  • Taxable Salary reported in Schedule S of ITR does not match with the gross amount in Tax Credit Statement

Taxable Salary in ITR does not match with the Taxable Salary as per Form 16. This means that an extra deduction has been claimed in the ITR which is not reflected in Form 16

Communication of proposed adjustment u/s 143(1)(a)

How will I receive Communication u/s 143(1)(a)?

Communication on Email

  • The system auto-generates the communication u/s 143(1)(a) and sends it to the assessee on the email entered while filing the income tax return
  • The sender of these email is CPC i.e. Central Processing Centre and the sender’s email is intimations@cpc.gov.in
  • The subject of the email is ‘Communication u/s 143(1)(a) for PAN CDAxxxxx8P for the A.Y. 2019-20‘. The PAN and AY (Assessment Year) would be different in each case
  • The notice is attached to the email in a pdf format. It is password protected. The password to open is PAN in lower case and the date of birth in DDMMYYYY format. Eg: aagpr1212a02101980 for PAN: AAGPR1212A and DOB: 02/10/1980

Communication on SMS

  • The system auto-generates the communication u/s 143(1)(a) and communicates to the assessee on the mobile entered while filing the income tax return
  • The sender of the message is CPC i.e. Central Processing Centre and the sender’s name is VM-ITDCPC

Time Limit for issue of Communication for Proposed adjustment u/s 143(1)(a)

The income tax department can send intimation u/s 143(1)(a) within one year from the end of the financial year in which the return is filed.

Example

Taxpayer files ITR for FY 2018-19 in July 2019 or October 2019
End of financial year in which return is filed – 31st March 2020
One year from end of financial year – 31st March 2021
Therefore, the tax department can send intimation for ITR of FY 2018-19 up to 31st March 2021

If a taxpayer does not receive any intimation within such period, it means that there are no adjustments and changes to the ITR filed. There is no change in tax liability or refund. Thus, the Income Tax Return filed is deemed to be intimation u/s Section 143(1).

Due Date to submit response to notice u/s 143(1)(a)

If you have received a notice under section 143(1)(a), you must file a response within 30 days from the date of issue of notice.

  • If you Agree to the mismatch in notice – File a Revised Return u/s 139(5)
  • If you Disagree to the mismatch in notice – Submit a response
  • When you Partially Agree to the mismatch in notice – File a Revised Return u/s 139(5) and submit a response

How to File Response to Notice u/s 143(1)(a)

  1. Visit the e-Filing portal

    Login using valid credentials on the e-Filing portal.

  2. Pending Actions

    Click on Pending Actions > e-Proceedings from the dashboard

  3. View Notices

    Click on the option to View Notice for adjustment u/s 143(1)

  4. Notice pdf

    Click on the Notice/Letter pdf.

  5. Download the notice

    You will be able to view the notice issued to you. If you wish to download the notice, click Download.

  6. Respond to Notice

    Click on the option to submit response.

  7. Details of the Prima Facie Adjustments

    You will be able to view the details of the Prima Facie Adjustments found by CPC in your filed ITR. Click on each variance to provide responses.

  8. Provide Response

    On clicking the variance, details of the variance will be displayed. To provide response for the particular variance, click Provide Response.

  9. Response from dropdown

    Select the relevant response from the dropdown and click Save after responding to each Prima Facie Adjustment.

  10. Proceed to e-Verify your response

    Once all the responses have been provided, click Back. On clicking Back, you will be taken back to the details of Prima Facie Adjustment found by CPC in your filed ITR. After responding to each variance, the responses will be saved. Click Continue. Select the Declaration checkbox and click Proceed to e-Verify.

  11. Successful Verification

    On successful e-Verification, a success message is displayed along with a Transaction ID. You will also receive a confirmation message on your email ID registered on the e-Filing portal.

FAQs

Is income tax notice u/s 143(1) different from notice u/s 143(1)(a)?

Communication u/s 143(1) is just an intimation and not a notice. Under this intimation, there is a preliminary check whether the calculations as per ITR match with the calculations as per tax department.
If there is any mismatch in the data, the department issues a notice for adjustment u/s 143(1)(a) The taxpayer needs to respond to this notice within 30 days.

