ITR
Demand outstanding while rectification is pending
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Facts
A rectification request does not by itself stop a demand. You should respond under Response to Outstanding Demand and say you disagree, giving the rectification reference. Unpaid demands can be set off against later refunds.
Provisions and law
- Sec 156 (now Sec 289)Notice of demand and payment within the time allowed
- Sec 245 (now Sec 438)Refund can be set off against an outstanding demand after intimation to the taxpayer
- Sec 154 (now Sec 287)Rectification of mistake apparent from record in an intimation or order
Analysis
If the demand of ₹35,000 arose only because TDS was not credited, mark it as disagree with demand and choose the reason that the rectification has been filed. That puts the department on notice and is your record if recovery action starts. If part of the demand is correct, pay that part and dispute the rest. Interest for late payment on a demand that finally stands can run, so do not ignore a demand you agree with.
Conclusion
- Open Pending Actions > Response to Outstanding Demand
- Choose disagree, select rectification filed and give the reference number
- Pay any part of the demand you agree with
- Keep the response acknowledgement until the demand is reduced
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Rectification, Sec 154 (now 287)
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