THE SECOND SCHEDULE

PROCEDURE FOR RECOVERY OF TAX

57
[[See sections 222 and 276]]
PART I
GENERAL PROVISIONS
Definitions.
1. In this Schedule, unless the context otherwise requires,—
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[(a) "certificate", except in rules 7, 44, 65 and sub-rule (2) of rule 66, means the certificate
drawn up by the Tax Recovery Officer under section 222 in respect of any assessee referred to
in that section;]
(b) "defaulter" means the assessee mentioned in the certificate;
(c) "execution", in relation to a certificate, means recovery of arrears in pursuance of the
certificate;
(d) "movable property" includes growing crops;
(e) "officer" means a person authorised to make an attachment or sale under this Schedule;
(f) "rule" means a rule contained in this Schedule; and
(g) "share in a corporation" includes stock, debenture-stock, debentures or bonds.
Issue of notice.
2. 59[When a certificate has been drawn up by the Tax Recovery Officer] for the recovery of arrears
under this Schedule, the Tax Recovery Officer shall cause to be served upon the defaulter a notice
requiring the defaulter to pay the amount specified in the certificate within fifteen days from the
date of service of the notice and intimating that in default steps would be taken to realise the
amount under this Schedule.
When certificate may be executed.
3. No step in execution of a certificate shall be taken until the period of fifteen days has elapsed
since the date of the service of the notice required by the preceding rule :
Provided that, if the Tax Recovery Officer is satisfied that the defaulter is likely to conceal,
remove or dispose of the whole or any part of such of his movable property as would be liable to
attachment in execution of a decree of a civil court and that the realisation of the amount of the
certificate would in consequence be delayed or obstructed, he may at any time direct, for reasons to
be recorded in writing, an attachment of the whole or any part of such property:
Provided further that if the defaulter whose property has been so attached furnishes security to the
satisfaction of the Tax Recovery Officer, such attachment shall be cancelled from the date on which
such security is accepted by the Tax Recovery Officer.
Mode of recovery.
4. If the amount mentioned in the notice is not paid within the time specified therein or within such
further time as the Tax Recovery Officer may grant in his discretion, the Tax Recovery Officer
shall proceed to realise the amount by one or more of the following modes :—
(a) by attachment and sale of the defaulter’s movable property;
 (b) by attachment and sale of the defaulter’s immovable property;
(c) by arrest of the defaulter and his detention in prison;
(d) by appointing a receiver for the management of the defaulter’s movable and immovable
properties.
Interest, costs and charges recoverable.
5. There shall be recoverable, in the proceedings in execution of every certificate,—
(a) such interest upon the amount of tax or penalty or other sum to which the certificate relates as
is payable in accordance with sub-section (2) of section 220, and
(b) all charges incurred in respect of—
(i) the service of notice upon the defaulter to pay the arrears, and of warrants and other processes,
and
(ii) all other proceedings taken for realising the arrears.
Purchaser’s title.
6. (1) Where property is sold in execution of a certificate, there shall vest in the purchaser merely
the right, title and interest of the defaulter at the time of the sale, even though the property itself be
specified.
(2) Where immovable property is sold in execution of a certificate, and such sale has become
absolute, the purchaser’s right, title and interest shall be deemed to have vested in him from the
time when the property is sold, and not from the time when the sale becomes absolute.
Suit against purchaser not maintainable on ground of purchase being made on behalf of
plaintiff.
7. (1) No suit shall be maintained against any person claiming title under a purchase certified by the
Tax Recovery Officer in the manner laid down in this Schedule, on the ground that the purchase
was made on behalf of the plaintiff or on behalf of some one through whom the plaintiff claims.
(2) Nothing in this section shall bar a suit to obtain a declaration that the name of any purchaser
certified as aforesaid was inserted in the certificate fraudulently or without the consent of the real
purchaser, or interfere with the right of a third person to proceed against that property, though
ostensibly sold to the certified purchaser, on the ground that it is liable to satisfy a claim of such
third person against the real owner.
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[Disposal of proceeds of execution.