How do I check my 143(1) online?

Generally IT Department sends intimation u/s 143(1) on the registered mail. However, if you have not received you can still request for 143(1) by logging into your Income tax account, then my account and request for 143(1) intimation under service request.

What does pending for response to proposal of adjustment u/s 143(1)( a) ?

A communication for such an adjustment under Section 143(1)(a) is sent to taxpayers wherein there is a mismatch of the income/deductions/exemptions reported in the Income Tax Return and in the income/deductions/exemptions as shown in the Form 16.

Income Tax Intimation under section 143(1)

Intimation received u/s 143(1) is not a Notice but a communication received from the income tax department. Once the assessee files his income tax return, the income tax department does a preliminary assessment. This includes verifying arithmetical errors, any incorrect claim in the return, the difference in tax calculation, verification of tax payment etc. This letter basically matches the calculations in the Income Tax Return filed with the calculations computed by the income tax department.

Intimation u/s 143(1)

How will I receive Intimation u/s 143(1)?

Communication on Email

  • The system auto-generates the intimation u/s 143(1) and communicates to the assessee on the email entered while filing the income tax return
  • The sender of these email is CPC i.e. Central Processing Centre and the sender’s email is intimations@cpc.gov.in
  • The subject of the email is ‘Intimation U/S 143(1) for PAN BCFxxxxx8D AY:2019-20‘. The PAN and AY (Assessment Year) would be different in each case
  • The intimation is attached to the email in a pdf format. It is password protected. The password to open is PAN in lower case and the date of birth in ddmmyyyy format. Eg: aagpr1212a02101980 for PAN: AAGPR1212A and DOB: 02/10/1980

Communication on SMS

  • The system auto-generates the intimation u/s 143(1) and communicates to the assessee on the mobile entered while filing the income tax return
  • The sender of the message is CPC i.e. Central Processing Centre and the sender’s name is VM-ITDCPC

Time Limit for issue of Intimation u/s 143(1)

The income tax department can send intimation u/s 143(1) within one year from the end of the financial year in which the return is filed.

Example

Taxpayer files ITR for FY 2018-19 in July 2019 or October 2019
End of financial year in which return is filed – 31st March 2020
One year from end of financial year – 31st March 2021
Therefore, intimation for ITR of FY 2018-19 can be sent up to 31st March 2021

If a taxpayer does not receive any intimation within such period, it means that there are no adjustments and changes to the ITR filed. There is no change in tax liability or refund. Thus, the Income Tax Return filed is deemed to be intimation u/s Section 143(1).

Action to be taken against Intimation u/s 143(1)

Action Reason
No Action required Calculation in the ITR filed matches with the calculation as per income tax i.e. No Demand & No Refund
No action required. Refund would be credited to your bank account Tax payable as per ITR filed is more than the tax payable as per income tax calculation i.e Refund
File Revised Return u/s 139(5) If you observe any mistakes in the ITR filed
Pay Demand and File Response (within 30 days) Tax payable as per ITR filed is less than the tax payable as per income tax calculation i.e. Outstanding Demand – If you Agree
File Rectification Request u/s 154 Tax payable as per ITR filed is less than the tax payable as per income tax calculation i.e. Outstanding Demand – If you Disagree

FAQs

There is no mismatch, no additional demand and no refund in the intimation u/s 143(1), what should I do?

The income tax department has successfully processed the income tax return. You can simply ignore the notice. No further action is required.

Is income tax notice u/s 143(1) different from notice u/s 143(1)(a)?

Communication u/s 143(1) is just an intimation and not a notice. Under this intimation, there is a preliminary check whether the calculations as per ITR match with the calculations as per tax department.
If there is any mismatch in the data, the department issues a notice for adjustment u/s 143(1)(a) The taxpayer needs to respond to this notice within 30 days.

Two months have passed since the e-verification of my ITR for F.Y. 2018-19, but I have not received the Intimation u/s 143(1). What should I do?

You can check your ITR status online on Income Tax Portal. In case, it has been processed then you can request for reissue of intimation online and you will receive it on your mail after request. If your ITR has not been processed by the department till now then either wait for the ITR to be processed or submit a grievance. Sometimes the department takes longer to process the return.

