Reply to Demand Notice Under Section 156 — Draft Template
Ready-to-use draft reply template for demand notice under Section 156 for additional tax payment under the Income Tax Act. Includes format, legal references, and compliance notes. Illustrative only — customize based on your specific case facts and professional advice.
Response Deadline: As specified in the notice (typically 15-30 days)
Filing: E-filing portal (incometax.gov.in) → Pending Actions → Response to Notices
When Do You Receive This Notice?
demand notice under Section 156 for additional tax payment is issued by the Assessing Officer / CPC when Section 156 provisions are triggered. You must respond within the time specified in the notice — failure to respond can result in best judgment assessment, penalty, and prosecution.
Draft Reply
[On Letterhead]
Subject: Response to Demand Notice u/s 156 dated [Date] — PAN: [PAN] — AY [Year] — Demand Amount Rs. [Amount]
Respected Sir/Madam,
Option 1 — If demand is correct: The demand of Rs. [Amount] is acknowledged. Payment of Rs. [Amount] has been made vide Challan No. [Number] dated [Date]. Kindly update the demand register.
Option 2 — If demand is incorrect (request rectification): The demand of Rs. [Amount] is incorrect due to [reason — TDS credit not given, deduction wrongly disallowed, computation error]. I/we request rectification under Section 154. Detailed computation enclosed.
Option 3 — If demand is disputed (filing appeal): The demand is disputed and appeal under Section 246A is being filed. Pending appeal, I/we request stay of the demand / reduced payment of [20%] as per CBDT Instruction No. 1914.
[Name] | [PAN] | Date: [Date]
Key Compliance Notes
Options: (a) Pay the demand if correct. (b) If incorrect due to error: file rectification u/s 154 on e-filing portal. (c) If incorrect due to disagreement: file appeal u/s 246A/250 within 30 days AND apply for stay of demand (pay 20% and request stay for balance). (d) CBDT instruction: AO should grant stay if 20% is paid and appeal is filed.
Documents to Attach
| # | Document | Purpose |
|---|---|---|
| 1 | Copy of the notice received | Reference |
| 2 | Copy of ITR filed for the relevant AY | Proof of filing |
| 3 | Computation of income with supporting schedules | Substantiation |
| 4 | All documentary evidence supporting your position | Evidence |
| 5 | Bank statements, Form 26AS, AIS for the relevant period | Verification |