Section 156

What a section 156 notice is

Demand Notice. A demand has been raised. Pay it or formally dispute it. It is a high-severity notice in the recovery family under the Income Tax Act 1961.

If you ignore it: Assessee in default. Interest u/s 220(2), then recovery proceedings.

Time to reply: commonly stated as 30 days from the date of the notice — but the date printed on your own notice governs, and it overrides any general figure. Interest u/s 220(2) starts running after the period expires. Stay of demand is a separate application.

Under the Income Tax Act 2025: section 289. But read that as reference, not as the provision to cite. Under s.536(2) of the 2025 Act, a proceeding for any tax year beginning before 1 April 2026 stays under the Income Tax Act 1961 from the notice through to the appeal — so a notice arriving today for an earlier year is a 1961 Act matter, whatever today's date is.

Section 156 — the law in short

What the courts have decided on section 156, in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• UOI v Tata Chemicals Ltd Supreme CourtHelps taxpayer
  I deducted tax under s.195 because the officer told me to, and the CIT(A) has now held it was not deductible. Do I get interest on the refund, or only the tax back?
  Yes, interest as well. The resident deductor is entitled not only to the refund of the tax deposited under s.195(2) but to have it refunded with interest from the date of payment of the tax. The Revenue was the appellant and its appeals were dismissed. The CBDT has since accepted the position by circular.
• M/s. Vikrant Tyres Ltd v The First Income Tax Officer - no s.220(2) interest where the original demand was paid on time Supreme CourtHelps taxpayer
  I paid the original demand in full, got a refund when I won in appeal, and repaid on a fresh demand after losing in reference. The department now wants s.220(2) interest for the period in between. Must I pay it?
  No. The Supreme Court held that the condition precedent for s.220(2) is a notice of demand under s.156 AND a default in paying the amount demanded within the time allowed. Where the assessee satisfied the original demand promptly and later satisfied the fresh demand promptly, there was no default at any point, and s.220(2) cannot be invoked for the period during which the refunded money was in his hands.
• Kalyan Kumar Ray v CIT Supreme CourtHelps department
  My assessment order does not compute the tax — the figures are only on the ITNS-150. Does that make the assessment bad?
  No, and the argument runs the other way from how it is often quoted. A three-Judge Bench rejected the submission that Form ITNS-150 is not part of the assessment order. The form is itself a form for determination of tax payable, and when signed or initialled by the officer it is an order in writing determining the tax within the meaning of s.143(3), to be treated as part of the assessment order in the wider sense. The assessee lost.
• CIT v Vegetable Products Ltd Supreme CourtHelps taxpayer
  The provision can be read two ways. Which reading wins?
  Yours. Where two reasonable constructions of a taxing provision are possible, the one favourable to the assessee must be adopted. Applied here to hold that penalty is computed on tax payable after credit for amounts already paid.
• Dwarka Nath v Income-Tax Officer Supreme CourtHelps taxpayer
  The Commissioner dismissed my revision and the officer will not issue a demand notice so I cannot appeal. Is the revisional order beyond the reach of a writ because it is administrative?
  No. The Supreme Court held that the revisional jurisdiction is prima facie judicial: the order brought before the Commissioner affects the assessee's rights, it is implicit in a revisional power that the parties be heard, and the nature of the jurisdiction carries with it a duty to act judicially. Certiorari therefore lies. And even if the revisional order were administrative, that would not help the Revenue, because the officer's failure to issue the statutory demand notice would still be a failure of a statutory duty, correctable by mandamus. The Court quashed the revisional order and directed the officer to pass an order and issue notice according to law.
• ITO, Kolar v Seghu Buchiah Setty Supreme CourtHelps taxpayerSuperseded by amendment
  My assessment was reduced in appeal after the officer had already sent a recovery certificate to the Collector and my property was attached. Can he carry on with the old certificate?
  No, on the law as it then stood. By a majority the Supreme Court held that once the assessment order is revised in appeal, the notice of demand founded on it, the default and the recovery proceedings that followed are superseded. There cannot be two defaults in respect of one liability, so the officer must serve a fresh notice of demand for the amount now due, give the assessee an opportunity to pay, and only then treat him as in default. The Mysore High Court had rightly quashed the certificates and the attachment. Shah J dissented, holding that a modification which does not vacate the assessment leaves the earlier default intact.
• M/s Kanoria Energy and Infrastructure Ltd v CCIT High CourtHelps taxpayerHigh Courts differ
  The Commissioner rejected my Form 10-IC condonation application as time-barred under Circular 17/2024, counting from the date of my application and ignoring that I had actually filed the Form years earlier. Is that right?
