Hi, Kindly help me resolve the following Income Tax issue for my sister. She wrongly filed ITR-1 in A.Y. 2023-24, while she was an NRI (Residential status) in the relevant F.Y., for which ITR-2 needed to be filed. The mistake is only in declaring the residential status & the ITR form chosen to be filed. The income declared is all correct. We’ve researched and concluded the following. Let me know if we are wrong in any of the points below: - Missed the Revised Return deadline. Can’t be filed. - Cannot file ITR-U as there's no increase in tax liability. - Cannot file Rectification as there was a mistake on the taxpayer's side, not in the CPC Intimation Order. I am writing this to help guide my sister who would like to find a solution to this wrong filing proactively and avoid a future notice from ITD, in case. Alternatively, can we just leave it as it is and handle it at the time of notice - what are the consequences then? How to handle it then? P.S. Since the income was below the exemption limit, there was no tax liability. But there was a refund of the TDS amount - deducted for a Fixed Deposit, which was processed by the CPC u/s 143(1).
Now that the return is already processed by the CPC and refund is also issued, you may just ignore the error.
Even otherwise, the return was validated and allowed to be uploaded, which would not have been possible, if the wrong return was selected. Further more, even CPC also did not notify it as a defective return and still processed. So practically there is no need for concern.
- Ordinary resident is liable to disclose global income (i.e. Indian income and foreign income) and pay tax on such income. Also he is required to disclose foreign assets in the ITR
- As she was NRI in A.Y. 2023-24 which can be vouched from TDS deduction by bank on FD interest or/and NRO SB interest (if TDS was deducted u/s 195)
- Update the facts if she receives any notice
- Also recheck her Indian income earned during F.Y. 2022-23. If any income is escaped then you can file ITR-U for such income with correction of residential status
- Check the correctness of ITR filed for A.Y.2024-25 and w.e.f A.Y. 2025-26, file the ITR correctly
For detailed discussion you may opt for phone consultation
Incorrect Form (ITR-1) Chosen:
This is a technical mistake relating to residential status and form selection.
Revised Return Not Possible:
The deadline for filing a revised return for AY 2023–24 was 31 December 2023.
This option is no longer available.
ITR-U Not Applicable:
ITR-U can only be used where income was underreported and there is additional tax liability.
In this case, there was no omission of income, hence not eligible.
Rectification u/s 154 Not Valid:
This remedy is limited to errors apparent on record, such as arithmetical mistakes.
Wrong ITR form or residential status selection does not qualify.
CPC Has Already Accepted the Return:
The return was not marked as defective.
The system allowed filing and processed the refund, indicating no immediate compliance issue.
No action is required at this stage. The return has been accepted, and there is no legal compulsion to revise or withdraw it now.
Maintain supporting documentation (passport entries, visa, travel history) to prove NRI status in case a query or notice is issued later.
From AY 2024–25 onwards, ensure the correct form (typically ITR-2) is used based on NRI status.
If any future notice is received under Section 139(9) (defective return) or Section 143(2) (scrutiny), a suitable clarification can be filed with supporting documents, explaining the genuine mistake and that no income was underreported.
Let me know if you'd like me to help in for future filings.
Since:
Income figures are correct,
No underreporting or concealment,
Tax liability is NIL (even before refund),
CPC has already processed and issued the refund,
…the risk of a future notice is low.
However, the mismatch is in the residential status & choice of ITR form — if this comes up in departmental scrutiny, they could issue a limited scrutiny notice to verify status and compliance.
If they do issue a notice in future:
You’ll have to explain that the residential status was wrongly marked in the original ITR.
Provide proof of NRI status (passport with travel details, visa, foreign bank statements, etc.).
Clarify that income figures were correctly reported and there was no revenue loss.
In most such cases, it ends with an advisory/warning, especially when there’s no tax evasion.
Proactive approach vs. wait-and-watch
Option A – Proactive disclosure now
You can file an offline letter to the AO (jurisdictional assessing officer) explaining the error and enclosing:
Copy of the filed ITR & acknowledgement
Correct residential status details
Computation showing NIL tax liability
Proof of NRI status
This way, the record is corrected in departmental files and your sister has shown good faith.
Option B – Wait and respond if notice comes
Since there’s no revenue impact, many taxpayers leave it as-is.
Keep all documents ready in case of a query.
Respond promptly with explanation if you get a notice.
Practical recommendation
Given there’s no tax loss and refund already processed, the risk of any adverse outcome is minimal.
If your sister wants absolute peace of mind, I’d suggest sending a one-page voluntary disclosure letter to her Jurisdictional AO via post or online e-proceedings (if enabled).
If she’s fine with a small residual risk, she can do nothing now and just be prepared with the documents.