8. (1) Whenever assets are realised by sale or otherwise in execution of a certificate, the proceeds
shall be disposed of in the following manner, namely :—
(a) they shall first be adjusted towards the amount due under the certificate in execution of which
the assets were realised and the costs incurred in the course of such execution;
(b) if there remains a balance after the adjustment referred to in clause (a), the same shall be
utilised for satisfaction of any other amount recoverable from the assessee under this Act
which may be due on the date on which the assets were realised; and
(c) the balance, if any, remaining after the adjustments under clauses (a) and (b) shall be paid to
the defaulter.
(2) If the defaulter disputes any adjustment under clause (b) of sub-rule (1), the Tax Recovery
Officer shall determine the dispute.]
General bar to jurisdiction of civil courts, save where fraud alleged.
9. Except as otherwise expressly provided in this Act, every question arising between the 61[Tax
Recovery] Officer and the defaulter or their representatives, relating to the execution, discharge or
satisfaction of a certificate 62[***], or relating to the confirmation or setting aside by an order under
this Act of a sale held in execution of such certificate, shall be determined, not by suit, but by order
of the Tax Recovery Officer before whom such question arises :
Provided that a suit may be brought in a civil court in respect of any such question upon the
ground of fraud.
Property exempt from attachment.
10. (1) All such property as is by the Code of Civil Procedure, 1908 (5 of 1908), exempted from
attachment and sale in execution of a decree of a civil court shall be exempt from attachment and
sale under this Schedule.
(2) The Tax Recovery Officer’s decision as to what property is so entitled to exemption shall be
conclusive.
Investigation by Tax Recovery Officer.
11. (1) Where any claim is preferred to, or any objection is made to the attachment or sale of, any
property in execution of a certificate, on the ground that such property is not liable to such
attachment or sale, the Tax Recovery Officer shall proceed to investigate the claim or objection :
Provided that no such investigation shall be made where the Tax Recovery Officer considers that
the claim or objection was designedly or unnecessarily delayed.
(2) Where the property to which the claim or objection applies has been advertised for sale, the Tax
Recovery Officer ordering the sale may postpone it pending the investigation of the claim or
objection, upon such terms as to security or otherwise as the Tax Recovery Officer shall deem fit.
(3) The claimant or objector must adduce evidence to show that—
(a) (in the case of immovable property) at the date of the service of the notice issued under this
Schedule to pay the arrears, or
(b) (in the case of movable property) at the date of the attachment,
he had some interest in, or was possessed63 of, the property in question.
(4) Where, upon the said investigation, the Tax Recovery Officer is satisfied that, for the reason
stated in the claim or objection, such property was not, at the said date, in the possession of the
defaulter or of some person in trust for him or in the occupancy of a tenant or other person paying
rent to him, or that, being in the possession of the defaulter at the said date, it was so in his
possession, not on his own account or as his own property, but on account of or in trust for some
other person, or partly on his own account and partly on account of some other person, the Tax
Recovery Officer shall make an order releasing the property, wholly or to such extent as he thinks
fit, from attachment or sale.
(5) Where the Tax Recovery Officer is satisfied that the property was, at the said date, in the
possession of the defaulter as his own property and not on account of any other person, or was in
the possession of some other person in trust for him, or in the occupancy of a tenant or other person
paying rent to him, the Tax Recovery Officer shall disallow the claim.
(6) Where a claim or an objection is preferred, the party against whom an order is made may
institute a suit in a civil court to establish the right which he claims to the property in dispute; but,
subject to the result of such suit (if any), the order of the Tax Recovery Officer shall be conclusive.
Removal of attachment on satisfaction or cancellation of certificate.
12. Where—
(a) the amount due, with costs and all charges and expenses resulting from the attachment of any
property or incurred in order to hold a sale, are paid to the Tax Recovery Officer, or
(b) the certificate is cancelled,
the attachment shall be deemed to be withdrawn and, in the case of immovable property, the
withdrawal shall, if the defaulter so desires, be proclaimed at his expense, and a copy of the
proclamation shall be affixed in the manner provided by this Schedule for a proclamation of sale of
immovable property.
Officer entitled to attach and sell.
13. The attachment and sale of movable property and the attachment and sale of immovable
property may be made by such persons as the Tax Recovery Officer may from time to time direct.
Defaulting purchaser answerable for loss on resale.
14. Any deficiency of price which may happen on a resale by reason of the purchaser’s default, and
all expenses attending such resale, shall be certified to the Tax Recovery Officer by the officer
holding the sale, and shall, at the instance of either the 64[Tax Recovery] Officer or the defaulter, be
recoverable from the defaulting purchaser under the procedure provided by this Schedule:
Provided that no such application shall be entertained unless filed within fifteen days from the date
of resale.