  No. The Rajasthan High Court set aside the rejection, holding that it was legally unsustainable because it conflated the date of filing of Form 10-IC with the date of the formal condonation application. The Form having been filed on 30 January 2023, within three years of the end of AY 2020-21, and the s.115BAA option having been unambiguously exercised in the return itself, the delay was condoned and the matter remanded with a direction that the authority not consider delay or limitation again.
• Arris Estates P Ltd v Assessment Unit High CourtHelps taxpayerNo later treatment found
  The Department admits it refused the video hearing but says limitation was about to expire. Is that a defence?
  No. The Gujarat High Court quashed an assessment where the request for a video conference hearing made on 4 March 2024 was not granted and the order followed on 15 March 2024, rejecting the plea that earlier adjournments had left the Department no time before the 31 March deadline.
• Pune Municipal Corporation v ACIT (TDS), Pune High CourtHelps taxpayerNo later treatment found
  I have been held an assessee in default under s.201 for not deducting s.194C and s.194LA tax when I issued TDR certificates instead of paying money. Is there an answer where the payment is wholly in kind?
  The Bombay High Court found a strong prima facie case and stayed the s.201 order, the demand and the s.271C penalty notice. Its prima facie view is that the words 'or by any other mode' in s.194C and in s.194LA must be read ejusdem generis with payment in cash or by cheque or draft, so those sections do not operate where the payment is made in kind by issuing transferable development rights. The court drew support for that reading from s.194B and s.194R, which do contain express machinery for a benefit paid wholly in kind and which is conspicuously absent from s.194C and s.194LA.
• G R Infraprojects Limited v ACIT High CourtHelps taxpayer
  I withdrew my education cess claim after the Finance Act 2022 inserted section 155(18). Can the officer still treat it as under-reported income and levy penalty?
  The Rajasthan High Court set the penalty aside and directed that immunity under s.270AA be granted. Where the company withdrew its cess claim by letter dated 19 March 2022, before s.155(18) came into force on 1 April 2022, and accepted the proposed variation, it was entitled to immunity from penalty under s.270A, and the initiation was in any event non est because the officer never specified which limb of s.270A(9) was attracted.
• Sevensea Vincom P Ltd v PCIT High CourtHelps taxpayerNo later treatment found
  They reopened AY 2016-17 in 2022 for under Rs 50 lakh. Is the notice time-barred?
  Yes. The Jharkhand High Court held the three-year period for AY 2016-17 ended on 31 March 2020, and because the Department itself alleged escapement of only Rs. 39,21,450 the extended ten-year window in s.149(1)(b) was unavailable. The whole proceeding was without jurisdiction.
• Bharat Aluminium Company Ltd v Union of India High CourtHelps taxpayer
  I asked for a personal hearing in the faceless assessment and was refused. Does the order survive?
  No. The Court read 'may' in s.144B(7)(viii) as 'must': once the assessee asks for a personal hearing it has to be given, because a power carrying civil consequences attracts the rules of natural justice unless the statute excludes them, and s.144B embeds rather than excludes them. The assessment order and demand notice were set aside for a fresh reasoned order after hearing.
• Mantra Industries Ltd v NFAC High CourtHelps taxpayerSuperseded by amendment
  The faceless order says I filed no reply when I did, and my hearing request was ignored. Is it valid?
  It was set aside. The final order reproduced the draft order word for word apart from one sentence, recorded that no response had been filed when two replies were on the record, and ignored the requests for adjournment and personal hearing — so it was held non est under s.144B(9) as it then stood. The Court warned that costs would be recovered from the Assessing Officer personally and entered in the service record if it recurred.
• Gandhi Realty (India) P Ltd v Asst/Jt/Dy CIT High CourtHelps taxpayerSuperseded by amendment
  The Department says it issued a draft assessment order, but nothing appeared on the portal. Who has to prove service?
  The Department does. Where the Revenue claimed a draft assessment order had been placed and served but nothing was traceable on the portal, the Gujarat High Court quashed the assessment. Every step of s.144B has to be treated with the same seriousness, because s.144B(9), as it then stood and before its retrospective omission, made a non-compliant assessment non est.
• Rajeev Behl v PCIT High CourtHelps departmentNo later treatment found
  The department is recovering the company's tax from me as a director. I resigned, and an MOU and an arbitral award put the tax liability on another director. Is that a defence under s.179?
  No. The burden under s.179(1) is on the director to prove that the non-recovery cannot be attributed to his gross neglect, misfeasance or breach of duty - it is not for the Revenue to prove that he was guilty of it. And a private arrangement between directors, even one affirmed by an arbitral award upheld by the High Court, governs rights in personam and cannot bind a statutory authority; income-tax liability cannot be apportioned by private agreement.
