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Notice for demand under section 156

Taxation in India

Notice for demand under section 156

Notice u/s 156 is sent by the income tax department asking to make payment to the department for any 7tax you are liable to or interest or penalty to be paid.

You receive Notice for Demand u/s 156 when the Assessing Officer (A.O.) raises demand for any tax, interest, penalty, fine, or any other sum to be payable by you as a result of any order passed under the Income Tax Act.

Notice for sum payable u/s 143(1), 200A (1), 206CB (1) shall be deemed to be Notice of Demand u/s 156.

The amount you pay under this notice shall be paid within 30 days of receipt. However, the A.O., in some cases if he has a reason to believe that allowing a period of thirty days will be detrimental to the Income Tax Department. with prior approval from the Joint Commissioner of Income Tax (JCIT), can ask you to deposit the amount in less than 30 days.

How to respond to an Outstanding Demand Notice?

Four options are available for a taxpayer to respond against an outstanding demand notice. Given below are the options:

  • Demand is correct.
  • The demand is partially correct.
  • Disagree with demand.
  • Demand is not correct but agrees to adjustment

Let’s Understand the reasons which are required to be selected:-

  • Demand has already been paid – Here, depending upon applicability 3 types of options are present, One should select the relevant option and then provide the (If available & applicable) Challan Identification Number (CIN), BSR code, date of payment, the serial number of challan and amount.
  • Demand has already been reduced by rectification/revision – Provide the date of order, demand amount after rectification, details of AO, etc.
  • Demand has already been reduced by appellate order. Still, the appeal effect has to be given by the department – Provide the date of order and the appellate order passed by (details of appellate authority and the reference number of order).
  • An appeal has been filed – Depending upon the status, one should select whether the stay petition was filed, or stay has been granted, or the installment facility was granted.
  • Rectification/revised return has been filed at CPC – If you select this reason, please provide additional information related to the revised return filed.
  • Rectification has been filed with the assessing officer – Mention the date of application and remarks (comments, if any of the taxpayer).
  • Others – If there is any other reason apart from mentioned above, then select this reason and provide your comment.

Time limit to respond to the demand

The assessee shall pay the amount of demand within 30 days from the date of service of notice. However, in some exceptional cases, the assessing officer may reduce the thirty-day period with prior approval of the joint commissioner.
An assessee can also apply to the AO to extend the time for payment or allow payment by installment, provided the application should be made before the expiry of thirty days.

Consequences of delay/ Penalty for delay

Interest u/s 220(2) – Interest at a rate of one percent per month or part of the month, which is payable after the expiry of 30 days. Such interest shall be payable by the assessee even if the Assessing Officer has approved the application for an extension of the time period for the payment or allowed payment in installments.

Penalty u/s 221 – A penalty may be imposed by the Assessing Officer up to the amount demanded in demand notice, provided a reasonable opportunity of being heard is given to the assessee. No penalty shall be levied if the assessee proves that the default was for good and sufficient reasons.

 

Frequently Asked Questions

▶By which mode will I receive the demand notice from the IT department?

You will receive an email from the IT department. The department also sends an SMS alert to the tax filer that the intimation notice has been sent to their registered email ID.

▶Does a salaried person also serve an income tax department notice?

Notices sent by the department are not dependent upon the income of a person it depends upon how correctly the return is filed. So salaried people can also get departmental notices.

▶I have got a Notice of Demand under section 156 of the Income Tax Act, 1961, for Rs 30. But the income tax website shows no records found under e-file -> response to outstanding tax demand. What should I do now?

If there is no outstanding demand as per the income tax website, then no amount is required to be paid by you.

▶What happens if Income Tax (Rs.40 lakhs total) has not been paid after final notice?

If the demand is not paid after the final notice, then the department will take action to recover the money by initiating recovery procedures.

▶What will happen if I disagree with a tax demand notice?

If the assessee disagrees with the tax demand notice, he can challenge the same to the next higher authority.

▶What is the meaning of assessee in default?

If the amount which is specified in the demand notice is not paid within 30 days of service of notice, then the assessee becomes the assessee in default.

▶Can I refile my taxes before e-verifying (ITR-V) my original returns?

A revised return is filed to correct the issues in the original return and It’s better you verify both returns to avoid any issues in the future.

▶How can I check my demand tax notice online?

To check the tax demand notice online, login to the Income Tax Site through PAN, Password and Captcha code and then select the Respond to Outstanding Tax Demand in Pending Actions.

▶What happens if someone ignores the demand notice?

You will be entitled to a formal legal action and it will be used against you in court.

▶What happens if I don’t respond to the notice within 30 days?

If we don’t respond to the notice within the specified period in the notice, then the demand will be confirmed and will be adjusted against your refund (if any) or shown as demand payable against your PAN ( in case no refund is due).

 

Disclaimer: This tax consultancy article is for educational purposes only. It does not constitute personalized tax advice. For specific tax situations, consult a qualified tax professional or contact Qualified Munim Team at qualifiedmunim@gmail.com or +91-74199-00446. Visit www.qualifiedmunim.com. We are not liable for any actions taken based on this information.

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