Error Code 31 Under Section 139(9) | Income Tax Return |

Certain Assessees are receiving Error Code 31 through Intimation under section 139(9) of the Income Tax Act. The Error Code 31 is sent for only assessees who have filed their Income Tax Return (ITR 4) with ‘Income from Business or Profession’. Until last year, there is no such Error Code 31 for Returns filed. Error Code 31 arises when you have not submitted the Balance Sheet or If the Balance Sheet you submitted is empty with all Zero Balances. Below, we have provided the solution for Assessees who have received the 139(9) Intimation and Error Code 31 and do not know what to do.

Solution for Error Code 31

From this Assessment Year, Income Tax Department is not accepting blank Balance Sheets. You will have to fill in some numbers in those columns.

If you have an asset, the there is no issue with filling up those details.

But what if you do not own any assets. In such case, you will have to fill at least the Bank and Cash Balances.

You will find the Bank and Cash Balance Columns in Point No-51 of the Income Tax Return.

In this case all you have to done is to put in your estimated cash balance and actual bank balance used for the business orprofession.

You need to rectify the notice under ‘defective return u/s 139(9) error code 31’ by submitting a revised return after rectifying the detect.

How to Prepare Balance Sheet in response to Error Code 31 through Intimation 139(9) – by Satish

The best way to prepare Balance Sheet is to start with ‘Application of Funds’ section.

In application of funds first figure out the assets that you use for your profession. For me it includes

  1. Car,
  2. Computer.
  3. Laptop,
  4. Two Mobile Phone Phones.
  5. Some Furniture at Home,
  6. Some Equipment (I use for my profession).

Some were purchased in the beginning of  financial year (2015-16) others were purchased earlier. For those purchased in FY 2015-16, I used the value on the bill and for those purchased earlier I calculated their depreciated value as on beginning of FY 2015-16 as per rules of depreciation.

The sum of these asset values were entered into the  Fixed Assets Gross Block Column. Then depreciation for all the assets for FY 2015-16 was calculated and entered into Fixed Assets Depreciation Column.

The software then calculates the Net Block Assets as (Gross Block Assets – Depreciation). I donot have capital work in progress. So this was left zero. So Total Assets in my case = Net Block Assets

So now the total Application of funds = Total Assets+ Balance in the bank (will be automatically calculated by the Software).

This value (Total Application of Funds) was entered into Source of Funds sections against Proprietor’s Capital in Proprietor’ Funds column. I left all other columns in the Source of Funds section blank as I did not have loans, reserves, or other liabilities for my business.

This will now Balance the whole BS section. The Source of Funds = Application of Funds!!

Now nothing entered in BS to calculate assets can be shown as an expenditure in the P&L statement.  The depreciation already entered in BS is to be shown as expenditure in the P&L against the Depreciation and amortization column in P&L.

Depreciation should also be entered in every detail in the relevant sections of Schedule DPM, Schedule DOA, Schedule DEP, and Schedule DCG.

After making these changes (Entering BS, Revising P&L by factoring depreciation, and Entering all relevant schedules of depreciation (DPM and DEP in my case)) I was able to submit the revised return.

The revised return was processed without further detects and I have received my refund.

Conclusion: Error Code 31

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