What happens if I do not respond to the intimation within 30 days of receiving the intimation?

In case, if we do not respond within 30 days (thirty days) of the issue of this intimation, the return of income will be processed after making necessary adjustment(s) u/s 143(1)(a) of Income Tax Act, 1961 without providing any further opportunities in this matter.

Is intimation u/s 143(1) and tax assessment order the same?

No, tax assessment order and intimation are not the same.

Do I need to reply to a 143(1) intimation, if I have 0 refunds and 0 tax demand, and proper sync on the taxpayer and 143(1) section columns?

No, you are not required to reply if everything is as per the details submitted by you in your ITR. It means the department has accepted the return as filed without carrying out any adjustments to it.

How to respond to Non-filing of IT Return Notice?

What is Non-Filers Monitoring System(NMS)?

Non-Filers Monitoring System, or NMS, is a monitoring system of IT Department that identifies the people who are liable to file taxes (i.e., with annual income more than 2,50,000) but haven’t done so. Upon identifying such non-compliant taxpayers, the system automatically sends a non-compliance email to taxpayer’s registered email address for Non-filing of IT Return. Monitoring system uses

  • ​AIR (Annual Information Return) filed by Financial Institutions
  • ​CIB (Centralised Information Branch)
  • TDS Statements to identify such taxpayers.

Every year I-T Department notifies non-filers through SMS and email.

Sample email from Non-filers Monitoring System

How to respond to NMS compliance email?

Here is a step by step guide on how to deal with non-filers monitoring system email

  1. Visit Income Tax Portal

    Login Income Tax Website.

  2. Navigate to Compliance

    Click on View and Submit Compliance.

  3. You will see the Submit Compliance Form.

    Navigate to Filing of Income Tax Return.

  4. Navigate to Asssessment Year for which Return Not Received.

    You have two options to respond:
    A. ITR has been filed,
    B. ITR has not been filed.

  5. If you select option (A), you need to provide:

    1. Mode of filing the ITR,
    2. Date of filing the ITR,
    3. An acknowledgement Number.

  6. If ITR was e-Filed,

    details will be prefilled automatically.

  7. If you select option (B), you need to provide one of the following reasons:

    ​​1. Return under Preparation,
    2. Business has been Closed,
    3. No Taxable Income,
    4. Others.

  8. Navigate to Related Information Summary.

    It gives a detailed information summary.

  9. Choose a relevant option under Information Related To against each transaction mentioned

    Provide additional information if required.

  10. Following are the options available to a taxpayer under Information Relates To tab:

    1. Self-Investment/ expenditure is out of exempt income
    2. Self-Investment/ expenditure is out of accumulated savings
    ​3. Self-Investment/ expenditure is out of gifts/ loans from others
    ​4. Self-Investment/ expenditure is out of foreign income
    5. Self-Income from a transaction is exempt 
    ​6. Income from a transaction is below taxable limit 
    ​7. Self-Income from transaction relate to different AY 
    ​8. Self-Not Known
    ​9. Other PAN 
    ​10. Not Known 
    ​11. I need more information

  11. Upon submission you will see following screen.

    Download Response.pdf for your future reference.

FAQs

How do I file a return against notice?

Step 1: Open the income tax e-filing website and log in to your account with User ID and password.
Step 2: Click on ‘e-File’ tab and select the option ‘e-File in response to notice

What happens if I don’t respond to the notice within 30 days?

In case, no response is received within 30 days of the issue of this intimation, the return of income will be processed after making necessary adjustment(s) without providing any further opportunities in this matter.

What if belated return is not filed?

The income tax department may issue a notice under Section 271F for non-filing of IT Return. You may have to pay a penalty of up to Rs. 5,000 for missing the deadline. If you have a genuine explanation for not filing and if the officer is satisfied with the reason, you may not have to pay the penalty.

How to deal with income tax department notice?

It is very common to receive a notice from the Income Tax Department. These notices create a sense of panic amongst assessees. But to say the least, a lot of such notices are sent in the normal course of processing tax returns. It might be for routine inquiry or a request for clarification. So there is absolutely no need to panic in the first place.

