Self Assessment Tax Must Be Paid Before Filing Return!

What is the procedure to adjust the shortage of income tax paid during the previous year (2006-2007)? for example if I have paid the amount less than the actual amount to be paid in the year 2006-2007, Can I adjust the same in the next year by paying more or will that be adjusted with the excess amount which I had paid in the year 2005-2006?archana_k_r@yahoo.com

There is no provision that a person can pay less in a year and in succeeding year he/she pays more to adjust.In fact , if you pay less than what you should pay as per your computation of tax before filing Return , your return may be treated as defective return as per the Explanation to the Section 139(9).

Further the self assessment tax is responsibility of the person filing the return . The provision is contained in section 140A states as under:

"140A. (1) Where any tax is payable on the basis of any return required to be furnished ....... section 139 or section 142 .....as the case may be, section 158BC, after taking into account the amount of tax, if any, already paid under any provision of this Act,the assessee shall be liable to pay such tax together with interest payable under any provision of this Act for any delay in furnishing the return or any default or delay in payment of advance tax, before furnishing the return and the return shall be accompanied by proof of payment of such tax and interest."

However, what practically may happen is that the A.O may not invalidate your return and processes the return u/s 143(1), you will be charged with interest u/s 234B and 234C of the I T Act.that too till the date of processing of return.

He will send you an intimation which is a demand notice in itself. You may be charged with penalty u/s 220 if the new demand is not paid within 30 days of service of notice.

So what happens if return of next years filed with refund claim ?

If that happens ,You can write to the A.O to adjust the refund of next year to be adjusted with the demand raised for previous year. Anyway, A.O can not issue demand . This is as per the refund till he recover arrearsprovision in Section 245 of the I T Act which is given as under :

• 245. Where under any of the provisions of this Act, a refund is found..........of the refund, set off the amount to be refunded or any part of that amount, against the sum, if any, remaining payable under this Act by the person to whom the refund is due, after giving an intimation in writing to such person of the action proposed to be taken under this section."

So, best is pay the tax before filing the return of income.

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I could not pay demand for paucity of funds. The interest part of the demand is huge now. I am not in postion to pay such demand .What to do?

Sure, you can apply before Commissioner of Income tax or Chief Commissioner of Income Tax , on plane paper u/s 220(2A) which says :

"Chief 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. "

So, if you can prove before the CIT or CCIT aforesaid conditions u/s220(2A) , they can waive the interest or even refund you the interest already paid by you.

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