Income Tax Department Withdraws Erroneous Notices for Correctly Filed ITRs

In a recent announcement, the Income Tax Department has acknowledged and withdrawn defective return notices mistakenly issued to taxpayers who had accurately filed their Income Tax Returns (ITRs) for the Assessment Year 2024-25. The department has assured taxpayers that such erroneous communications should be disregarded.

What Happened?

On November 29, 2024, certain taxpayers received defective return notices alleging discrepancies, such as offering income under Section 44AD despite gross receipts exceeding ₹2 crore, absence of audited books of accounts, or failure to file a balance sheet and profit and loss account. Upon review, the department confirmed these notices were issued in error and stated:

"We regret the above erroneous communication. The return is now being taken up for processing. Kindly await the receipt of intimation for the results of processing."

Expert Insights

Tax professionals have highlighted the incident as a reminder of the need for robust validation systems within the Income Tax Department. A tax expert noted:

"Transparent communication and swift resolution are crucial for maintaining taxpayer trust in the e-filing process. Incidents like this cause undue stress and highlight the need for better system checks."

What Should Taxpayers Do?

If you've received such a notice, here's what you need to know:

1. Verify Notices: Log in to the Income Tax e-filing portal to confirm whether the defective notice still stands or has been withdrawn.
2. Stay Organised: Retain all filing-related documents, including ITR-V and supporting proofs, for quick reference in case of discrepancies.
3. Consult Professionals: Unsure about a notice? Seek assistance from a chartered accountant or tax advisor for expert guidance.
4. Monitor Updates: Stay updated with official announcements from the Income Tax Department.

Filing a Revised ITR? No Need to Worry

If you’ve submitted a revised return under Section 139(5) following an erroneous notice, there’s no cause for concern. A revised ITR replaces the original return and becomes the valid document for assessment. The department will process the latest return unless there are valid reasons for rejection.

What This Means for Taxpayers

This incident underscores the importance of double-checking communications from the Income Tax Department and seeking professional advice when in doubt. By staying informed and organised, taxpayers can ensure a smooth filing process even in cases of administrative errors.