Steps to deal with Income Tax Notice

  1. Don’t ignore the notice

    A lot of these notices can be attended by sincere communication. If you ignore it, you might end up paying penalty along with your income tax payments.

  2. Check the notice for your basic details

    Check PAN name, assessment year, assessing officer and income tax ward details. Make sure that the notice is intended for you only.

  3. Preserve the notice

     Whether received physically or via email preserve it. Because the notice contains the date of order and/or communication for further communication with the IT Department.

  4. Identify the reason for the notice

    In most of the cases, you would be able to identify the reason just by casually reading it. These reasons could be a mismatch in TDS or defect in return etc.

  5. Check the validity of the notice

    There are certain time limits prescribed by the IT department, subject to which any notice can be issued by the department. Check a section mentioned in the notice in pursuance of which the notice has been issued. For example, a notice under section 143(3) for scrutiny assessment has to be served within six months of the end of the financial year in which the return was filed. So, if the notice is served later than this period, it will be considered invalid.

  6. Provide Supporting

    The department would ask you to provide the supporting to support your defense. So the best way to respond to notice is with the help of supporting documents.

  7. In time response

    Even if you are unable to gather all the supporting documents, you should write the same to the office.

  8. Take professional help

    In case of serious matters involving scrutiny assessment, income concealment, etc take professional help from a Chartered Accountant.

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Common reasons for Notice and their resolution

 

Section Reason for Notice Probable resolution
139(9)

For filing a defective return

Identify the defect mentioned in “Annexure A” and submit a return in response to the notice of defective return u/s 139(9)

142

For not filing the income tax return or for the scrutiny of a documents & accounts in support of the return filed.

File the return within the time limit mentioned in the notice.

Submit a proper response if you are not required to file a return.

Present before assessing officer with books of accounts and supporting documents if demanded by Assessing Officer.

143(1)

For adjustment or additional tax demand if an error or incorrect information is detected in the return. 

Pay outstanding tax dues if any.

Correct the errors and file rectification return u/s 154 if required.

143(2)

For scrutiny assessment after a detailed inquiry by assessing officer.

Your case has been selected for scrutiny and you should provide all the relevant information, pieces of evidence as demanded by IT authorities.

148

For reassessment, if the officer believes some income has escaped assessment.

Provide all the relevant information, evidence as demanded by IT authorities.

156

For dues (tax, interest, penalty, fine or any other sum) payable by the assessee)

 

 

Submit a response to a notice from e-filing account.

Pay tax if you agree.

Provide a reason if you don’t agree with the demand.

245

For adjustment of a refund with any demand due

Your refund has already been adjusted against outstanding tax demand so no further action required.

FAQs

What is section 131(1A), and what are reasons to get notice u/s 131(1A)?

Assessing Officer is of the opinion that tax payer are concealing the income or likely to conceal income then tax payer will receive notice u/s 131(1A). This notice is basically intimation that AO is initiating an enquiry or investigate into the matter. The AO should expect the attendance of tax payer and books of accounts, statement of all bank accounts, details of all properties acquired during the financial year.

What is scrutiny assessment u/s 143(3)?

This is a detailed assessment and is referred to as scrutiny assessment. The scrutiny is carried out to confirm the correctness and genuineness of various claims, deductions, etc., made by the taxpayer in the return.

How do I respond to an income tax notice?

Login to your account on the e-filing website by entering your credentials: User ID (PAN), password, and captcha code.
Click on the ‘e-file’ tab and select ‘Response to outstanding Tax Demand’ option.

Understand Income Tax Notices

Identifying the type of Notice Taxpayer has Received

Before responding to any Income Tax notice, you need to make sure that it is a genuine notice and it is addressed to you. You can do that by checking the basic details as shown in a sample notice below:

You need to check:

  • Your name and address
  • Your PAN number
  • Assessment year, type return, ITR type
  • Name and designation of issuing officer
  • Communication reference number

Once you have verified the above details. Understand the intent of Income Tax Notice and requirements stated by the Department. Let’s take a look at the scenarios in which the income tax department may issue Notice.

