Notice u/s 139(9) for defective return
This query is : Resolved
04 September 2018
Dear Member,
One of my client received Notice U/s 139(9) for Defective return for AY 2017-18 with an error code 332 : Tax Payer has shown gross Receipt or income under the head " PGBP" more than Rs1 Crore; However, Part A of the Profit & Loss Account and/or Balance Sheet have not been filed and the books of accounts have been audited'.
After verification of his ITR & P&L and Balance sheet, he shows net sale as Rs 98 Lacs as Turnover & in Other income Rs 2.75 Lacs as other receipt. As per his clarification about Rs 2.75 lac, this is not his business income & entry was entered on the basis of proforma invoice & there was no actual sale. This Figure is also confirm from VAT return filed & there was no other receipt in Gross sale in VAT return during that period.He also paid tax on such amount considering in P&L account.
Now, can he give reply by deducting such amount from other receipt & file return with revised figure of sale & claim refund of tax paid.
Thanks in advance....
One of my client received Notice U/s 139(9) for Defective return for AY 2017-18 with an error code 332 : Tax Payer has shown gross Receipt or income under the head " PGBP" more than Rs1 Crore; However, Part A of the Profit & Loss Account and/or Balance Sheet have not been filed and the books of accounts have been audited'.
After verification of his ITR & P&L and Balance sheet, he shows net sale as Rs 98 Lacs as Turnover & in Other income Rs 2.75 Lacs as other receipt. As per his clarification about Rs 2.75 lac, this is not his business income & entry was entered on the basis of proforma invoice & there was no actual sale. This Figure is also confirm from VAT return filed & there was no other receipt in Gross sale in VAT return during that period.He also paid tax on such amount considering in P&L account.
Now, can he give reply by deducting such amount from other receipt & file return with revised figure of sale & claim refund of tax paid.
Thanks in advance....
04 September 2018
First try to file the response in pursuance to notice for defective return. Mention these facts and file online response. Once you receive the order from them , then file the revised return in case they don’t accept your submission.
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05 September 2018
Thank a lot.....
waiting for more solutions from experts....
waiting for more solutions from experts....
04 August 2024
Given the situation where your client received a notice under Section 139(9) for a defective return with error code 332, here’s a structured approach to resolve the issue:
### **Understanding the Error Code 332:**
- **Error Code 332:** This error indicates that the Gross Receipts or Income shown under the head "Profit and Gains of Business or Profession" (PGBP) exceeds Rs. 1 Crore, but Part A of the Profit & Loss Account and/or Balance Sheet was not filed, and the books of accounts were not audited.
### **Steps to Address the Notice:**
#### **1. **Verify the Data:**
- **Reconcile Figures:** Ensure that the figures in the ITR, Profit & Loss (P&L) Account, and Balance Sheet match accurately. Confirm that the turnover in the P&L Account and the Balance Sheet is correctly reported.
- **Check the Other Income:** Verify the Rs. 2.75 Lacs entry, which your client believes is not business income. Ensure this amount was correctly reported in the VAT returns and other relevant documents.
#### **2. **Prepare Revised ITR:**
- **Correct the Figures:**
- **Remove Non-Business Income:** If the Rs. 2.75 Lacs is indeed not business income and was incorrectly included, you can adjust the figures accordingly.
- **Revise Turnover:** Deduct the Rs. 2.75 Lacs from the gross receipts, so the corrected turnover should be below Rs. 1 Crore.
- **Prepare the Revised Return:**
- Log in to the [Income Tax e-filing portal](https://incometax.gov.in/iec/foportal).
- Select “e-File” > “Income Tax Return” > “Revised Return” and choose the relevant Assessment Year (AY 2017-18).
- Correctly reflect the revised turnover and other relevant details in the P&L Account and Balance Sheet.
- Attach the revised P&L Account and Balance Sheet if necessary.
