Section 156 tax notice is the notice of demand issued by the Income Tax Department when any tax, interest, penalty, fine or any other sum is payable in consequence of any order passed. The section 156 tax notice of demand will specify the sum which is payable.

This demand notice is generally accompanied by an intimation notice under section 143(1) or along with the assessment order that is issued on completion of the scrutiny proceedings. Notice of Demand u/s 156 is issued in respect of every assessment order for addition to income.

Time Limit

The amount which is demanded in the Section 156 demand notice has to be paid by the Assessee within a period of 30 days after the date of receipt of the notice.

Specimen of the Section 156 Tax Notice

section 156 tax notice

Steps to be taken

If you have received a Section 156 tax notice for demand then you have to follow these steps:

1. Login to Income Tax e-filing portal with your User ID and Password.

2. Click on the option of “E-file” and then select the option of “Respond to Outstanding Tax Demand“. You’ll get the following window:

section 156 tax notice

3. Click on “Submit” to submit the response and then you’ll get the following options:

section 156 tax notice

4. If the demanded amount is correct, then you have to select the option of “Demand is correct“. Once the option is selected then you have to pay the tax online through the option of E-Pay Tax and if any amount of refund is due, then the amount of demand will be adjusted with it and you have to pay the balance amount.

5. If the demanded amount is partially correct, then you have to select the option of “Demand is partially correct“. Then there will be two options available:

  • Amount which is correct
  • Amount which is incorrect

section 156 tax notice

Enter the amount which is correct and the incorrect amount will be auto populated and you also have to give a valid reason because of which the demanded amount is incorrect. In this case, the acceptance is subject to approval by the Department.

6. If the demanded amount is incorrect, then you have to select the option of “Disagree with demand“. You’ve to select the reason because of which the demanded amount is incorrect. After submitting a reason the success screen would be displayed with the transaction ID. The status of demand will be updated after the response is processed by the IT Department.

Penalty

If the person to whom the section 156 tax notice for demand has been issued fails to pay the amount demanded within the time limit provided under the section 156 tax notice, then the assessee is liable for following penalties:

  • Interest u/s 220- Interest at the rate of 1% per month or part thereof is payable after the expiry of the 30 days time provided under section 156 tax notice.
  • Penalty u/s 221- A penalty u/s 221 may be imposed by the AO on the assessee but it should not be more than the amount demanded in the Demand Notice.

For any help on ITR Filing feel free to consult the tax experts at LegalRaasta. You can file ITR yourself via our ITR software or get CA’s help on filing income tax return. You can also use the option of Business Return, Bulk Return or Revised Return Filing.