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Defective Return

In case of any defects in the Income Tax Return, Assessing Office can issue notice u/s 139(9). You need to file a return within 15 days of issue of notice in this case.

Here are some of the instances when a return can be considered a defective return:

  • Any required details are not provided in the annexures, statements and columns of the income tax return.
  • Any tax dues are not paid before filing the income tax return.
  • Assessee is required to maintain books of accounts but he/she has filed the return without providing details of the balance sheet and profit and loss account.
  • Details of auditor and audit report are not provided in case of audit applicability.

Probable resolution

In case of a notice of defective return u/s 139(9), the notice will contain ‘Annexure-A’. which will contain error description & probable resolution. Here’s an example:

Annexure – A
Sl. No Error Code Error Description Probably Resolution
1 31 Taxpayer having income under the income head “Profits and gains of business and profession” but has not filled balance sheet and loss account as required in explanation(d) under section 139(9) read with section 44AA The part A of the profit and loss account and part A of the balance sheet should be entered in the corrected return without which the return filed earlier is liable to be treated as invalid 

 

Time limit

The assessee has to rectify the defect prescribed in the notice within 15 days from the date of the notice. The Assessing officer may condone the delay and treat the return as a valid return. Provided a return is filed before completion of an assessment.

Scrutiny Assessment

Assessing officer (AO) may issue a notice for scrutiny assessment u/s 143(2) to confirm any of the following:

  • A taxpayer has not understated the income; or
  • Has not claimed excessive loss; or
  • Has not underpaid the tax in any manner

The AO will issue a notice requiring the taxpayer to attend his office or to produce any evidence, supporting documents or information in support of his return.

Probable resolution

The taxpayer or his representative has to appear before the assessing officer. Present his arguments, supporting documents and information on the matters/issues required by the officer.

Time limit

Notice issued by AO u/s 143(2) will contain date and time on which the taxpayer needs to appear in his office. The taxpayer may ask for an extension in case of unavoidable circumstances. Notice u/s 143(2) can be issued within 6 months from the end of the financial year in which return is is filed.

Tax Credit Mismatch

When TDS amount or self-assessment tax/advance tax details entered in return do not match with your Form-26AS then you will receive an intimation u/s 143(1) with a tax credit mismatch.

The notice will contain amounts entered by you and the amount calculated by the income tax department as shown below:

In case of any mismatch resulting in “TAX PAYABLE”. You will have to verify the details and take a proper course of action to correct any errors.

Probable resolution

It is possible that your employer/deductor has made any mistakes while filing TDS return. As a result, the amount which you have claimed and the amount in your Form-26AS will vary. You have to ask your employer/deductor to revise the TDS return. So that you can claim credit for TDS which was deducted from your income.

Once the return is revised and correct figures are reflected in Form-26AS. You have to rectify your return u/s 154 due to tax credit mismatch.

If the details entered are correct but the tax computation is not proper, then it will vary with the tax calculation provided by Income Tax Department. Here you may have to pay the remaining tax dues and submit the response for outstanding tax demand.

Tax Return not Filed

This is one of the most common income tax notices. In this case, the IT Department will send you a notice to file a return without further delay. Department can send a notice for past 6 assessment years.

Department also has a system called ‘Non Filers Monitoring System’.  Where based on your transactions, a department may send you a notice to file a tax return.

Probable resolution

The taxpayer needs to respond to a notice within the time limit provided in the notice. If his total income is not taxable then he can respond to notice and provide the same reason.

If his total income is taxable then he must file a return at the earliest otherwise he may be penalized. In case of delayed filing, the department can levy a penalty of Rs 5,000 per year. However, the penalty is not mandatory and depends upon the discretion of the assessing officer. However, if any tax is due, the department charges 1% interest per month from the due date of filing.

Discovery, Production of Evidence

In the case of concealment of income, IT Authority may issue notice u/s 131(1A). Present before him and produce books of accounts and other relevant documents. Failure to comply with this notice is punishable with a penalty of Rs. 10,000 for each default. The books of accounts and other evidence produced by the taxpayer may be impounded by IT Authorities for the proceedings.

Probable resolution

The taxpayer or his representative has to appear before the assessing officer. Present his arguments, supporting documents and information on the matters/issues required by the officer.

