ITR2 defective under section 139(9) - TDS gross receipt is higher than LTCG computed

Read the notice properly...

 "The gross receipts shown in Form 26AS, on which credit for TDS has been claimed, are higher than the total of the receipts shown under all heads of income, in the return of income.

Not higher than LTCG computed.

Rectification is possible provided you sort out the actual defect.

Thank you for replying, Dhirajlal ji. Are you saying there is a mismatch in the TDS section in ITR vs. 26AS?

No. The income reported in ITR as against TDS claimed, is less than the income reported in form 26AS.

Not the LTCG .... Incomes.....

Perfect, and this is precisely the problem I mentioned originally. Unfortunately, the income reported in 26AS (by CAMS / MF) is based on no indexation benefit, and hence it is more than the actual income (which is LTCG computed based on indexation benefit). This is what I have provided as explanation to the notice. Other heads of income (like OS) are perfectly matching due to no question of indexation there.

I got notice under section 139(9) with same code SEC139_F26AS_2021_002 couple of days back.  Have you submitted response after disagreeing with the notice ? Have they accepted your response ? 

The response is submitted, but there is no further indication of acceptance or not. I might submit a greviance in another few days to check if there is anything else required.

Prashant ji, is your situation similar i.e. wrong (non-indexed) basis applied by CAMS to calculate cost of acquisition for debt-oriented MFs acquired prior to 2023?

I  had submitted a 'disagree' response to Defective Notice under Section 139(9) with error code SEC139_F26AS_2021_002. I had mentioned actual figures of Income reported in ITR and Receipts mentioned against TDS in form 26AS  in 'reason' box, & had  stated that since former figure (quoted in ITR)  is higher than later one (in 26AS), my explanation be accepted & ITR be processed. However even after 2 months, there is no indication from ITD regarding acceptance or rejection.  

Shall I raise a grievence ?  If I happen to receive a 'non-acceptance' response after December 31, I wont be able to file a revised return too.

Shall appreciate if the experts here could provide guidance in this matter.

This is a common issue in ITR-2 where TDS has been deducted on a transaction, and 26AS/AIS shows the full sale consideration as gross receipts, but you have computed only the capital gain portion in Schedule CG.

The department reads this as: income received (full sale value per 26AS) is higher than income declared in ITR. Hence the defect notice under 139(9).

How to fix this:
- In ITR-2, go to Schedule TDS-1 or TDS-2 and ensure the Amount on which TDS was deducted column matches the gross receipt shown in 26AS, not just the gain amount. This is a different field from the income/gain itself.
- For mutual fund redemptions, the full redemption value is typically the TDS gross receipt, and your capital gain (redemption value minus cost of acquisition) goes in Schedule CG. Both fields need to be filled separately.
- Once you identify the mismatch, respond to the 139(9) notice on the e-filing portal within 15 days from the notice date, selecting Agree to the defect and filing a corrected return.

For the exact portal steps and which ITR-2 schedules to correct, this [Section 139(9) defective return guide](https://taxgarden.in/blog/section-139-9-defective-return-notice-how-to-respond-fix-itr-india) has a step-by-step walkthrough.