Section 290 — Modification and revision of notice in certain cases. Successor to s.156A of the 1961 Act.
Section 290 is in Chapter XVI — Procedure for Assessment, which runs from section 268 to section 301.
Sub-section (1) applies where two things coincide: a notice of demand has earlier been issued under section 289 in respect of any tax, interest, penalty, fine or other sum, and that sum is reduced as a result of an order of the Adjudicating Authority as defined in section 5(1) of the Insolvency and Bankruptcy Code, 2016. The Assessing Officer must then serve on the assessee a modified notice of demand specifying the sum payable, if any, and that notice is to be treated as a notice under section 289, with the provisions of the Act applying accordingly.
Sub-section (2) requires the modified notice to be revised where the order referred to in sub-section (1)(b) is itself modified by the National Company Law Appellate Tribunal or the Supreme Court.
An insolvency resolution can cut down a tax demand after the notice of demand has issued, leaving a demand on the record that no longer reflects what is owed and that the recovery machinery would otherwise enforce. The section makes the Assessing Officer put the reduced figure on a fresh notice with the full status of a section 289 notice, and sub-section (2) keeps it in step with the appellate course of the insolvency proceedings.
The section operates in one direction only: it engages where the sum is reduced by the Adjudicating Authority's order, and the modified notice specifies the sum payable, if any — which may be nothing. The duty is mandatory, expressed as "shall serve", so the assessee does not have to apply for the correction. Once served, the modified notice is treated as a notice under section 289, so the recovery and default consequences that attach to such a notice run on the modified figure rather than the original. Sub-section (2) keeps the correction alive through the appellate chain, without any fresh assessment.
A company is served with a notice of demand under section 289 for Rs. 5 crore of tax and interest. In its insolvency proceedings the Adjudicating Authority passes an order under the Insolvency and Bankruptcy Code, 2016 reducing the sum to Rs. 60 lakh. The Assessing Officer must serve a modified notice of demand for Rs. 60 lakh, which is then treated as a notice under section 289. If the National Company Law Appellate Tribunal later modifies that order to Rs. 90 lakh, sub-section (2) requires the modified notice to be revised accordingly.
As the modified notice of demand itself, served by the Assessing Officer and treated as a notice under section 289 after an order of the Adjudicating Authority; and again as a revised notice if the appellate authorities alter that order.
the Assessing Officer shall serve on the assessee a modified notice of demand specifying the sum payable, if any, and such notice shall be treated as a notice under section 289
shall be revised where the order referred to in sub-section (1)(b) is modified by the National Company Law Appellate Tribunal or the Supreme Court
See the full 1961 to 2025 concordance.