Section 139(9) Defective Return for Incorrect HRA Claims
House Rent Allowance (HRA) is a key tax exemption for salaried employees who live in rented accommodations. However, incorrect HRA claims in Income Tax Returns (ITR) can lead to a defective return notice under Section 139(9) of the Income Tax Act, 1961. This occurs when the Income Tax Department detects discrepancies in the HRA claim, leading to scrutiny and requiring the taxpayer to correct the return within a specified time.
Understanding the reasons behind a defective return notice under Section 139(9) due to incorrect HRA claims is crucial. This article explores the causes, consequences, and corrective actions taxpayers can take to rectify errors and ensure compliance with tax laws.
Table of Contents
What is Section 139(9) of the Income Tax Act?
Definition: Section 139(9) of the Income Tax Act allows the tax department to mark an ITR as defective if it contains incomplete or incorrect information.
Impact: A defective return notice means the taxpayer must correct errors and re-file the return within 15 days, or it may be considered invalid.
Common Reasons for Defective Returns:
Mismatch in Income Details
Omissions in Deductions or Exemptions
Incorrect HRA Claims
Discrepancies Between Form 16 and ITR
Failure to Provide Necessary Supporting Documents
Incorrect PAN Details or Bank Information
How Incorrect HRA Claims Trigger a Defective Return Notice?
1. Claiming HRA Without Paying Rent
Taxpayers sometimes claim HRA exemption without actually paying rent.
If the Income Tax Department detects this discrepancy, they can issue a Section 139(9) defective return notice.
Correction: Rent receipts, lease agreements, and bank transfer proofs must be available as evidence.
2. Mismatch Between HRA in Form 16 and ITR
Employers report HRA exemptions in Form 16, and if the claimed amount in ITR is different, it raises a red flag.
Correction: Verify Form 16 details and match the HRA claim before submitting the ITR.
3. Fake Rent Receipts or Bogus Landlord Details
Claiming HRA by providing fake rent receipts or mentioning a non-existent landlord is a violation.
If the landlord’s PAN is missing (mandatory for annual rent exceeding ₹1 lakh), a defective return notice may be issued.
Correction: Ensure the landlord’s PAN is provided, and valid rent receipts are maintained.
4. Claiming HRA for Own Property
Some taxpayers claim HRA while residing in self-owned property, which is not allowed.
Correction: HRA exemption is valid only if rent is actually paid to a landlord.
5. Claiming HRA and Home Loan Benefits Simultaneously
While taxpayers can claim HRA and home loan interest deduction, they must fulfill eligibility conditions.
If both are claimed incorrectly for the same property, a defective return notice may follow.
Correction: Ensure compliance by keeping home loan and HRA claims separate.
6. Failure to Provide Supporting Documents When Required
If the Income Tax Department requests proof of rent payment and it is not provided, an ITR may be marked defective.
Correction: Always keep digital and physical copies of rent receipts, rental agreements, and rent payment proofs.
What to Do If You Receive a Defective Return Notice Under Section 139(9)?
1. Download the Defective Return Notice
Log in to the Income Tax e-filing portal.
Go to ‘e-Proceedings’ → ‘Respond to Notice’.
Download the 139(9) notice and review the defect code.
2. Identify the Error in HRA Claim
Cross-check the HRA claimed in ITR with Form 16.
Verify rent receipts, rental agreements, and payment proofs.
3. File a Revised ITR (Rectified Return)
Select ‘Income Tax Return Rectification’ under the e-filing portal.
Choose ‘Revised Return’ and correct the HRA claim.
Upload the revised ITR within 15 days of receiving the notice.
4. Submit Supporting Documents (if required)
Attach valid rent receipts and a rental agreement in case of further verification.
Ensure that the landlord’s PAN details are correctly mentioned if applicable.
5. Check the Status of Rectification Request
After submission, track the status under ‘Pending Actions’ → ‘Response to Notice’.
If successfully rectified, no further action is needed.
How to Avoid Incorrect HRA Claims in the Future?
Maintain Proper Rent Records: Always keep original rent receipts, a valid rental agreement, and bank transaction proofs.