Adjournment or stoppage of sale.
15. (1) The Tax Recovery Officer may, in his discretion, adjourn any sale hereunder to a specified
day and hour; and the officer conducting any such sale may, in his discretion, adjourn the sale,
recording his reasons for such adjournment :
Provided that, where the sale is made in, or within the precincts of, the office of the Tax Recovery
Officer, no such adjournment shall be made without the leave of the Tax Recovery Officer.
(2) Where a sale of immovable property is adjourned under sub-rule (1) for a longer period than
one calendar month, a fresh proclamation of sale under this Schedule shall be made unless the
defaulter consents to waive it.
(3) Every sale shall be stopped if, before the lot is knocked down, the arrears and costs (including
the costs of the sale) are tendered to the officer conducting the sale, or proof is given to his
satisfaction that the amount of such arrears and costs has been paid to the Tax Recovery Officer
who ordered the sale.
Private alienation to be void in certain cases.
16. (1) Where a notice has been served on a defaulter under rule 2, the defaulter or his
representative in interest shall not be competent to mortgage, charge, lease or otherwise deal with
any property65belonging to him except with the permission of the Tax Recovery Officer, nor shall
any civil court issue any process against such property in execution of a decree for the payment of
money.
(2) Where an attachment has been made under this Schedule, any private transfer or delivery of the
property attached or of any interest therein and any payment to the defaulter of any debt, dividend
or other moneys contrary to such attachment, shall be void as against all claims enforceable under
the attachment.
Prohibition against bidding or purchase by officer.
17. No officer or other person having any duty to perform in connection with any sale under this
Schedule shall, either directly or indirectly, bid for, acquire or attempt to acquire any interest in the
property sold.
Prohibition against sale on holidays.
18. No sale under this Schedule shall take place on a Sunday or other general holiday recognised by
the State Government or on any day which has been notified by the State Government to be a local
holiday for the area in which the sale is to take place.
Assistance by police.
19. Any officer authorised to attach or sell any property or to arrest the defaulter or charged with
any duty to be performed under this Schedule, may apply to the officer-in-charge of the nearest
police station for such assistance as may be necessary in the discharge of his duties, and the
authority to whom such application is made shall depute a sufficient number of police officers for
furnishing such assistance.
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[Entrustment of certain functions by Tax Recovery Officer.
19A. A Tax Recovery Officer may, with the previous approval of the 67[Joint] Commissioner,
entrust any of his functions as the Tax Recovery Officer to any other officer lower than him in rank
(not being lower in rank than an Inspector of Income-tax) and such officer shall, in relation to the
functions so entrusted to him, be deemed to be a Tax Recovery Officer.]
PART II
ATTACHMENT AND SALE OF MOVABLE PROPERTY
Attachment
Warrant.
20. Except as otherwise provided in this Schedule, when any movable property is to be attached,
the officer shall be furnished by the Tax Recovery Officer (or other officer empowered by him in
that behalf) a warrant in writing and signed with his name specifying the name of the defaulter and
the amount to be realised.
Service of copy of warrant.
21. The officer shall cause a copy of the warrant to be served on the defaulter.
Attachment.
22. If, after service of the copy of the warrant, the amount is not paid forthwith, the officer shall
proceed to attach the movable property of the defaulter.
Property in defaulter’s possession.
23. Where the property to be attached is movable property (other than agricultural produce) in the
possession of the defaulter, the attachment shall be made by actual seizure, and the officer shall
keep the property in his own custody or the custody of one of his subordinates and shall be
responsible for due custody thereof:
Provided that when the property seized is subject to speedy and natural decay or when the expense
of keeping it in custody is likely to exceed its value, the officer may sell it at once.
Agricultural produce.
24. Where the property to be attached is agricultural produce the attachment shall be made by
affixing a copy of the warrant of attachment—
(a) where such produce is growing crop,—on the land on which such crop has grown, or
(b) where such produce has been cut or gathered,—on the threshing floor or place for treading out
grain or the like, or fodder-stack, on or in which it is deposited,
and another copy on the outer door or on some other conspicuous part of the house in which the
defaulter ordinarily resides, or with the leave of the Tax Recovery Officer, on the outer door or on
some other conspicuous part of the house in which he carries on business or personally works for
gain, or in which he is known to have last resided or carried on business or personally worked for
gain. The produce shall, thereupon, be deemed to have passed into the possession of the Tax
Recovery Officer.
