HOW DEFECTIVE NOTICES AFFECT ITR-U?

India’s income tax system is rapidly moving toward greater transparency and stricter digital compliance. With PAN–Aadhaar linkage, GST integration, and AI-driven scrutiny, even minor discrepancies in reported income are quickly identified. To help taxpayers voluntarily fix past mistakes, the government introduced the Updated Return (ITR-U) under Section 139(8A). This facility plays an important role in understanding the relation between defective notice and ITR-U, especially in cases involving a defective return u/s 139(9).

In this blog, we will explore the benefits of filing ITR-U, common mistakes to avoid, how to give a proper response to defective return notice, whether ITR-U can be used to switch tax regimes, and how defective notices affect ITR-U filings. We’ll also cover real-life scenarios, highlight the new Tax Year system starting in 2026, and answer practical FAQs to help you stay compliant.

Benefits of ITR-U Filing and Mistakes to Avoid

• Avoids penalty notices for under-reporting.
• Reduces the risk of scrutiny.
• Maintains a clean compliance record.
• Provides peace of mind.

Common Mistakes to Avoid While Filing ITR-U

• Filing without paying additional tax.
• Trying to claim a refund (not allowed).
• Missing the 48-month deadline.

Relation Between Defective Notice and ITR-U

A defective notice is issued when the Income Tax Department finds errors, missing details, or mismatches in the ITR you have already filed.

An ITR-U (Updated Return) is a tool for voluntarily fixing past returns by declaring omitted income or mistakes. However, it does not replace the defective return process.

• If your return is marked defective u/s 139(9), you must correct it first by re-filing or submitting a response.
• If later you realize that you under-reported income or missed certain income, you can use ITR-U to fix it (within 12–48 months).

👉 In short:

• Defective Notice = Department points out errors (reactive).
• ITR-U = You correct past mistakes voluntarily (proactive).

Both aim at compliance, but they work differently.

What is a Defective Return (Notice) Under Section 139(9)?

A notice under Section 139(9) is raised when the ITR you filed has gaps, mistakes, or inconsistencies.

👉 The Income Tax Department won’t correct it on your behalf because:

• Only the taxpayer knows accurate figures (income, deductions, challan details, etc.)
• Legally, the taxpayer is responsible for filing a correct return.
• System auto-checks at CPC only validate; they don’t “fix” your return.

What makes a Return Defective?

Some common reasons are:-

1. Wrong ITR form – Choosing an ITR form that does not support the income to be shown there.
2. Mismatch with TDS/TCS data – Claiming TDS but TDS not appearing in Form 26AS.
3. Business income errors – In disclosing “Income from profits and gains from business/profession”, the Balance Sheet/Profit & Loss statement is not filled out, where the maintenance of books and accounts is mandatory.
4. Non-filing of Audit Report – When a tax audit under Section 44AB is required but the audit report has not been submitted.
5. Missing schedules or details – Incorrect insurance policy number in 80D claim, missing annexures, or incomplete heads of income.
6. Deliberate or accidental omission – Hiding income may pass initial filing but gets flagged when matched against AIS, GST, or TDS data.

Examples of Defective Returns

• A partner in a firm files ITR-1 for his salary from the firm under the heading “Income from salary” instead of filing ITR-3 as “Income from profits and gains from business/profession”. → defective.
• A taxpayer claims TDS credit of ₹10,000/- on interest income but fails to report ₹1,00,000/- interest on deposit under the head ”Income from other sources” or underreports ₹50,000/-. → defective.

How will a Taxpayer be informed about a Defective Return?

1. The Income Tax Department communicates a notice under Section 139(9) through your registered email or by post.
2. It will also be available on the E-filing portal → Login → Pending Actions → E-Proceedings.

Response To Defective Return Notice

• An assessee generally gets 15 days from the notice date (or longer if extended) to correct it.
• You can authorize another person (e.g., CA) to respond on your behalf.
• The defect can be fixed by filing the Income Tax Return again online with the correct information.

What if You Don’t Respond?

1. The return can be considered invalid, meaning it will be treated as if it was never filed.
2. This leads to loss of carry-forward of losses, loss of exemptions, penalty, and interest exposure.

Can You File a Fresh Return After Defective Notice?

1. If the due date for that assessment year has not expired, you can submit a fresh or revised return.
2. When the return filing deadline has passed, the taxpayer must address the notice under Section 139(9) instead of filing a fresh return.
3. Failure to respond will result in your return being treated as not filed for that year.

Can I Update My ITR in ITR-U to Switch Between Old and New Tax Regimes?

The short answer: No.

For Individuals without Business Income (ITR-1 & ITR-2)

• You can change it each year, but only until the original filing due date under Section 139(1).
• After that, regime selection is locked.

For Taxpayers with Business/Professional Income (ITR-3 & ITR-4)

• One-time option to switch, but must be exercised before the due date.
• Once chosen, the option generally stays fixed.

✅ In short: ITR-U cannot be used to change tax regimes.

Practical Scenarios Where ITR-U is a Lifesaver

The New Income-Tax Bill and the “Tax Year” Shift

From April 2026, India will adopt a Tax Year system replacing “Previous Year” and “Assessment Year.”

Why This Matters for ITR-U?

1. Cleaner timelines: 48-month window counted from the end of the Tax Year.
2. Global alignment: Matches international practice, helps NRIs/MNCs.
3. No confusion: Filing years become simpler to track.

Frequently Asked Questions (FAQ)

Q1. I submitted an ITR-U and later got a defective notice.. How do I respond?

Ans. Login to the E-filing Portal → Pending Actions → e-Proceedings → Select Notice → Submit Response.

Q2. While preparing a response, which section should I select?

Ans. For ITR-U → Select 139(8A), and For other returns → Select 139(9).

Q3. Can I submit multiple responses to the same defective notice?

Ans. No, only one response per notice is allowed.

Q4. Is e-verification required for ITR-U?

Ans. Yes. Aadhaar OTP, EVC, or DSC is mandatory for completion.

Q5. Do I need to attach proofs with ITR-U?

Ans. No attachments are uploaded. Keep records ready for future queries.

Q6. I submitted an Updated Return (ITR-U) under Section 139(8A).. Later, I also responded to a defective notice for my earlier return. Which return will be considered as the latest?

Ans. The Updated Return (ITR-U) will prevail. It will be treated as your latest valid return, even if a defective notice response was filed for an earlier return.

Final Thoughts

ITR-U is more than a compliance tool—it’s a chance for taxpayers to correct mistakes before facing penalties. With the Tax Year reform in 2026, timelines will be simpler, but enforcement will be stricter.

The government’s message is clear:

• Opportunity: Fix mistakes voluntarily.
• Accountability: The later you correct, the higher the cost.
• Transparency: Digital trails make it harder to hide.

👉 Voluntary compliance today is always cheaper than enforced compliance tomorrow.

New to updated returns? Start with our ITR-U Basics 2025 guide to understand eligibility, timelines, and filing rules.

Paramita Deb

I am a practicing Chartered Accountant, now venturing into content writing. Covering money matters—taxation, finance & financial news—presenting accurate, easy-to-understand insights, combining professional knowledge with a passion for educating readers on managing and understanding their finances better.