Match Form 16 with ITR: Ensure that the HRA amount in Form 16 and ITR are identical.
Regularly Review AIS and TIS Before Filing ITR: Cross-check AIS and TIS data with your actual tax records, as incorrect entries in these statements can lead to defective return notices under Section 139(9).
Avoid Claiming HRA for Self-Owned Property: If you own the property you live in, you cannot claim HRA.
Include Landlord’s PAN (if required): If annual rent exceeds ₹1 lakh, mention the landlord’s PAN in ITR.
Do Not Claim Both HRA and Home Loan Interest for the Same Property: Ensure that the claims are made as per tax laws.
Submit Rent Payments Through Bank Transfers: Payments made via bank transfers act as proof and prevent rejection of HRA claims.
Section 139(9) Defective Return and HRA: Consequences of Non-Compliance
Failing to address a Section 139(9) defective return related to HRA claims can have serious consequences. If the taxpayer does not rectify the defects within the stipulated 15-day window, the Income Tax Department may treat the return as invalid, leading to the following issues:
Loss of Tax Benefits: Any deductions or exemptions claimed, including HRA, may be disallowed.
Legal Implications: The taxpayer may be considered as not having filed an ITR, which can lead to penalties or interest under Section 234F.
Revised Return Complexity: If the deadline passes, the taxpayer may need to file a fresh ITR with penalties, making the process more complicated.
Higher Tax Liability: The taxpayer may face additional tax demand, as incorrect HRA claims may lead to reassessment and rejection of benefits.
To avoid these consequences, it is crucial to respond promptly to the defective return notice and ensure that all HRA-related claims are accurate and well-documented.
How to Rectify Section 139(9) Defective Return Related to HRA Through ITR Portal
If you receive a Section 139(9) defective return notice due to an incorrect HRA claim, you can rectify the issue through the Income Tax e-filing portal by following these steps:
Log in to the E-filing Portal
Visit incometax.gov.in and log in with your PAN and password.
Navigate to ‘Pending Actions’
Click on ‘e-Proceedings’ and select ‘Response to Notice’.
Locate the Section 139(9) defective return notice.
Download the Notice and Identify the Error
Carefully read the error description, which may specify discrepancies in HRA claims, such as missing rent receipts or mismatched figures.
File a Revised Return (Corrected ITR)
Select ‘Income Tax Return Rectification’ under the filing section.
Choose ‘Revised Return’ and update the HRA claim with accurate figures.
Ensure that the HRA exemption matches Form 16 and is supported by valid documents.
Submit Supporting Documents (If Required)
Attach rent receipts, rental agreements, and proof of rent payments (bank statements or UPI transfers).
If the rent exceeds ₹1 lakh per annum, include the landlord’s PAN details.
Verify and Submit the Rectified ITR
Once corrections are made, review the revised ITR and submit it.
Verify it through Aadhaar OTP, net banking, or EVC (Electronic Verification Code).
Check Status and Confirmation
Monitor the ‘Response to Notice’ section to ensure the rectification is processed.
If the revised return is accepted, no further action is required.
By following these steps, taxpayers can rectify defective returns efficiently and prevent potential tax penalties or reassessments related to incorrect HRA claims.
Conclusion
Incorrect HRA claims can lead to a Section 139(9) defective return notice, requiring immediate rectification. By ensuring accurate documentation, matching Form 16 details, and submitting valid rent receipts, taxpayers can avoid unnecessary scrutiny. Proper tax planning and compliance with HRA claim rules help in smooth ITR filing and prevent legal consequences.
Timely rectification of defective returns and understanding the correct method of claiming HRA ensures peace of mind, financial savings, and compliance with tax laws. If you receive a defective return notice, act promptly, verify all details, and refile a corrected return to avoid penalties and tax liabilities.
FAQs
1. What is Section 139(9) defective return, and how does it relate to HRA?
Section 139(9) of the Income Tax Act allows the Income Tax Department to mark a tax return as defective if there are errors, missing information, or discrepancies in the filed ITR. If incorrect HRA claims are made—such as claiming HRA without actual rent payments, mismatching Form 16 details, or providing fake rent receipts—the tax authorities may issue a defective return notice, requiring the taxpayer to rectify and refile the return.
