Filed your ITR in the last hour? These 5 mistakes can trigger a defective return notice

As the 31 July income tax return (ITR) filing deadline enters its final hours, many taxpayers are rushing to submit their returns before the clock hits 12 am. In the hurry to complete the process, small errors can go unnoticed and some of them may lead to complications after the ITR has already been filed.

One of the most post-filing issues is the possibility of receiving a defective return notice from the income tax department. Such notices are linked to inconsistencies and omissions or filing errors. Hence, taxpayers are advised to take a moment to review their details before finally clicking on the submit button.

When is a defective return notice issued?

The income tax department issues a defective return notification under Section 139(9) when a filed return is found to be incomplete or inconsistent. Here are the top five reasons that may trigger it:

1. Non-disclosure of foreign assets: Not reporting foreign assets or income in Schedule FA of the ITR form is considered a serious oversight and can trigger a tax notice. If a taxpayer deliberately hides their income, it can lead to a penalty of ₹10 lakh.
2. Inconsistent information: If discrepancies are found between the reported income and tax paid, or between the return and Form 26AS, it may trigger a defective return notice as well.

• Not verifying the return: Just filing an ITR is not enough as it becomes valid only after e-verification is done. You must complete this step within 30 days of filing your return on the e-filing portal to avoid penalties or your return being treated as unfiled.
• Incorrect deductions claimed: If the tax department finds that a taxpayer has made a false entry in their books of account or deliberately omitted an entry to reduce their tax outgo, then a tax notice is sent and a steep penalty equal to 100% of the value of the false or omitted entry is imposed.
• Non-disclosure of capital gains: If you do not disclose capital gains in your ITR, the transaction can create a mismatch during return processing. Such an act can trigger a tax notice and, if left unresolved, penalties and additional tax demands may be imposed.

How to respond to a defective return notice?

The procedure for responding to defective return notice and e-file rectified ITR under section 139(9) is as follows:

• Go to https://www.incometax.gov.in/iec/foportal/ and log in with your user ID and password.
• Click on the e-proceedings tab, select the defective notice, and click on view
• On successful validation, the defective notice will be displayed
• Click on submit in the response column to submit a response
• Select the relevant ITR form from the drop down and upload the corrected XML file.​

Taxpayers should carefully compare the information available in AIS, Form 26AS and TIS with their own financial records before submitting the return. This reduces the chances of receiving a defective tax return.

And in case there is any discrepancy in the AIS, taxpayers should report it on the income tax portal with supporting evidence. However, if the information reflected in the AIS is correct, it must also be disclosed in the ITR, even if the income is exempt, falls below the taxable threshold, or has already been subjected to TDS (tax deducted at source).