Provisions as to agricultural produce under attachment.
25. (1) Where agricultural produce is attached, the Tax Recovery Officer shall make such
arrangements for the custody, watching, tending, cutting and gathering thereof as he may deem
sufficient; 68[and he shall have power to defray the cost of such arrangements].
(2) Subject to such conditions as may be imposed by the Tax Recovery Officer in this behalf, either
in the order of attachment or in any subsequent order, the defaulter may tend, cut, gather and store
the produce and do any other act necessary for maturing or preserving it; and, if the defaulter fails
to do all or any of such acts, any person appointed by the Tax Recovery Officer in this behalf may,
subject to the like conditions, do all or any of such acts, and the costs incurred by such person shall
be recoverable from the defaulter as if they were included in the certificate.
(3) Agricultural produce attached as a growing crop shall not be deemed to have ceased to be under
attachment or to require reattachment merely because it has been severed from the soil.
(4) Where an order for the attachment of a growing crop has been made at a considerable time
before the crop is likely to be fit to be cut or gathered, the Tax Recovery Officer may suspend the
execution of the order for such time as he thinks fit, and may, in his discretion, make a further order
prohibiting the removal of the crop pending the execution of the order of attachment.
(5) A growing crop which from its nature does not admit of being stored shall not be attached under
this rule at any time less than twenty days before the time at which it is likely to be fit to be cut or
gathered.
Debts and shares, etc.
26. (1) In the case of—
(a) a debt not secured by a negotiable instrument,
(b) a share in a corporation, or
(c) other movable property not in the possession of the defaulter except property deposited in, or
in the custody of, any court,
the attachment shall be made by a written order prohibiting,—
 (i) in the case of the debt—the creditor from recovering the debt and the debtor from making
payment thereof until the further order of the Tax Recovery Officer;
(ii) in the case of the share—the person in whose name the share may be standing from
transferring the same or receiving any dividend thereon;
(iii) in the case of the other movable property (except as aforesaid)—the person in possession of
the same from giving it over to the defaulter.
(2) A copy of such order shall be affixed on some conspicuous part of the office of the Tax
Recovery Officer, and another copy shall be sent, in the case of the debt, to the debtor, in the case
of the share, to the proper officer of the corporation, and in the case of the other movable property
(except as aforesaid), to the person in possession of the same.
(3) A debtor prohibited under clause (i) of sub-rule (1) may pay the amount of his debt to the Tax
Recovery Officer, and such payment shall discharge him as effectually as payment to the party
entitled to receive the same.
Attachment of decree.
27. (1) The attachment of a decree of a civil court for the payment of money or for sale in
enforcement of a mortgage or charge shall be made by the issue to the civil court of a notice
requesting the civil court to stay the execution of the decree unless and until—
(i) the Tax Recovery Officer cancels the notice, or
(ii) the 69[Tax Recovery] Officer or the defaulter applies to the court receiving such notice to
execute the decree.
(2) Where a civil court receives an application under clause (ii) of sub-rule (1), it shall, on the
application of the 69[Tax Recovery] Officer or the defaulter and subject to the provisions of the
Code of Civil Procedure, 1908 (5 of 1908), proceed to execute the attached decree and apply the
net proceeds in satisfaction of the certificate.
(3) The 69[Tax Recovery] Officer shall be deemed to be the representative of the holder of the
attached decree, and to be entitled to execute such attached decree in any manner lawful for the
holder thereof.
Share in movable property.
28. Where the property to be attached consists of the share or interest of the defaulter in movable
property belonging to him and another as co-owners, the attachment shall be made by a notice to
the defaulter prohibiting him from transferring the share or interest or charging it in any way.
Salary of Government servants.
29. Attachment of the salary or allowances of servants of the Government or a local authority may
be made in the manner provided by rule 48 of Order 21 of the First Schedule to the Code of Civil
Procedure, 1908 (5 of 1908), and the provisions of the said rule shall, for the purposes of this rule,
apply subject to such modifications as may be necessary.
Attachment of negotiable instrument.
