Agile development reduces the risk of developing low quality software in the first place by minimizing defects. In agile software development formal defect management processes help to build quality software. The core purpose of defect management is to make the software more effective and efficient in order to increase its quality. There are several methods for handling defects like defect prevention, defect discovery and resolution which are used by software developers and testers. Refactoring keeps the system clean by identifying and removing quality defects. To gain the full confidence of the customer defect management should be involved at every stage of development. Agile methodologies focus on delivering the software in form of short iterations. Thus each iteration helps to overcome defects and leads better development and end user satisfaction. This study paints the picture of handling the software defects using agile based Software Development Process.