• Trendsutra Client Services P Ltd v ACIT High CourtHelps taxpayerSuperseded by amendment
  The faceless order made additions but no show cause notice or draft order ever came. What is the order worth?
  Nothing. Where the final order varies the returned income to the assessee's prejudice and no show cause notice or draft assessment order was served, the assessment is not made in accordance with s.144B and is non est. The Bombay High Court quashed it outright.
• Bhupendra Murji Shah v DCIT High CourtHelps taxpayer
  My appeal is filed and part-heard, but the Assessing Officer says pay 20% or recovery continues, and my bank account is attached. What can the High Court do?
  The Bombay High Court directed that during the pendency of the appeals the assessee not be called upon to pay any sum, much less 20%, and that any attachment on his bank account be raised forthwith. The reasoning is that a statutory right of appeal must not be rendered illusory and nugatory by recovery that would make the appeal infructuous before it is heard. But read the order to the end: the Court itself said it cannot be treated as a precedent for all cases of this nature.
• Madhya Pradesh Audyogik Kendra Vikas Nigam Ltd v DCIT High CourtHelps departmentNo later treatment found
  The department has attached my bank account under s.226(3) because I did not pay the 20%. I say I have already paid more than that. Will the High Court interfere?
  Not if the payment you point to was self-assessment tax paid against your own returned income, and not against the assessment demand. The Court upheld the garnishee notice to the bank: the assessee was obliged under the CBDT circulars to pay 20% of the outstanding demand, it had not done so, and the department was therefore justified in proceeding under s.226(3).
• CIT, Kolkata-I v Birla Corporation Ltd High CourtHelps taxpayerHigh Courts differ
  Part of my refund is self-assessment tax I paid under s.140A. The officer says no interest is payable on that. Is he right?
  No. The Calcutta High Court held that s.244A(1)(b) is a residuary clause that covers a refund of excess self-assessment tax paid under s.140A, and that interest runs from the date the tax was paid to the date the refund is granted — a starting point since narrowed by s.244A(1)(aa) for periods from 1 June 2016. The Explanation to clause (b) does not stand in the way, because it operates only where the tax was paid pursuant to a notice of demand under s.156.
• Vijay Television P Ltd v DRP High CourtHelps taxpayer
  The AO skipped the draft order and passed a final one. Can a corrigendum cure that?
  No. The procedure in s.144C is mandatory and the draft order is the gateway to the eligible assessee's right to go to the DRP. Once a final order is passed, with a demand notice and penalty proceedings, the AO is functus officio and a corrigendum cannot convert it into a draft; the defect is an absence of power, not a curable mistake.
• Sony India Pvt Ltd v Additional CIT (Delhi) High CourtHelps taxpayerNo later treatment found
  The AO rejected my stay application and issued a garnishee notice to my bank the same day. Is that permissible?
  The Delhi High Court held that issuing a notice under s.226(3) on the very day the stay application was rejected, and emptying the bank account two days later, carried an element of impropriety and arbitrariness, even though it could not be said to be illegal. The Court ordered the money reversed to the account and restrained coercive steps until the Tribunal decided the stay application.
• Maganbhai Hansrajbhai Patel v ACIT High CourtHelps taxpayerSuperseded by amendment
  The officer has raised a demand on me personally as a director of a private company that has closed, and the figure includes interest and penalty as well as tax. Does section 179 reach interest and penalty?
  On this judgment, no - not as the section then stood. Section 179(1) makes a director of a private company jointly and severally liable for the tax due from the company which cannot be recovered from it. The Gujarat High Court held that the words tax due cannot be stretched to take in interest and penalty. The Act defines tax, it separately defines interest, and it does not define penalty at all; and where the legislature meant to sweep in everything it said so, as it did in s.156, which speaks of tax, interest, penalty, fine or any other sum payable. Section 179 does not use those words. The position has since been changed for later years by an Explanation added to the section.
• Girnar Investment Ltd v CIT High CourtHelps department
  The Commissioner (Appeals) wiped out my demand and the tax was refunded; then the Tribunal restored the assessment. Am I charged s.220(2) interest for the years in between?
  Yes, on this decision, and the reason matters. The Delhi High Court held that where an assessment is restored on appeal the original demand revives from inception, so interest under s.220(2) runs on the unpaid amount from the expiry of thirty days from the notice of demand, and an intervening appellate order in the assessee's favour — even one that wiped out the demand and produced a refund — makes no difference to the liability for interest. The boundary of the holding is that the assessee here had not paid the full demand: where the demand was satisfied in full and promptly, Vikrant Tyres Ltd. v. First ITO [2001] 247 ITR 821 (SC) holds that no interest can be charged, and this judgment distinguishes that case rather than displacing it.
