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Notice for demand under section 156

Updated on: 13 Sep, 2022 01:47 PM

Notice u/s 156 is sent by the income tax department asking to make payment to the department for any tax 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 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 payable by you under this notice shall be paid within 30 days of receipt of the notice. However, the A.O. in some cases, with prior approval from Joint Commissioner of Income Tax (JCIT) can ask you to deposit amount in less than 30 days.

Options to respond to Outstanding Demand Notice

There are four options available with a taxpayer to respond against outstanding demand notice. Given below are the options :

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

Guide on how to respond to outstanding demand

Step 1 : Login into your income tax e-filing portal with your user id and password.
income tax e-filing

Step 2 : Select the option of Pending Actions-> Response to Outstanding Tax Demand
Select the option of E-file

Step 3 : Click on submit response
Click on submit responseClick on submit response

Step 4 : After submit, you will be taken to given below screen and the options discussed above will be displayed.
After submit

Option 1 : Now if you click on Demand is correct

IF you agrees with the demand then on the Response to Outstanding Amount page, select the Demand is Correct option and the disclaimer Once you submit the response as Demand is correct, then you cannot Disagree with Demand later on as displayed here:-

After submit


On the same page, select Not paid yet option and click Pay Now then you will be taken to the e-Pay Tax page where you can make the tax payment . On successful payment, a success message is displayed along with a Transaction ID. Please keep a note of the Transaction ID for future reference.

e-Pay Tax page


If demand is already paid, then just Select Yes, Already paid and Challan has CIN. Click Add Challan Details.

demand is already paid


To add the challan details, select Type of Payment (minor head), enter Challan Amount, BSR Code, Serial Number and select Date of Payment. Click Attachment to upload the copy of the challan (PDF) and click Save.

add the challan details


NOTE:-
- The maximum size of a single attachment should be 5 MB.
- If you have multiple documents to upload, put them together in a zipped folder and upload the folder. The maximum size of all the attachments in a zipped folder should be 50 MB.

After entering the Challan details, click Submit to submit the response and the details of challan entered.

add the challan details


On successful validation, a success message is displayed along with a Transaction ID. Please keep a note of the Transaction ID for future reference as shown above.


Option 2 : Disagree with demand (Either in partial or in full)

On Response to Outstanding Amount page, select Disagree with the demand (Either in full or in Part) option. Click Add Reasons. Demand is partially correct

To select the reason(s) for your disagreement, select from the options and click Apply. (You can select one or more options.) Now enter the amount which is correct

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 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 but 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).
  • Appeal has been filed – Here depending upon status one should select that whether Stay petition filed or stay has been granted or instalment granted.
  • Rectification/revised return has been filed at CPC – If you select this reason, then please provide additional information related to the revised return filed.
  • Rectification has been filed with 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 you comment.

After selecting the appropriate reasons for your disagreement, select each reason you listed in Step 2 on the Response to Outstanding Amount page and enter the appropriate details for each reason.

Disagree with demand

Note: Completed status will be displayed against the reason for which you have submitted the details.

After submission of details for all the reasons selected, click Pay Now to pay the remaining outstanding amount available in the payment summary (if you partially disagree).

Disagree with demand

Note: You will be taken to the e-Pay Tax page where you can make the tax payment. After payment, you will be taken to the Response to Outstanding Amount page, click Submit to submit your response.

Disagree with demand

Click Confirm to confirm your submission.

Disagree with demand

On successful submission, a success message is displayed along with a Transaction ID. Please keep a note of the Transaction ID for future reference.

Disagree with demand

After Submission, you will get this type of info in response to outstanding demand:-

Disagree with demand


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 time period of thirty days may be reduced by the assessing officer with prior approval of joint commissioner.

An assessee can also make an application to the AO to extend the time for payment or allow payment by instalment, provided the application should be made before expiry of thirty days.


Consequences of delay/ Penalty for delay

  • Interest u/s 220(2) – Interest at a rate of one per cent 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 time period for the payment or allowed payment in installment.
  • 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. If the assessee proves that the default was for good and sufficient reasons, no penalty shall be levied.

Did you receive a tax notice? Let us help you respond to the IT Department.

  • Tax2win has expertise in responding to Income Tax Department
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Did you receive tax notice? Let us help you respond to the IT Department.

- Tax2win has expertise in responding to Income Tax Department

- Our experts would help you avoid legal consequences by assisting in responding accurately.

Frequently Asked Questions

Q- Does a salaried person gets an income tax department notice?

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


Q- I have got 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.


Q- What happens if Income Tax (Rs.40 lakhs total) has not 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 seizing the bank account.


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

If the assessee is disagree with the tax demand notice then he can challenge the same to the next higher authority.


Q- What is the meaning of assessee in default?

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


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

A revised return is filed for the original return. There is no need to e verify the original return only a revised return needs to be verified.


Q- How can I check my 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,


Q- How do you respond to notice 143 1?

To respond to the notice under 143(1), you first need to login to the Income Tax Site through PAN, Password and Captcha code. Now, click on e-proceeding to respond to the notice 143 (1).


Q- Can a revised return be filed after 143 (1)?

Yes, a revised return can be filed even after issuing of intimation under section 143(1). You need to file the return just like a normal return.


Q- What happens if I don't respond to the notice within 30 days?

If we don’t respond to the notice within 30 days, the amount determined by the tax authorities will be considered the income of the assessee.


CA Abhishek Soni
CA Abhishek Soni

Abhishek Soni is a Chartered Accountant by profession & entrepreneur by passion. He is the co-founder & CEO of Tax2Win.in. Tax2win is amongst the top 25 emerging startups of Asia and authorized ERI by the Income Tax Department. In the past, he worked in EY and comes with wide industry experience from telecom, retail to manufacturing to entertainment where he has handled various national and international assignments.

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