Defective Return Under Income Tax Act (Section 139(9))

A Defective Return refers to an income tax return (ITR) that is incomplete or incorrect due to missing or improper information. Under Section 139(9) of the Income Tax Act, if a return is found defective, the taxpayer is given an opportunity to correct and resubmit it.

📌 When is a Return Considered Defective?

A return is treated as defective if it has any of the following errors or omissions:

1️⃣ Mandatory Details Missing

• Personal details such as Name, PAN, or Address are incomplete or incorrect.
• Bank account details are missing or invalid.

2️⃣ Incomplete or Inconsistent Information

• Balance sheet or profit & loss account details missing in cases where audit is applicable.
• Income details and TDS/TCS claims do not match with Form 26AS.

3️⃣ Tax Computation & Payment Issues

• Taxes due are not paid fully before filing the return.
• Self-assessment tax (SAT) or advance tax is not deposited.

4️⃣ Incorrect ITR Form Used

• Filing an incorrect ITR form based on the income source.

5️⃣ Missing Attachments (For Audit Cases)

• If the taxpayer is required to maintain books of accounts but fails to attach the details.
• Failure to submit the audit report under Section 44AB when applicable.

📢 What Happens If a Return is Defective?

If the Income Tax Department detects a defective return, they issue a Notice under Section 139(9), giving the taxpayer 15 days to rectify and resubmit the correct return.

🚀 If the defect is not rectified within the given time, the return may be treated as invalid, and the taxpayer may face penalties or further notices.

To avoid a defective return, always ensure that the ITR form is properly filled, taxes are paid, and supporting documents are submitted where required.

Is Aadhaar Number Mandatory Under the Income Tax Act?

Yes, quoting the Aadhaar number is mandatory in various cases under the Income Tax Act, 1961. The government has linked Aadhaar with PAN to prevent tax evasion and duplicate PANs.

📌 Key Provisions Related to Aadhaar Under Income Tax Act

1️⃣ Mandatory Quoting of Aadhaar (Section 139AA)

• As per Section 139AA, quoting Aadhaar number or Aadhaar Enrolment ID is mandatory while:
  • Filing Income Tax Returns (ITR)
  • Applying for a new PAN

2️⃣ Linking PAN with Aadhaar

• As per CBDT notification, PAN will become inoperative if not linked with Aadhaar within the prescribed deadline.
• To check or link, visit the Income Tax e-filing portal.

3️⃣ TDS and TCS Applicability (Section 206AA & 206CC)

• If a taxpayer does not provide PAN or Aadhaar, TDS/TCS is deducted at a higher rate of 20% under Section 206AA & 206CC.

4️⃣ Aadhaar for Verification & e-KYC

• Aadhaar is required for e-verification of ITR and e-KYC of financial transactions like opening bank accounts, investing in securities, etc.

5️⃣ Filing ITR Without Aadhaar

• If an individual does not have an Aadhaar number, they must quote the Aadhaar Enrolment ID while filing their return.

6️⃣ Penalty for Non-Linking

• If PAN becomes inoperative due to non-linking with Aadhaar, transactions requiring PAN (e.g., bank accounts, Demat, property sales) may get restricted.

📢 Final Thoughts

Aadhaar is mandatory for filing ITR, linking with PAN, and certain tax-related transactions. Ensure your PAN is linked to Aadhaar to avoid penalties and non-compliance issues. 🚀

Summary Assessment Under Income Tax Act – Section 143(1)

Summary Assessment is a computerized assessment of an Income Tax Return (ITR) without any human intervention. It is done under Section 143(1) of the Income Tax Act and is based purely on the details submitted by the taxpayer in the return.

📌 Key Features of Summary Assessment

1️⃣ Automated Processing

• The return is processed electronically using the Centralized Processing Center (CPC).
• No manual verification is done at this stage.

2️⃣ Matching with Departmental Records

• The system automatically compares the ITR details with Form 26AS, AIS, and TDS records.
• Any discrepancies in tax payments, deductions, or income are flagged.

3️⃣ Possible Adjustments
The tax department may make adjustments for:

• Arithmetic errors in tax computation.
• Incorrect tax claims or deductions.
• Mismatches in TDS/TCS or tax credits.

4️⃣ No Scrutiny Involved

• Summary assessment is not a detailed scrutiny.
• If further verification is needed, the department issues a notice under Section 143(2) for scrutiny.

5️⃣ Time Limit for Summary Assessment

• A summary assessment order must be issued within 9 months from the end of the financial year in which the return was filed.

6️⃣ Outcome of Summary Assessment
After processing, the taxpayer receives an Intimation under Section 143(1), which may show:
✅ No changes in tax liability.
✅ Refund due (if excess tax is paid).
✅ Additional tax payable (if tax is underpaid).

📢 Final Thoughts

Summary assessment is a quick, computerized check of tax returns without human intervention. However, if discrepancies exist, taxpayers may receive demand notices, refund approvals, or scrutiny notices for further examination. Always ensure accurate reporting to avoid unnecessary issues! 🚀

Read:What are the time limits of issuing of Notices under Income Tax Act?

Reassessment Under Income Tax Act – Meaning, Provisions & Process

📌 What is Reassessment?

Reassessment refers to the process where the Assessing Officer (AO) re-examines an already completed assessment if they believe that income has escaped assessment. This is done under Section 147 of the Income Tax Act, 1961.

🔹 Key Provisions of Reassessment (Section 147)

1️⃣ Reason to Believe:

• The AO must have a valid reason to believe that some income was not assessed or was under-reported.
• Mere change of opinion is not a valid ground for reassessment.

2️⃣ Time Limits for Reassessment Notices (Section 148):

• If the escaped income is ₹50 lakh or less → Notice can be issued within 3 years from the end of the relevant assessment year.
• If the escaped income is more than ₹50 lakh → Notice can be issued within 10 years from the end of the relevant assessment year.

3️⃣ Approval Requirement:

• The AO needs prior approval from the specified authority before issuing a reassessment notice.

🔹 Process of Reassessment Under Section 147 & 148

✅ Step 1: Notice under Section 148 is issued to the taxpayer.
✅ Step 2: The taxpayer is required to file an Income Tax Return (ITR) in response to the notice.
✅ Step 3: The AO examines the response and issues a show-cause notice explaining why reassessment should not be done.
✅ Step 4: If valid reasons exist, reassessment proceedings begin, and a fresh assessment order is passed.
✅ Step 5: Taxpayer can challenge the reassessment if they find it unjustified.

🔹 When is Reassessment Not Allowed?

🚫 If the same issue was examined in the original assessment and no new information is available.
🚫 If more than 3 or 10 years have passed (depending on income threshold).
🚫 If AO does not have concrete evidence of income escaping assessment.

⚖️ Legal Safeguards for Taxpayers

• Taxpayers have the right to challenge reassessment before the Commissioner of Income Tax (Appeals) or the Income Tax Tribunal.
• If reassessment is without proper justification, courts can quash the notice.

📢 Final Thoughts

Reassessment is a tool for tax authorities to bring escaped income into the tax net, but it must be conducted lawfully. If you receive a notice under Section 148, consult a tax expert before responding.

Read: What are the time limits of issuing of Notices under Income Tax Act?