• Prakash v ITO High CourtHelps departmentNo later treatment found
  I paid for the new house but it's in my son's name. Can I still claim 54F?
  No, on this view. The court held that ownership and domain over the new asset must run to the assessee from the sale of the original asset through to the purchase or construction; where the son became the owner, the assessee had no right over the property and section 54F was refused.
• KEC International Ltd v B.R. Balakrishnan High CourtHelps taxpayer
  What is the officer actually required to do when deciding your stay application?
  Five parameters, four of them addressed to the officer deciding the stay application: set out the assessee's case briefly, give short prima facie reasons if directing a part deposit, indicate whether the assessee is financially sound where financial difficulty is pleaded, and check whether the time to appeal has expired. Coercive measures should generally not be used during the appeal period unless the authority concludes the assessee is likely to defeat the demand. The fifth parameter is addressed to the administrative authority above him, which need not give a second reasoned order if those four have been complied with.
• Nawal Kishore Chowdhury v ITO High CourtHelps taxpayer
  The department has treated my client's trust as revocable, taxed the income in the settlor's hands, and is now attaching the trust's rents under s.226(3) to recover the settlor's arrears for a string of other years. Can it do that?
  Not on that basis. Section 65 is the only route by which the person in whose name the asset stands can be made to pay, and it permits recovery only on the service of a notice of demand on that person and only of the portion of the tax levied on the assessee which is attributable to the income so included. Where no such notice was served, and where the demand covers years and amounts unrelated to the trust income, s.65 has been breached and the recovery notices are liable to be quashed.
• Finesse International Design v DCIT ITATHelps taxpayerNo later treatment found
  The section 153D approval for my search assessment carries no DIN, even though the assessment order itself does. Does that invalidate the assessment?
  Yes, on this Tribunal's view. The Delhi Bench held that CBDT Circular No. 19/2019 requires a computer-generated DIN in the body of every departmental communication issued from 1 October 2019, and that a communication issued without one is invalid and deemed never to have been issued. The approval under section 153D dated 19 February 2021 carried no DIN. Because that approval is the fulcrum on which the final order rests, the Tribunal treated it as non est in law, and quashed the section 153A assessment and the section 156 demand notice built on it. It did not go into the merits.
• Statutory position — s.210(3) to (6): the Assessing Officer's order to pay advance tax, the assessee's own lower estimate in Form 28A, and s.218 default CBDT Circulars & InstructionsCuts both waysNo later treatment found
  The Assessing Officer has served an order in February requiring my client to pay advance tax on the basis of an earlier year's assessed income. Can he do that, and what can my client do if the current year's income will be far lower?
  He can, but only within the limits s.210(3) sets: the power exists only where the person has already been assessed by way of regular assessment for some previous year, it must be exercised 'at any time during the financial year but not later than the last day of February', it must be by order in writing, the tax must be calculated in the manner laid down in s.209, and a notice of demand under s.156 specifying the instalments must issue. If the current income will be lower, s.210(5) lets the assessee send an intimation in the prescribed form — Form No. 28A under rule 39 — and pay according to his own estimate instead; if it will be higher, s.210(6) obliges him to pay the higher amount by the last instalment date without waiting to be asked.
• Statutory position — s.219: advance tax is a payment of tax for the year, and credit for it must be given in the regular assessment CBDT Circulars & InstructionsCuts both ways
  The assessment order taxes the year but the computation sheet has not given credit for the advance tax my client paid, or has credited it to the wrong year. What is the statutory basis for insisting on the credit?
  Section 219 is the answer and it is a single sentence: any sum, other than a penalty or interest, paid by or recovered from an assessee as advance tax in pursuance of Chapter XVII shall be treated as a payment of tax in respect of the income of the period which would be the previous year for an assessment for the assessment year next following the financial year in which it was payable, and credit therefor shall be given to the assessee in the regular assessment. So the section does two things: it characterises advance tax as a payment of tax rather than a deposit, and it fixes the year to which that payment belongs by reference to the financial year in which the tax was payable.
• Statutory position — s.200A: the CPC computes tax, interest and the s.234E fee on a TDS statement and issues an intimation CBDT Circulars & InstructionsCuts both waysSuperseded by amendment
  CPC has sent me an intimation under section 200A with a late fee on it. What does section 200A actually let them compute, when did the fee limb go in, and can I appeal it?