#### **3. **File the Revised Return:**
- **Submit the Revised Return:** After making the necessary corrections, submit the revised return with the updated figures.
- **E-Verify the Return:** Complete the e-verification process or send the physical ITR-V form if required.
#### **4. **Claim Refund (if applicable):**
- **File for Refund:** If your client is eligible for a refund due to the revised lower turnover and the corrected tax figures, include a claim for the refund in the revised return.
- **Monitor the Refund:** Track the status of the refund through the Income Tax e-filing portal.
### **Respond to the Notice:**
- **Online Response:**
- Navigate to “e-File” > “Income Tax Return” > “Response to Notice” on the Income Tax e-filing portal.
- Provide a detailed explanation, mentioning the corrected figures and the reason for the discrepancy. Attach any supporting documents, such as VAT returns or proforma invoices, if needed.
### **Additional Steps:**
- **Consult a Tax Professional:** If there are complexities in handling the notice or the revision, consider consulting a tax professional or chartered accountant for expert guidance.
- **Keep Records:** Maintain a record of all submissions, communications, and corrections for future reference.
By following these steps, you can address the defects in the return, correct the errors, and ensure compliance with the notice requirements.
### **Understanding the Error Code 332:**
- **Error Code 332:** This error indicates that the Gross Receipts or Income shown under the head "Profit and Gains of Business or Profession" (PGBP) exceeds Rs. 1 Crore, but Part A of the Profit & Loss Account and/or Balance Sheet was not filed, and the books of accounts were not audited.
### **Steps to Address the Notice:**
#### **1. **Verify the Data:**
- **Reconcile Figures:** Ensure that the figures in the ITR, Profit & Loss (P&L) Account, and Balance Sheet match accurately. Confirm that the turnover in the P&L Account and the Balance Sheet is correctly reported.
- **Check the Other Income:** Verify the Rs. 2.75 Lacs entry, which your client believes is not business income. Ensure this amount was correctly reported in the VAT returns and other relevant documents.
#### **2. **Prepare Revised ITR:**
- **Correct the Figures:**
- **Remove Non-Business Income:** If the Rs. 2.75 Lacs is indeed not business income and was incorrectly included, you can adjust the figures accordingly.
- **Revise Turnover:** Deduct the Rs. 2.75 Lacs from the gross receipts, so the corrected turnover should be below Rs. 1 Crore.
- **Prepare the Revised Return:**
- Log in to the [Income Tax e-filing portal](https://incometax.gov.in/iec/foportal).
- Select “e-File” > “Income Tax Return” > “Revised Return” and choose the relevant Assessment Year (AY 2017-18).
- Correctly reflect the revised turnover and other relevant details in the P&L Account and Balance Sheet.
- Attach the revised P&L Account and Balance Sheet if necessary.
#### **3. **File the Revised Return:**
- **Submit the Revised Return:** After making the necessary corrections, submit the revised return with the updated figures.
- **E-Verify the Return:** Complete the e-verification process or send the physical ITR-V form if required.
#### **4. **Claim Refund (if applicable):**
- **File for Refund:** If your client is eligible for a refund due to the revised lower turnover and the corrected tax figures, include a claim for the refund in the revised return.
- **Monitor the Refund:** Track the status of the refund through the Income Tax e-filing portal.
### **Respond to the Notice:**
- **Online Response:**
- Navigate to “e-File” > “Income Tax Return” > “Response to Notice” on the Income Tax e-filing portal.
- Provide a detailed explanation, mentioning the corrected figures and the reason for the discrepancy. Attach any supporting documents, such as VAT returns or proforma invoices, if needed.
### **Additional Steps:**
- **Consult a Tax Professional:** If there are complexities in handling the notice or the revision, consider consulting a tax professional or chartered accountant for expert guidance.
- **Keep Records:** Maintain a record of all submissions, communications, and corrections for future reference.
By following these steps, you can address the defects in the return, correct the errors, and ensure compliance with the notice requirements.
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