30. Where the property is a negotiable instrument not deposited in a court nor in the custody of a
public officer, the attachment shall be made by actual seizure, and the instrument shall be brought
before the Tax Recovery Officer and held subject to his orders.
Attachment of property in custody of court or public officer.
31. Where the property to be attached is in the custody of any court or public officer, the
attachment shall be made by a notice to such court or officer, requesting that such property, and any
interest or dividend becoming payable thereon, may be held subject to the further orders of the Tax
Recovery Officer by whom the notice is issued:
Provided that, where such property is in the custody of a court, any question of title or priority
arising between the 70[Tax Recovery] Officer and any other person, not being the defaulter,
claiming to be interested in such property by virtue of any assignment, attachment or otherwise,
shall be determined by such court.
Attachment of partnership property.
32. (1) Where the property to be attached consists of an interest of the defaulter, being a partner, in
the partnership property, the Tax Recovery Officer may make an order charging the share of such
partner in the partnership property and profits with payment of the amount due under the certificate,
and may, by the same or subsequent order, appoint a receiver of the share of such partner in the
profits, whether already declared or accruing and of any other money which may become due to
him in respect of the partnership, and direct accounts and inquiries and make an order for the sale
of such interest or such other order as the circumstances of the case may require.
(2) The other persons shall be at liberty at any time to redeem the interest charged or, in the case of
a sale being directed, to purchase the same.
Inventory.
33. In the case of attachment of movable property by actual seizure, the officer shall, after
attachment of the property, prepare an inventory of all the property attached, specifying in it the
place where it is lodged or kept, and shall forward the same to the Tax Recovery Officer and a copy
of the inventory shall be delivered by the officer to the defaulter.
Attachment not to be excessive.
34. The attachment by seizure shall not be excessive, that is to say, the property attached shall be as
nearly as possible proportionate to the amount specified in the warrant.
Seizure between sunrise and sunset.
35. Attachment by seizure shall be made after sunrise and before sunset and not otherwise.
Power to break open doors, etc.
36. The officer may break open any inner or outer door or window of any building and enter any
building in order to seize any movable property if the officer has reasonable grounds to believe that
such building contains movable property liable to seizure under the warrant and the officer has
notified his authority and intention of breaking open if admission is not given. He shall, however,
give all reasonable opportunity to women to withdraw.
Sale
Sale.
37. The Tax Recovery Officer may direct that any movable property attached under this Schedule
or such portion thereof as may seem necessary to satisfy the certificate shall be sold.
Issue of proclamation.
38. When any sale of movable property is ordered by the Tax Recovery Officer, the Tax Recovery
Officer shall issue a proclamation, in the language of the district, of the intended sale, specifying
the time and place of sale and whether the sale is subject to confirmation or not.
Proclamation how made.
39. (1) Such proclamation shall be made by beat of drum or other customary mode,—
(a) in the case of property attached by actual seizure—
(i) in the village in which the property was seized, or, if the property was seized in a town or
city, then, in the locality in which it was seized; and
(ii) at such other places as the Tax Recovery Officer may direct;
(b) in the case of property attached otherwise than by actual seizure, in such places, if any, as the
Tax Recovery Officer may direct.
(2) A copy of the proclamation shall also be affixed in a conspicuous part of the office of the Tax
Recovery Officer.
Sale after fifteen days.
40. Except where the property is subject to speedy and natural decay or when the expense of
keeping it in custody is likely to exceed its value, no sale of movable property under this Schedule
shall, without the consent in writing of the defaulter, take place until after the expiry of at least
fifteen days calculated from the date on which a copy of the sale proclamation was affixed in the
office of the Tax Recovery Officer.
Sale of agricultural produce.
41. (1) Where the property to be sold is agricultural produce, the sale shall be held,—
(a) if such produce is a growing crop—on or near the land on which such crop has grown, or
(b) if such produce has been cut or gathered—at or near the threshing floor or place for treading
out grain or the like, or fodder-stack, on or in which it is deposited:
Provided that the Tax Recovery Officer may direct the sale to be held at the nearest place of public
resort, if he is of opinion that the produce is thereby likely to sell to greater advantage.