FAQs

How do I respond to an income tax notice?

Login to your account on the Income Tax e-filing website by entering your credentials: User ID (PAN), password, and captcha code.
Click on the ‘e-file’ tab and select ‘Response to outstanding Tax Demand’ option.

What is intimation u/s 143(2)?

The notice u/s 143(2) is issued with the aim of ensuring that the taxpayers has not understated any income or shown excessive loss or has paid lower tax. This notice is also known as scrutiny notice. Moreover, notice u/s 143(2) can only be issued if income tax return has been filed by the taxpayer.

Consequences for non-payment of tax demand?

1. Non payment of tax demand attracts penalty and prosecution as per the provisions of the Income tax Act,1961.
2. You are also liable to pay simple interest at the rate of one per cent for every month or part of a month for the period of default in accordance with section 220(2) of Income Tax Act, 1961

Income Tax Notice u/s 139(9) : Responding to defective return notice

What is a defective return?

Filed ITR is defective if any:

  • Discrepancy or
  • Mistake or
  • Information is missing

A notice u/s 139(9) is sent by the IT Department if the return is found defective.

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Defective Return Notice u/s 139(9)

Notice u/s 139(9)

How will I receive notice u/s 139(9)?

Communication on Email

  • The system auto-generates the notice u/s 139(9) and communicates to the assessee on the email entered while filing the income tax return.
  • The sender of these email is usually CPC i.e. Central Processing Centre.
  • The subject of the email is “Communication u/s 139(9) for PAN AWZXXXXXXK for the A.Y.2019-20”. The PAN and AY (Assessment Year) would be different in each case.
  • The notice is attached to the email. It is password protected . The password to open is PAN in lower case and the date of birth in DDMMYYYY format. Eg: aagpr1212a02101980 for PAN: AAGPR1212A and DOB: 02/10/1980.

What are the reasons for defective return notice u/s 139(9)?

Common reasons for defective return notice are as follows:

Mismatch in TDS and Income Details

Defective Return notice u/s 139(9) is issued when there is a discrepancy between Income details filed in ITR & TDS deducted as per Form 26AS. Following are the common reasons for mismatch notice if TDS is deducted under section:

  • 192 but Income is not taxed as salary income,
  • 194J but income is not taxed as business and professional income,
  • 194H but Income is not taxed as business and professional income,
  • 194A but Income is not taxed under Income From Other Source,
  • As per Form 26AS but income is not shown in filed ITR.

To know the exact defect look at the TDS Section mentioned in your Form 26AS and Income Details in ITR.

Example

Ajay earned income from freelancing during FY 2018-19. Freelancing income is considered as Professional Income and TDS is deducted u/s 194J of TDS. However, he reported the income under the head Salary. Here he would receive defective return notice with a mismatch in TDS and Income Details. Form 26AS with TDS Section 194J

ITR filed with Salary Income

Part B Gross Total Income
B1 Income from Business and Profession
Note – Enter value from E8 of Sch BP
0

B2


Salary / Pension

(i) Gross Salary 685074
(ia) Gross Salary as per 17(1) 685074
(ib) Value of
perquisites as per section 17(2)
0
(ic) Profits in lieu of salary as per section 17(3) 0

Return is Filed with Tax Dues

Defective return notice u/s 139(9) is issued when there is a discrepancy between total taxes paid as per Form 26AS and total taxes payable in filed ITR. Following are the common reasons for tax dues:

  • Income added in return but filed without payment of tax dues,
  • Income is added in return but filed without TDS details,
  • The Income added in return but filed without self-assessment tax payment challan details,
  • Income and TDS are added in return but filed without payment of penalty interest.

You can know the defect from ITR and Form 26AS. Let’s take an example: Vijay is a salaried individual with freelancing income. His employer deducted his TDS on salary, However, no TDS was deducted on his freelancing income. While filing ITR-4 for FY 2018-19, he offered all his incomes but forgot to make payment of self-assessment tax before filing ITR. In this case, he would receive defective return notice for return filed with tax dues.

