Unit 2 - Collection and Recovery of Tax

Collection and Recovery of Tax
Notice of Demand: Section 156
When any tax, interest penalty, fine or any other sum is payable in
consequence of any order passed under this Act, the Assessing Officer
shall serve upon the assessee a notice of demand in the prescribed form
specifying the sum so payable.
However, intimation sent under Section 143(1) or Section 200A(1) or

Section 206CB(1) shall be deemed to be notice of demand if any sum is
payable. (Proviso to Section 156)
Intimation of loss: Section 157
When in the course of the assessment of the total income of any assessee, it is
established that a loss has taken place which the assessee is entitled to have
carried forward and set off against the income in subsequent years, the Assessing
Officer shall notify to the assessee by an order in writing the amount of the loss
as computed by him for the purposes of carry forward and set off.
Assessee in Default:
The amount specified in the notice of demand shall be paid within 30 days of the
service of the notice at the place and to the person mentioned in the notice. If the
Assessing Officer has any reason to believe that it will be detrimental to revenue
if the full period of 30 days is allowed he may, with the prior approval of the
Joint Commissioner reduce the period as he thinks fit (Section 220).
If the amount specified in the notice of demand is not paid within the period
mentioned in the notice, the assessee shall be liable to pay simple interest at one
per cent for every month or part of a month comprised in the period commencing
from the day immediately following the end of the 30 days or shorter period, as
allowed, and ending with the date of payment of the tax.
The Principal Chief Commissioner or Chief Commissioner or Principal Commission

or Commissioner may reduce or waive the amount of interest paid or payable by an
assessee u/s 220(2), if he is satisfied about:
 Genuine hardship to the assessee because of such payment
 Circumstance were beyond the control of assessee
 The assessee has cooperated in enquiry.
Application of waiver of interest to be disposed within 12 months and the opportunity

of being heard to be given to the assessee before rejecting the application is must.
If the assessee is not in a position to pay the amount in the prescribed time, he may submit
an application to the Assessing Officer before the expiry of the due date of the payment. On
receipt of such application, the Assessing Officer may extend the time for payment or allow
payment by installments, subject to such conditions as he may think fit to impose.
If, in a case where payment by installments is allowed under sub-section (3), the assessee
commits defaults in paying any one of the installments within the time fixed under that sub-
section, the assessee shall be deemed to be in default as to the whole of the amount then
outstanding, and the other installment or installments shall be deemed to have been due on
the same date as the installment actually in default.
If the amount is not paid as mentioned above, the assessee shall be deemed to be in default
and shall be liable to pay in addition to the amount of the arrears and the amount of
interest, by way of penalty such amount as the Assessing Officer may direct. In the case of
continuing default, he shall be liable to pay such further amount as the Assessing Officer
may, from time to time, direct. However, the total amount of penalty shall not exceed the
amount of tax in arrears.
Recovery of Tax [Section 222]
Section 222 provides that in case assessee fails to pay any sum imposed by way of
interest, fine, penalty, or any other sum payable under the provisions of this Act, the same
shall be recoverable in the manner specified in the Act for the recovery of arrears of tax.
Section 222(1) When an assessee is in default or is deemed to be in default in making a

payment of tax, the Tax Recovery Officer may draw up under his signature a statement in
the prescribed form specifying the amount of arrears due from the assessee and shall
proceed to recover from such assessee the amount specified in the certificate by one or
more of the modes mentioned below, in accordance with the rules laid down in the
Second Schedule :
 attachment and sale of the assessee’s movable property ;
 attachment and sale of the assessee’s immovable property ;
 arrest of the assessee and his detention in prison ;
 appointing a receiver for the management of the assessee’s movable and immovable
properties.
Tax Recovery Officer by whom recovery is to be effected [ Sec. 223 ]
(Jurisdiction of tax recovery officer)
The Tax Recovery Officer competent to take action shall be— Section 223(1)
 the Tax Recovery Officer within whose jurisdiction the assessee carries on
his business or profession or within whose jurisdiction the principal place
of his business or profession is situate, or
 the Tax Recovery Officer within whose jurisdiction the assessee resides or
any movable or immovable property of the assessee is situate,
Jurisdiction assigned to the Tax Recovery Officer under the orders or

directions issued by the Board, or by the Chief Commissioner or
Commissioner who is authorized in this behalf by the Board.
Section 223(2)
Where an assessee has property within the jurisdiction of more than one Tax
Recovery Officer and the Tax Recovery Officer by whom the certificate is drawn up
—
 is not able to recover the entire amount by sale of the property, movable or
immovable, within his jurisdiction, or
 is of the opinion that, for the purpose of expediting or securing the recovery of the
whole or any part of the amount under this Chapter, it is necessary so to do, he
may send the certificate or, where only a part of the amount is to be recovered, a
copy of the certificate certified in the prescribed manner and specifying the
amount to be recovered to a Tax Recovery Officer within whose jurisdiction the
assessee resides or has property and, thereupon, that Tax Recovery Officer shall
also proceed to recover the amount under this Chapter as if the certificate or copy
thereof had been drawn up by him.
Other Mode of Recovery of Tax [ Section 226 ]
Tax Recovery Officer may draw up under his signature a statement in the prescribed form
specifying the amount of arrears due from the assessee and shall proceed to recover from such
assessee the amount specified in the certificate (being the statement referred to above) by one or
more of the modes mentioned below:
(i) Deduction from Salary: If any assessee is in receipt of any “Salaries” income, the Assessing
Officer or Tax Recovery Officer may approach such person paying salary to deduct arrears of tax
from the salary of the assessee, and such person shall comply with any such requisition and shall
pay the sum so deducted to the credit of the Central Government or as the Board directs.
(ii) Collection from persons who owe money to assessee: The Assessing Officer or Tax Recovery
Officer may, at any time or from time to time, by notice in writing require any person from whom
money is due or may become due to the assessee or any person who holds or may subsequently hold
money for or on account of the assessee to pay to the Assessing Officer or Tax Recovery Officer
(when the money becomes due or is held) the amount which may be sufficient to pay the amount
due by the assessee in respect of arrears or the whole of the money when it is equal to or less than
that amount.
(iii) Application to Court for payment of money in court’s custody [ Sec. 226(4)]:
The Assessing Officer or Tax Recovery Officer may apply to the court in whose custody
there is money belonging to the assessee for payment to him of the entire amount of such
money, or, if it is more than the tax due, an amount sufficient to discharge the tax.
(iv) Distraint (seizure) and Sale of Movable Property [ Section 226(5)]: The
Assessing Officer or Tax Recovery Officer may, if so authorized by the Chief
Commissioner or Commissioner by general or special order, recover any arrears of tax
due from an assessee by distraint and sale of his movable property in the manner laid
down in the Third Schedule.
(v) Recovery through State Government [ Section 227]: If the recovery of tax in any
area has been entrusted to a State Government, the State Government may direct, with
respect to that area or any part thereof; that tax shall be recovered therein with, and as an
addition to, any municipal tax or local rate, by the same person and in the same manner as
the municipal tax or local rate is recovered.

Unit 2 - Collection and Recovery of Tax

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Unit 2 - Collection and Recovery of Tax

Uploaded by

Copyright:

Available Formats

Collection and Recovery of Tax

Notice of Demand: Section 156

However, intimation sent under Section 143(1) or Section 200A(1) or

The Principal Chief Commissioner or Chief Commissioner or Principal Commission

Application of waiver of interest to be disposed within 12 months and the opportunity

Section 222(1) When an assessee is in default or is deemed to be in default in making a

Jurisdiction assigned to the Tax Recovery Officer under the orders or

You might also like