Section 220 of Income Tax Act "When tax payable and when assessee deemed in default"
220. (1) Any amount, otherwise than by way of advance
tax, specified as payable in a notice of demand under
section 156 shall be paid within thirty days of the service
of the notice at the place and to the person mentioned in
the notice :
Provided that, where the Assessing Officer has any reason to
believe that it will be detrimental to revenue if the full
period of thirty days aforesaid is allowed, he may, with the
previous approval of the Joint Commissioner, direct that the
sum specified in the notice of demand shall be paid within
such period being a period less than the period of thirty
days aforesaid, as may be specified by him in the notice of
demand.
(1A) Where any notice of demand has been served upon an
assessee and any appeal or other proceeding, as the case may
be, is filed or initiated in respect of the amount specified
in the said notice of demand, then, such demand shall be
deemed to be valid till the disposal of the appeal by the
last appellate authority or disposal of the proceedings, as
the case may be, and any such notice of demand shall have
the effect as specified in section 3 of the Taxation Laws
(Continuation and Validation of Recovery Proceedings) Act,
1964 (11 of 1964).
(2) If the amount specified in any notice of demand under
section 156 is not paid within the period limited under
sub-section (1), 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 period mentioned in sub-section (1)
and ending with the day on which the amount is paid :
Provided that, where as a result of an order under section
154, or section 155, or section 250, or section 254, or
section 260, or section 262, or section 264 or an order of
the Settlement Commission under sub-section (4) of section
245D, the amount on which interest was payable under this
section had been reduced, the interest shall be reduced
accordingly and the excess interest paid, if any, shall be
refunded :
Provided further that where as a result of an order under
sections specified in the first proviso, the amount on which
interest was payable under this section had been reduced and
subsequently as a result of an order under said sections or
section 263, the amount on which interest was payable under
this section is increased, the assessee shall be liable to
pay interest under sub-section (2) from the day immediately
following the end of the period mentioned in the first
notice of demand, referred to in sub-section (1) and ending
with the day on which the amount is paid:
Provided also that in respect of any period commencing on or
before the 31st day of March, 1989 and ending after that
date, such interest shall, in respect of so much of such
period as falls after that date, be calculated at the rate
of one and one-half per cent for every month or part of a
month.
(2A) Notwithstanding anything contained in sub-section (2),
the Principal Chief Commissioner or Chief Commissioner or
Principal Commissioner or Commissioner may reduce or waive
the amount of interest paid or payable by an assessee under
the said sub-section if he is satisfied that-
(i) payment of such amount has caused or would cause genuine
hardship to the assessee ;
(ii) default in the payment of the amount on which interest
has been paid or was payable under the said sub-section was
due to circumstances beyond the control of the assessee ;
and
(iii) the assessee has co-operated in any inquiry relating
to the assessment or any proceeding for the recovery of any
amount due from him:
Provided that the order accepting or rejecting the
application of the assessee, either in full or in part,
shall be passed within a period of twelve months from the
end of the month in which the application is received:
Provided further that no order rejecting the application,
either in full or in part, shall be passed unless the
assessee has been given an opportunity of being heard:
Provided also that where any application is pending as on
the 1st day of June, 2016, the order shall be passed on or
before the 31st day of May, 2017.
(2B) Notwithstanding anything contained in sub-section (2),
where interest is charged under sub-section (1A) of section
201 on the amount of tax specified in the intimation issued
under sub-section (1) of section 200A for any period, then,
no interest shall be charged under sub-section (2) on the
same amount for the same period.
(2C) Notwithstanding anything contained in sub-section (2),
where interest is charged under sub-section (7) of section
206C on the amount of tax specified in the intimation issued
under sub-section (1) of section 206CB for any period, then,
no interest shall be charged under sub-section (2) on the
same amount for the same period.
(3) Without prejudice to the provisions contained in
sub-section (2), on an application made by the assessee
before the expiry of the due date under sub-section (1), the
Assessing Officer may extend the time for payment or allow
payment by instalments, subject to such conditions as he may
think fit to impose in the circumstances of the case.
(4) If the amount is not paid within the time limited under
sub-section (1) or extended under sub-section (3), as the
case may be, at the place and to the person mentioned in the
said notice the assessee shall be deemed to be in default.
(5) If, in a case where payment by instalments is allowed
under sub-section (3), the assessee commits defaults in
paying any one of the instalments 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 instalment or instalments shall be deemed to
have been due on the same date as the instalment actually in
default.
(6) Where an assessee has presented an appeal under section
246 or section 246A the Assessing Officer may, in his
discretion and subject to such conditions as he may think
fit to impose in the circumstances of the case, treat the
assessee as not being in default in respect of the amount in
dispute in the appeal, even though the time for payment has
expired, as long as such appeal remains undisposed of.
(7) Where an assessee has been assessed in respect of income
arising outside India in a country the laws of which
prohibit or restrict the remittance of money to India, the
Assessing Officer shall not treat the assessee as in default
in respect of that part of the tax which is due in respect
of that amount of his income which, by reason of such
prohibition or restriction, cannot be brought into India,
and shall continue to treat the assessee as not in default
in respect of such part of the tax until the prohibition or
restriction is removed.
Explanation.-For the purposes of this section, income shall
be deemed to have been brought into India if it has been
utilised or could have been utilised for the purposes of any
expenditure actually incurred by the assessee outside India
or if the income, whether capitalised or not, has been
brought into India in any form.
221. (1) When an assessee is in default or is deemed to
be in default in making a payment of tax, he shall, in
addition to the amount of the arrears and the amount of
interest payable under sub-section (2) of section 220, be
liable, by way of penalty, to pay such amount as the
Assessing Officer may direct, and in the case of a
continuing default, such further amount or amounts as the
Assessing Officer may, from time to time, direct, so,
however, that the total amount of penalty does not exceed
the amount of tax in arrears :
Provided that before levying any such penalty, the assessee
shall be given a reasonable opportunity of being heard :
Provided further that where the assessee proves to the
satisfaction of the Assessing Officer that the default was
for good and sufficient reasons, no penalty shall be levied
under this section.
Explanation.-For the removal of doubt, it is hereby declared
that an assessee shall not cease to be liable to any penalty
under this sub-section merely by reason of the fact that
before the levy of such penalty he has paid the tax.
(2) Where as a result of any final order the amount of tax,
with respect to the default in the payment of which the
penalty was levied, has been wholly reduced, the penalty
levied shall be cancelled and the amount of penalty paid
shall be refunded.