(2) Where, on the produce being put up for sale,—
(a) a fair price, in the estimation of the person holding the sale, is not offered for it, and
(b) the owner of the produce, or a person authorised to act on his behalf, applies to have the sale
postponed till the next day or, if a market is held at the place of sale, the next market day,
the sale shall be postponed accordingly, and shall be then completed, whatever price may be
offered for the produce.
Special provisions relating to growing crops.
42. (1) Where the property to be sold is a growing crop and the crop from its nature admits of being
stored but has not yet been stored, the day of the sale shall be so fixed as to admit of the crop being
made ready for storing before the arrival of such day, and the sale shall not be held until the crop
has been cut or gathered and is ready for storing.
(2) Where the crop from its nature does not admit of being stored or can be sold to a greater
advantage in an unripe stage (e.g., as green wheat), it may be sold before it is cut and gathered, and
the purchaser shall be entitled to enter on the land, and to do all that is necessary for the purpose of
tending or cutting or gathering the crop.
Sale to be by auction.
43. The property shall be sold by public auction in one or more lots as the officer may consider
advisable, and if the amount to be realised by sale is satisfied by the sale of a portion of the
property, the sale shall be immediately stopped with respect to the remainder of the lots.
Sale by public auction.
44. (1) Where movable property is sold by public auction, the price of each lot shall be paid at the
time of sale or as soon after as the officer holding the sale directs and in default of payment, the
property shall forthwith be resold.
(2) On payment of the purchase-money, the officer holding the sale shall grant a certificate
specifying the property purchased, the price paid and the name of the purchaser, and the sale shall
become absolute.
(3) Where the movable property to be sold is a share in goods belonging to the defaulter and a co-
owner, and two or more persons, of whom one is such co-owner, respectively bid the same sum for
such property or for any lot, the bidding shall be deemed to be the bidding of the co-owner.
Irregularity not to vitiate sale, but any person injured may sue.
45. No irregularity in publishing or conducting the sale of movable property shall vitiate the sale,
but any person sustaining substantial injury by reason of such irregularity at the hand of any other
person may institute a suit in a civil court against him for compensation, or (if such other person is
the purchaser) for the recovery of the specific property and for compensation in default of such
recovery.
Negotiable instruments and shares in a corporation.
46. Notwithstanding anything contained in this Schedule, where the property to be sold is a
negotiable instrument or a share in a corporation, the Tax Recovery Officer may, instead of
directing the sale to be made by public auction, authorise the sale of such instrument or share
through a broker.
Order for payment of coin or currency notes to the 71[Assessing] Officer.
47. Where the property attached is current coin or currency notes, the Tax Recovery Officer may, at
any time during the continuance of the attachment, 72[direct that such coins or notes shall be
credited to the Central Government and the amount so credited shall be dealt with in the manner
specified in rule 8].
PART III
attachment and sale of immovable property
Attachment
Attachment.
48. Attachment of the immovable property of the defaulter shall be made by an order prohibiting
the defaulter from transferring or charging the property in any way and prohibiting all persons from
taking any benefit under such transfer or charge.
Service of notice of attachment.
49. A copy of the order of attachment shall be served on the defaulter.
Proclamation of attachment.
50. The order of attachment shall be proclaimed at some place on or adjacent to the property
attached by beat of drum or other customary mode, and a copy of the order shall be affixed on a
conspicuous part of the property and on the notice board of the office of the Tax Recovery Officer.
Attachment to relate back from the date of service of notice.
51. Where any immovable property is attached under this Schedule, the attachment shall relate back
to, and take effect from, the date on which the notice to pay the arrears, issued under this Schedule,
was served upon the defaulter.
Sale
Sale and proclamation of sale.
52. (1) The Tax Recovery Officer may direct that any immovable property which has been
attached, or such portion thereof as may seem necessary to satisfy the certificate, shall be sold.
(2) Where any immovable property is ordered to be sold, the Tax Recovery Officer shall cause a
proclamation of the intended sale to be made in the language of the district.
Contents of proclamation.
53. A proclamation of sale of immovable property shall be drawn up after notice to the defaulter,
and shall state the time and place of sale, and shall specify, as fairly and accurately as possible,—
(a) the property to be sold;
(b) the revenue, if any, assessed upon the property or any part thereof;
(c) the amount for the recovery of which the sale is ordered; 73[***]
74
[(cc) the reserve price, if any, below which the property may not be sold; and]
(d) any other thing which the Tax Recovery Officer considers it material for a purchaser to know,
in order to judge the nature and value of the property.
