Respond to a Demand Notice Raised Under Section 156

Respond to a Demand Notice Raised Under Section 156

Respond to a Demand Notice Raised Under Section 156: A notice shall serve as a Demand Notice when any demand for tax, penalty, fine, or interest is raised as per the provisions of the Income Tax Act, 1961 by the concerned officer. Under Section 156, the amount payable is specified.

Time Limit

According to Section 220, payment of the amount specified in the Demand Notice is to be paid within 30 days from the date of issue of the Demand Notice.

According to Section 220(3), for extension of the payment date or payment in installments, the individual has to provide an application to the concerned officer.

If the Concerned officer has a reason to believe that allowing thirty days will be dangerous to the Income Tax Department, he can reduce 30 days with the consent and approval of the Joint Commissioner.

Penalty for Delay

The individual is liable for the following penalties as mentioned in the Demand Notice when the payment for the demand notice has not been made with the specified period;

Interest Under Section 220(2): Interest at the rate of 1% per month is charged on the amount immediately from the payment’s due date up to the date of payment of the amount. Even if the concerned officer has approved the application for an extension of the period of the payment/ allow installments, the individual still has to pay the interest amount.

Penalty Under Section 221: The amount that is mentioned in the Demand Notice is the limit of maximum penalty being imposed by the concerned officer.

Steps for Responding to Demand Notice

Step 1: The individual has to login into the Income Tax e-filing portal with his respective ID and password.

Step 2: Go to the E-file Option and the Click on Response to Outstanding Tax Demand.

Step 3:  A tabular form will show on the next screen and the following options will appear;

  • Assessment year information
  • Section code
  • Demand notification number (DIN)
  • Demand raised date
  • Outstanding demand amount
  • Uploader’s name
  • Rectification rights
  • Response – Submit and View
  • Pay Tax

Step 4: To submit the response, the individual has to click on the submit option present on the screen. The individual has the select one out of the following options;

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


Step 5: A confirmation message/pop-up will appear on the screen of the individual after he/she clicks on the ‘Submit’ option. A Unique Transaction ID will be provided to the individual.

Demand is Correct

A pop-up “If you select Demand is correct then you cannot disagree with the demand” appears on the screen of the individual when he/she selects the option ‘Demand is correct’. The individual has to click on the Submit button. A confirmation message will appear on the screen after the acceptance of demand and-

  • The outstanding amount is adjusted against the refund due along with the interest when/if any refund is due.
  • In other cases, the demand is to be repaid using the Pay Tax option available in the table of all demands by the individual.

Demand is Partially Correct

The individual may notice the following two different options on his/her screen after selecting this option;

  • The correct amount: the individual has to enter the correct amount. The individual will then notice a pop-up telling “Since the amount entered is equal to outstanding demand amount, please select the option “Demand is correct” when/if the demand amount is equal to the entered amount.
  • The incorrect amount: The individual will notice that in case of an incorrect amount the difference between the amount which is correct and the outstanding amount will appear automatically in the box.

For amount which is not correct, the individual has the select one or more from the following options;

Demand Paid

  • Demand paid and challan has CIN
  • Demand paid and challan has no CIN
  • Demand already reduced by rectification/revision
  • Demand already reduced by Appellate Order but appeal effect to be given
    • The appeal has been filed
    • Stay petition filed with
    • Stay granted by
    • Installment granted by
    • Rectification / Revised Return filed at CPC
    • AO filled Rectification
    • Others

The individual has to provide additional information given below based on the reasons selected;

REASON OPTED  ADDITIONAL DETAILS REQUIRED
Demand paid and challan has CIN BSR code
Date of payment
Serial number
Amount
Remarks
Demand paid and challan has no CIN Date of payment
Amount
Remarks
Upload copy of challan
Demand already reduced by rectification/revision Date of order
Demand after rectification/revision
Details of AO
Upload rectification/ giving appeal effect order passed by AO
Demand already reduced by Appellate order but appeal effect to be given Date of order
Order passed by
Reference number of the order
An appeal has been filed: stay petition filed with Date of filing of an appeal
Appeal pending with
Stay petition filed with
An appeal has been filed: stay granted by Date of filing of an appeal
Appeal pending with
Stay granted by
Upload copy of stay
An appeal has been filed: installment granted by Date of filing of an appeal
Appeal pending with
Installment granted b
Upload copy of installment/stay
Rectification/Revised return filed at CPC Filing type
E-type acknowledgment number
Remarks
Upload copy of challan
Upload TDS certificate
Upload letter requesting rectification copy
Upload indemnity bond
Rectification filed with AO Date of application
Remarks
Others Others

Note: The file size to be attached must be up to 50MB.

Disagree with Demand

The individual is compulsorily required to select one or more reasons for disagreement and he/she has to provide reasons also. The reasons are similar/exactly like the ones available under the ‘Demand is partially correct’ option.

Demand is not Correct but Agrees for Adjustments

The individual is compulsorily required to select one or more reasons for disagreement and he/she has to provide reasons also. The reasons are similar/exactly like the ones available under the ‘Demand is partially correct’ option.

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