Ahmedabad: An incorrect code in an income tax return (ITR) has put several business taxpayers under the department’s compliance scanner. Several from Ahmedabad have received defective return notices, flagging returns in which the selected business or profession code is absent, incorrect or does not correspond with the taxpayers’ activities reported in the financial statements. Tax professionals said such notices are not issued often, but an unusually high number have been sent for ITRs for 2024-25.The mismatch may trigger further scrutiny and compliance requirements, tax experts warned. They have advised recipients to correct the mismatch within the time specified by the department. If they fail to respond, experts cautioned, their returns may be treated as invalid.Under Section 139(9) of Income Tax Act, a return can be treated as defective if key particulars are missing, invalid or inconsistent. “Such notices are not issued often, but an unusually high number of them have been issued for the assessment year 2024-25,” chartered accountant Karim Lakhani said. “Many taxpayers file returns but make a mistake when selecting the business code, resulting in these notices.”Experts said a common error was selecting a professional code instead of an appropriate business code. They pointed out that taxpayers who accidentally picked a professional code and reported income above Rs 75 lakh have, in some instances, been prompted to comply with audit-related requirements linked to that classification.Lakhani said taxpayers were worried because the deadline for revising the assessment year 2024-25 return had already passed. “The only way to avoid such problems is to ensure that the correct business code is selected at the time of filing,” he said.Mayur Modha, vice-president of the CA Association of Ahmedabad, noted that numerous chartered accountants report an unprecedented volume of clients receiving these notices.He added that those affected should still try to rectify the error and file a revised return. “If the department has not processed the return yet, there may still be a chance to revise it,” he added.Tax experts advised affected taxpayers to read the notice carefully, check whether the selected code matches their actual line of activity and respond within the prescribed period. They said taxpayers should also verify whether the notice requires a revised return, a response through the income tax portal or any additional compliance.