  Section 200A is the machinery for processing a quarterly TDS statement under the Income-tax Act, 1961. Sub-section (1) runs (a) to (f): correct arithmetical errors and incorrect claims apparent from the statement, compute interest, compute the fee under section 234E, determine the sum payable or the refund, send an intimation, and grant the refund. The fee limb is clause (c), and the old clauses (c), (d) and (e) became (d), (e) and (f) when section 52 of the Finance Act, 2015 substituted clauses (c) to (f) for clauses (c) to (e) with effect from 1 June 2015 — so a submission that still calls the intimation clause (d) or the refund clause (e) is describing the law before that date. Under the 1961 Act the intimation cannot be sent after one year from the end of the financial year in which the statement is filed, and that limit sits in the proviso to sub-section (1), not in sub-section (2); under the successor provision, section 399 of the Income-tax Act, 2025, the same one-year limit is sub-section (2) itself. The intimation is deemed a notice of demand under the proviso to section 156, is appealable to the Commissioner (Appeals) under section 246A(1)(a), and can be rectified under section 154(1)(c). Whether a section 234E fee can be charged in a section 200A intimation for a quarter before 1 June 2015 is the point on which the High Courts have split — Karnataka and Kerala for the deductor, Gujarat, Rajasthan and Madras for the Revenue — and which High Court you are in decides it.
• Statutory position — s.211: the four advance tax instalments, and the single 15 March instalment for a s.44AD or s.44ADA presumptive assessee CBDT Circulars & InstructionsCuts both ways
  My client returns income under s.44AD. The CPC has charged s.234C interest on four instalments. Is a presumptive assessee not entitled to pay the whole advance tax by 15 March?
  He is. Section 211(1) now splits assessees into two classes: clause (a) covers 'all the assessees, other than the assessee referred to in clause (b)', who pay in four instalments — fifteen per cent by 15 June, forty-five per cent by 15 September, seventy-five per cent by 15 December and the whole by 15 March, each cumulative and reduced by earlier instalments; clause (b) covers 'an assessee who declares profits and gains in accordance with the provisions of sub-section (1) of section 44AD or sub-section (1) of section 44ADA', who pays 'to the extent of the whole amount of such advance tax during each financial year on or before the 15th March'. Section 234C(1)(b) mirrors this exactly, charging a presumptive assessee interest only on the shortfall from the tax due on the returned income as at 15 March.
• CBDT Instruction 1914 and the Office Memorandum on stay of demand CBDT Circulars & InstructionsCuts both waysSuperseded by amendment
  What does the department's own instruction actually say about staying a demand?
  It sets out the guidelines the AO is to follow when an assessee asks for a stay pending first appeal, including the standard percentage to be deposited — which the courts have read as guidance, not a mandatory bar.
• Statutory position — s.192(1C), s.191(2) and s.156(2): the eligible start-up ESOP deferral, its three triggers, the fourteen-day period, and the fact that it defers the employee's own tax too CBDT Circulars & InstructionsCuts both ways
  My client works for a start-up and has exercised his options. He has no cash and the shares cannot be sold. Is there any deferral, and does it cover his own tax or only his employer's TDS?
  This is stage one — the perquisite on exercise — and yes, there is a deferral, but only where the employer is an eligible start-up referred to in s.80-IAC. It covers BOTH sides. Section 192(1C) defers the employer's obligation to deduct or pay tax on the perquisite, and s.191(2) defers the employee's own obligation to pay income-tax on it directly, in identical terms; s.156(2) defers payment of the tax or interest included in a notice of demand on the same income. In every one of the three, the tax must be paid within FOURTEEN DAYS of the EARLIEST of three events: the expiry of forty-eight months from the end of the relevant assessment year; the date of sale of the specified security or sweat equity share; and the date the employee ceases to be the employee. All three sub-sections apply to income of an assessment year beginning on or after 1 April 2021, and all three were inserted by the Finance Act, 2020, which came into force on 1 April 2020.
• Ranchi Club Ltd v CIT (Patna) High CourtHelps taxpayerOverruled
  I filed my return on time and paid the self-assessment tax; the officer then added a disputed item in a best-judgment assessment and charged s.234A interest because I did not comply with a s.142(1) notice. Is that right?
  The Patna High Court said no. Where the return was filed within time with proof of payment, the mere issue of a s.142(1) notice calling for accounts or information does not attract s.234A, because the s.142(1) notice that s.234A speaks of is the notice to FURNISH A RETURN issued to a person who has not filed one — not the notice under clauses (ii) and (iii) calling for accounts or particulars.

Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.