ITR-3 Glitch? Income Tax Portal Flags Defects for Partners Even When No Error Exists

The Income Tax Department’s e-Filing portal has come under scrutiny after taxpayers filing ITR-3 as partners in partnership firms reported apparent issues in the Category D defect report generated during return validation. While the portal allows the return to be uploaded, it displays defect messages that professionals believe are incorrect and could create unnecessary confusion among taxpayers.

A screenshot shared by taxpayers shows that the return validation reports “Category of Defect B/D” with two errors found, even though the portal simultaneously states that the return can be uploaded and that the defects relate to possible issues in deductions or claims.

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Two Issues Identified

The first issue is a typographical error in the validation message itself.

The suggestion displayed by the portal reads:

“Kindly check whether the amount of interest due or received from the partnership firms is offeref to tax…”

Similarly, the message relating to remuneration also uses the word “offeref” instead of “offered.” Tax professionals have pointed out that such errors in official validation messages reduce confidence in the portal and should be corrected promptly.

Validation Logic Questioned

The more significant concern relates to the portal’s validation logic.

The portal generates the following defect messages:

Interest due or received from partnership firms is more than the amount disclosed in Schedule Profit & Loss Account (Sl. No. 14xi(b)).
Remuneration due or received from partnership firms is more than the amount disclosed in Schedule Profit & Loss Account (Sl. No. 14xi(c)).

However, professionals argue that this validation is not applicable in many genuine cases.

Why Professionals Say the Defect Is Incorrect

Where an assessee’s business income consists only of partnership firm receipts—such as:

Share of profit,
Interest from partnership firm, and
Remuneration from partnership firm,

there may be no separate Profit & Loss Account requiring disclosure of these figures under Schedule Profit & Loss.

In such cases, the income is reported through the schedules specifically meant for partnership income in ITR-3, and there is no requirement to duplicate the figures in the Profit & Loss schedule merely because the taxpayer is a partner in a firm.

Consequently, professionals contend that the portal should not generate these Category D defect messages for such returns.

Return Can Still Be Uploaded

Despite displaying the two defect messages, the portal clearly states:

“You will be allowed to upload the return. There is a possible defect present in the return or some of the deduction/claim may not be allowed.”

This indicates that the validation is advisory rather than a blocking error. Nevertheless, taxpayers may be unnecessarily concerned upon seeing defect warnings despite having correctly prepared their returns.

Need for Portal Correction

Tax experts have urged the Income Tax Department to address both issues:

Correct the spelling mistake by replacing “offeref” with “offered” in the validation messages.
Review the validation rule so that Category D defects are not generated where a partner correctly reports only partnership income and is not required to populate the Profit & Loss schedule with the same figures.

Until the validation logic is updated, taxpayers filing ITR-3 as partners should carefully review their returns, understand whether the warning is genuinely applicable to their case, and avoid making unnecessary disclosures solely to eliminate a system-generated advisory message.