Return filed without P&L and Balance Sheet

Individuals should maintain P&L and Balance Sheet under the following two conditions:

  • Business & Profession income is earned and,
  • An individual is not eligible to opt for presumptive taxation scheme u/s 44AD, 44ADA and 44AE.

IT Department issues notice u/s 139(9) if return filed with P&L and Balance Sheet details and assessee files return is without it. Following are the common reasons for defect:

  • Business & Professional Income is added without details in P&L and Balance Sheet,
  • Income of Business & Profession is added in P&L but Balance Sheet is not filed,
  • Business & Professional Income is added in P&L but the Balance Sheet is partially filled.

You can check the Schedule P&L and Schedule Balance Sheet in filed ITR to know the defect.

Example

Aman is a general commission agent. And he earns commission income from different companies during FY 2018-19. In this case, his income falls under the head Business & Profession. And he is not eligible to opt for presumptive taxation scheme u/s 44AD. He did maintain P&L and Balance Sheet. But while filing his ITR for FY 2018-19, he forgot to fill details in Balance Sheet. In this case, he would receive defective return notice for return filed without P&L and Balance Sheet.

Filed Return without Tax Audit Report

Individuals are required to get their books of accounts audited in the following cases:

  • Total sales, turnover or gross receipts, in business, exceeds INR 1 Crore in any previous year,
  • Gross receipts in profession exceed INR 50 Lakh in any previous year,
  • The income from business/ profession is lower than the presumptive income calculated as per section 44AD/44ADA and the total income is more than INR 2,50,000.

Any Practising Chartered Accountant can carry out tax audit on books of accounts of a taxpayer. The prepared tax audit report is required to be submitted on the income tax e-filing portal. It also needs to be approved by a taxpayer before filing ITR. In following cases you can receive defective return notice when returns are filed without an audit report:

  • Carried out by CA,
  • Submitted by CA or,
  • Accepted by a taxpayer.

For example, Bharat is a salaried individual who also does F&O Trading. His turnover from trading is INR 2.5 Crore. Here, he is required to get his books of accounts audited. But while filing ITR-3 for FY 2018-19, he did not get his books of accounts audited. In this case, he would receive defective return notice for the return filed without a tax audit report.

How to respond to defective return notice u/s 139(9)?

  1. Visit e-Filing portal

    Login to the e-Filing portal using valid credentials and click on Pending Actions > E-Proceedings from the dashboard.

  2. Click on Self

    Navigate to the Self section and click on “View Notices

  3. Notice or Letter

    Click on Notice/Letter pdf. and scroll down and you will have the option to download the notice.

  4. Submit Response

    Click on the submit response option.

  5. Agree or Disagree

    Choose from the options provided as to whether you agree with the terms of the notice or disagree.

  6. Agree with the Notice

    If you select Agree, then select Mode of Response as Online (Click Proceed with ITR and you will be able to open the ITR form online for the correction of defect) or Offline (upload the correct XML/ JSON file as applicable) and click Continue.

  7. Disagree with Notice

    If you select Disagree, then select the reason from the list of options given in the dropdown and click Continue.

  8. e-Verify the Response

    Select the Declaration checkbox and click Proceed to e-Verify.

  9. Successful Submission

    After successful e-Verification, a success message is displayed along with a Transaction ID. Please keep a note of the Transaction ID for future reference. You will also receive a confirmation message on your email ID registered on the e-Filing portal.

FAQs

What are the consequences of not filing a response to notice?

If you don’t file a response within 15 days then your return can be treated as an Invalid Return. Invalid return means no return has been filed for that year. And you can end up with penalties for failure to file return in time. However, you can file a revised return afterwards to save yourself from a penalty.

Do I need to e-verify the ITR filed in response to defective return notice?

No. There is no need to e-verify the ITR filed in response to defective return notice.

How can I download an acknowledgement of ITR filed in response to defective return notice?

You will receive an acknowledgement to your email mentioned in return. You can also download the same from your account on the income tax e-filing portal.

What should I do if the time limit has expired and I wish to file a response?

You can file the revised return from your login on Income Tax E-filing Website. However this return is to be filed u/s 139(5) and not under 139(9) with details of the original return. For FY 2018-19 (AY 2019-20) the due date to file revise return is 31/03/2019.