Section 139(9) of Income Tax Act, 1961, talks about income tax returns that are wrong. When a return filed by a person or entity is discovered to be missing or incorrect it outlines the procedure and requirements. This section is very important for making sure that taxpayers fill out their returns completely and correctly. If there are any mistakes or missing information in the return, the Assessing Officer (AO) can notify the taxpayer and ask them to correct the errors. This article will explain what Section 139(9) is all about, how it works, and what consequences it holds for taxpayers.
What Is a Defective Return?
A return of income can be considered defective under Section 139(9) if it does not meet certain required conditions. The most common reasons for a return being defective include missing information, incomplete annexures, or lack of necessary proof, such as the audit report or tax payment details. The section ensures that all the essential details are provided so that the return can be processed smoothly. If the return is defective, the taxpayer is given a chance to correct the errors.
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What Happens When the Return Is Defective?
If the return is defective, the Assessing Officer (AO) will send a notice to the taxpayer. This notice will explain what the issues are with the return. The taxpayer is then given 15 days to rectify the defect. If the taxpayer is unable to correct the return within these 15 days, they can request the AO to extend the deadline. The AO has the discretion to allow a further period, but it is up to their judgment.
If the taxpayer does not rectify the defect within the specified time or any extended period, the return will be treated as invalid. This means that it will be as if the taxpayer did not file any return at all. The provisions of the Income Tax Act will treat the case as a failure to file the return. This could lead to penalties, interest, or even legal consequences.
However, if the taxpayer rectifies the defects after the deadline but before the assessment is completed, the AO may still accept the return. In such cases, the AO can condone the delay and treat the return as valid.
What Makes a Return Defective?
A full description of what a defective return is can be found in Section 139(9). It spells out the requirements that must be met for the return to be acceptable. Some of these are:
Annexures and Statements: The return must include all the necessary annexures and statements. These documents are related to the computation of income under different heads, such as salary, business income, or capital gains. Without these, the return will be defective.
Computation of Tax: The return must be accompanied by a statement that shows the computation of the tax payable based on the income reported.
Audit Report: If the taxpayer’s income is subject to audit under Section 44AB, they must submit an audit report along with the return. If the audit report has already been submitted before the return, the taxpayer must provide proof of its submission.
Tax Payment Proof: The return must be accompanied by proof of taxes paid, including tax deducted at source (TDS), advance tax, and self-assessment tax. If the proof is missing, the return may still be accepted if the taxpayer provides a certificate of TDS or tax collection within a certain period.
Books of Accounts: If the taxpayer maintains regular books of accounts, they must include certain documents like the profit and loss account, balance sheet, and trading accounts. If the taxpayer runs a business, they must also provide personal accounts of the business owner or partners.
Audited Financial Statements: If the taxpayer’s accounts are audited, they must submit audited financial statements. These include the audited profit and loss account, balance sheet, and auditor's report.
Details for Unorganized Accounts: If the taxpayer does not maintain regular books of accounts, they must provide a statement showing turnover, gross profit, expenses, and net profit. This will help the AO understand the financial condition of the taxpayer.
How to Rectify a Defective Return?
Once the taxpayer receives a notice regarding a defective return, they need to take action immediately. The steps to rectify a defective return are as follows:
Review the Defect: The taxpayer should carefully read the notice sent by the Assessing Officer. This will detail the specific issues with the return.
Rectify the Defect: After understanding the issues, the taxpayer must correct them. This may involve submitting missing annexures, adding the audit report or providing proof of tax payments.
Resubmit the Return: After making the necessary corrections, the taxpayer must resubmit the corrected return. This can usually be done through the e-filing portal of the Income Tax Department.
Submit Proofs: Along with the corrected return, the taxpayer must also submit the required supporting documents, such as proof of tax payment, audit reports, and financial statements.
Verify the Return: Once the return is resubmitted, the taxpayer must verify it using methods like Aadhaar OTP, digital signature certificate (DSC) or electronic verification code (EVC).
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Consequences of Not Rectifying the Defective Return
If the taxpayer fails to rectify the defective return within the given period, the return will be treated as invalid. The consequences of this can be severe. For instance, the taxpayer may face penalties, legal actions, and interest charges for failing to file a proper return. In some cases, the taxpayer may also lose out on tax refunds that they would otherwise be eligible for.
Moreover, claims for deductions and exemptions may not be accepted, and the taxpayer’s compliance status may be affected, leading to future difficulties.
Summing Up
Section 139(9) of Income Tax Act, 1961, is a key part of making sure that taxpayers make returns that are complete and correct. There is a clear way to fix mistakes on tax returns, and taxpayers are encouraged to include all the necessary information. Taxpayers can stay out of trouble with the law and avoid fines if they follow the rules and fix any problems right away. Understanding the requirements of this section is crucial for every taxpayer to stay compliant with the law and ensure smooth processing of their returns.
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Section 139(9) of Income Tax Act, 1961: FAQs
Q1. What is Section 139 of Income Tax Act, 1961?
Section 139 of the Income Tax Act, 1961, pertains to the provisions related to filing of income tax returns. It defines when and how a taxpayer has to file a return and the consequences for default thereof.
Q2. Who has to file a return under Section 139 of Income Tax Act?
Section 139 requires each individual, Hindu Undivided Family (HUF), company, firm, or any other tax payer to submit a return if the total income is above the basic exemption amount. In some situations, even if the income is less than the exemption amount, submission of a return is required.
Q3. What is a belated return under Section 139(4)?
A belated return is submitted after the due date, but before the end of the assessment year. Belated returns, though, can incur a penalty and interest costs under Sections 234A, 234B, and 234C.
Q4. What is a revised return under Section 139(5) of Income Tax Act?
A revised return is submitted to rectify any errors or omission in the previously submitted return. The revised return should be submitted before the finalization of assessment or before the expiry of the relevant assessment year, whichever is earlier.
