The assessee may receive a demand notice under section 156 specifying the amount payable if the assessing officer raises any demand for tax, interest, penalty, fine, or any other sum as per the provision of Income Tax Act, 1961.
Notice for sum payable u/s 143(1), 200A (1), 206CB (1), etc shall be deemed to be Demand Notice u/s 156.
Assessee has to pay the amount specified in the notice within 30 days of receipt of the notice.
For submitting the response there are four options available with a taxpayer as below:
Lets discuss all the four options in detail.
If assessees agrees with the demand he/she should select this option that “Demand is correct”. Once the assessee selects this option then he cannot disagree with the demand.
If a refund is due, the outstanding amount and the interest will be adjusted against the refund due. Otherwise, the assessee has to pay the demand immediately.
If the assessee agrees with the partial demand he/she should select this option that “Demand is partially correct”. Once the assessee selects this option he/she will have to enter the amount of demand to which he/she agrees.
Moreover, the assessee has to provide the reasons for disagreement to the remaining amount of demand.
Following are the reasons which assessee can select for the disagreement and provide the additional information for the same.
If the assessee disagrees with the demand he/she should select this option that “Disagree with demand”. Once assessee selects this option he/she will have to select reason for disagreement which are same as reasons discussed above.
If the assessee agrees for the adjustment of demand he/she should select this option. Once the assessee selects this option below screen will appear and he/she will have to select the reason for disagreement which are the same as the reasons discussed above.
Login in to your income tax e-filing portal account with your user id and password.
Select the option of E-file -> Response to Outstanding Tax Demand
Click on submit response
After submit, select one of the suitable options out of the four options available. After selecting the appropriate option submit the additional details accordingly.
As per Section 220, amount shall be paid within a period of thirty days from the date of service of notice. However, in some exception cases, 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 installment, provided application should be made before expiry of thirty days.
If the assessee disagrees with the tax demand notice then he can challenge the same to the next higher authority.
You can log in to the Income Tax Site and then select the option “Respond to Outstanding Tax Demand” in the e-File tab, and you can check the tax demand notice.
If the assessee does not pay the amount specified in the demand notice within 30 days of service of notice then the assessee becomes assessee in default.