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

ITR 738 views 7 replies

Arvind

Individual

60 Points Joined July 2012

I have filed ITR2 with long-term capital gains for debt-oriented mutual funds which were acquired before April 1st, 2023 (so they are still eligible for indexation benefit). As a result of calculating indexation, the LTCG amount is lesser than the gross receipt indicated in 26AS - which was computed by MF / CAMS without indexation.

Somehow, this is triggering the below validation error and consequently the ITR was found defective: "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. Thus, while credit for TDS is being claimed, the corresponding receipts are not offered in the respective income schedules, to arrive at the taxable total income. Hence, the return of income filed is regarded as defective, as provided in Explanation (a) under section 139(9)." Notice has error code SEC139_F26AS_2021_002.

It does not seem to be correct logic. I am planning to respond as "disagree" to the notice and provide explanation. Any other option?

Replies (7)

Dhirajlal Rambhia

SEO Sai Gr. Hosp.

208350 Points Joined July 2016

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.

Arvind

Individual

60 Points Joined July 2012

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

Dhirajlal Rambhia

SEO Sai Gr. Hosp.

208350 Points Joined July 2016

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

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

Arvind

Individual

60 Points Joined July 2012

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.

Prashant

Director

44 Points Joined April 2008

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 ?

Arvind

Individual

60 Points Joined July 2012

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?

Prashant

Director

44 Points Joined April 2008

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.