Response to notice u/s 139(9) - defective return

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

04 June 2013
A friend of mine was in service and he had 3 months salary income, when he resigned and started his consultancy as professional. During 2011-12 he had small business income, but had to incur larger expenses trying to establish, resulting in business loss. He did not keep all books of account but filed his return taking income and expenses by analysing his bank account where whatever income he could generate was banked and all major expenses were through bank or credit card. He mentioned gross receipts and expenses in sl 51 of P &L, net figure being net loss which excel utility auto calculated.

He has received Notice u/s 139(9) with error clauses i.e. 14 & 23, stating Gross Profit or Net Profit in P & L is negative. It does not fall in tax audit case. It is professional loss (not a case of trading) where rule of 8% will apply.

What should he do? Can he file ITR 2 now in response to 139(9) ignoring business loss, or taking it in Income from other sources (loss)? or refile original return with out any change in response to sec 139(9) notice?

Please advise. I wrote to Income tax help line but got no answer. I contacted CPC helpline but they could not clarify how to rectify defect pointed out in on line excel utility. There is no way to contact CPC Assistant Commissioner who issued the notice as his/ her email address is not given.