2. What happens if I do not respond to a defective return notice?
If a taxpayer fails to rectify and submit the corrected return within 15 days of receiving the defective return notice, the Income Tax Department may treat the return as invalid. This means the return is considered as not filed, potentially leading to penalties, loss of tax benefits, and additional scrutiny from tax authorities.
3. How can I check if my ITR has been marked as defective due to incorrect HRA claims?
To check if your return is defective:
Log in to the Income Tax e-filing portal.
Navigate to ‘Pending Actions’ → ‘Respond to Notice’.
If your return is defective, a Section 139(9) defective return notice will be displayed.
Download the notice to review the defect code and reasons.
4. How do I rectify an HRA-related defective return?
If you receive a defective return notice for incorrect HRA claims, follow these steps:
Verify Form 16 and match it with the HRA amount in your ITR.
Correct any mismatches in claimed HRA and actual rent paid.
Submit valid rent receipts, rental agreements, and bank transaction proofs if required.
File a rectified return (Revised ITR) under ‘Response to Notice’ within 15 days.
5. Can I claim HRA if my landlord does not provide a PAN?
If the annual rent exceeds ₹1 lakh, it is mandatory to provide the landlord’s PAN details in your ITR. If the landlord does not have a PAN, the taxpayer should obtain a declaration from the landlord and keep valid proof of rent payments. Failure to provide this information may result in the rejection of the HRA claim.
6. What are common mistakes that lead to a defective return under Section 139(9) for HRA?
Some common mistakes include:
Claiming HRA without actually paying rent.
Providing fake rent receipts.
Not reporting the landlord’s PAN for rent above ₹1 lakh per annum.
Claiming both HRA and home loan deductions for the same property.
Discrepancies between Form 16, AIS/TIS, and ITR.
7. How does AIS and TIS impact HRA claims in ITR?
The Annual Information Statement (AIS) and Taxpayer Information Summary (TIS) provide pre-filled details of income, tax deductions, and exemptions reported to the Income Tax Department. If HRA details in ITR do not match the AIS or TIS records, it can trigger a defective return notice under Section 139(9). Taxpayers should cross-check their claims with AIS and TIS before filing ITR.
8. Can I claim HRA if I pay rent in cash?
Yes, rent paid in cash can be claimed under HRA, but the taxpayer must obtain valid rent receipts from the landlord. If annual rent exceeds ₹1 lakh, the landlord’s PAN is mandatory. Additionally, rent payments through bank transfers or digital modes offer better proof and reduce the chances of claim rejection.
9. Can I file a revised return if I mistakenly claimed excess HRA?
Yes, if you have overclaimed HRA, you can file a revised return (Rectified ITR) under Section 139(5) before the filing deadline. Ensure that:
The revised return matches Form 16 details.
You provide valid proof of rent payments.
You update any incorrect PAN or rental agreement details.
10. Can I claim HRA if I stay with my parents and pay rent to them?
Yes, you can claim HRA while staying with your parents, but only if:
You actually pay rent via bank transfer or cheque.
You have a valid rental agreement with your parents.
Your parents declare rental income in their ITR.
You keep rent receipts and transaction proof for verification.
11. Is there a penalty for submitting a fraudulent HRA claim?
Yes, submitting fraudulent HRA claims—such as fake rent receipts or claiming HRA while living in own property—can lead to:
Tax reassessment and recovery of the incorrect exemption.
Interest and penalty under Section 270A for under-reporting income.
Tax scrutiny or audit, leading to further legal action in extreme cases.
12. How can I avoid getting a defective return notice for HRA in the future?
To prevent receiving a defective return notice under Section 139(9) for HRA claims, taxpayers should:
Maintain proper documentation (rent receipts, agreements, bank transactions).
Match Form 16, AIS, and TIS data with ITR before filing.
Verify rent payments with bank transfers to strengthen claims.
Ensure accurate landlord details, including PAN if applicable.
Avoid claiming HRA for self-occupied property or incorrect locations.
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