Mode of making proclamation.
54. (1) Every proclamation for the sale of immovable property shall be made at some place on or
near such property by beat of drum or other customary mode, and a copy of the proclamation shall
be affixed on a conspicuous part of the property and also upon a conspicuous part of the office of
the Tax Recovery Officer.
(2) Where the Tax Recovery Officer so directs, such proclamation shall also be published in the
Official Gazette or in a local newspaper, or in both; and the cost of such publication shall be
deemed to be costs of the sale.
(3) Where the property is divided into lots for the purpose of being sold separately, it shall not be
necessary to make a separate proclamation for each lot, unless proper notice of the sale cannot, in
the opinion of the Tax Recovery Officer, otherwise be given.
Time of sale.
55. No sale of immovable property under this Schedule shall, without the consent in writing of the
defaulter, take place until after the expiration of at least thirty days calculated from the date on
which a copy of the proclamation of sale has been affixed on the property or in the office of the Tax
Recovery Officer, whichever is later.
Sale to be by auction.
56. The sale shall be by public auction to the highest bidder and shall be subject to confirmation by
the Tax Recovery Officer :
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[Provided that no sale under this rule shall be made if the amount bid by the highest bidder is less
than the reserve price, if any, specified under clause (cc) of rule 53.]
Deposit by purchaser and resale in default.
57. (1) On every sale of immovable property, the person declared to be the purchaser shall pay,
immediately after such declaration, a deposit of twenty-five per cent on the amount of his purchase
money, to the officer conducting the sale; and, in default of such deposit, the property shall
forthwith be resold.
(2) The full amount of purchase money payable shall be paid by the purchaser to the Tax Recovery
Officer on or before the fifteenth day from the date of the sale of the property.
Procedure in default of payment.
58. In default of payment within the period mentioned in the preceding rule, the deposit may, if the
Tax Recovery Officer thinks fit, after defraying the expenses of the sale, be forfeited to the
Government, and the property shall be resold, and the defaulting purchaser shall forfeit all claims to
the property or to any part of the sum for which it may subsequently be sold.
Authority to bid.
59. 75[(1) Where the sale of a property, for which a reserve price has been specified under clause
(cc) of rule 53, has been postponed for want of a bid of an amount not less than such reserve price,
it shall be lawful for an 76[Assessing] Officer, if so authorised by the 77[77a[Principal Chief
Commissioner or] Chief Commissioner or 77a[Principal Commissioner or] Commissioner] in this
behalf, to bid for the property on behalf of the Central Government at any subsequent sale.]
78
[(2)] All persons bidding at the sale shall be required to declare, if they are bidding on their own
behalf or on behalf of their principals. In the latter case, they shall be required to deposit their
authority, and in default their bids shall be rejected.
79
[(3) Where the 76[Assessing] Officer referred to in sub-rule (1) is declared to be the purchaser of
the property at any subsequent sale, nothing contained in rule 57 shall apply to the case and the
amount of the purchase price shall be adjusted towards the amount specified in the certificate.]
Application to set aside sale of immovable property on deposit.
60. (1) Where immovable property has been sold in execution of a certificate, the defaulter, or any
person whose interests are affected by the sale, may, at any time within thirty days from the date of
the sale, apply to the Tax Recovery Officer to set aside the sale, on his depositing—
80
(a) 81[***] the amount specified in the proclamation of sale as that for the recovery of which the
sale was ordered, with interest thereon at the rate of 82[one and one-fourth per cent for every
month or part of a month], calculated from the date of the proclamation of sale to the date
when the deposit is made; and
(b) for payment to the purchaser, as penalty, a sum equal to five per cent of the purchase money,
but not less than one rupee.
(2) Where a person makes an application under rule 61 for setting aside the sale of his immovable
property, he shall not, unless he withdraws that application, be entitled to make or prosecute an
application under this rule.
Application to set aside sale of immovable property on ground of non-service of notice or
irregularity.
61. Where immovable property has been sold in execution of a certificate, 83[such Income-tax
Officer as may be authorised by the 83a[Principal Chief Commissioner or] Chief Commissioner
or 83a[Principal Commissioner or] Commissioner in this behalf], the defaulter, or any person whose
interests are affected by the sale, may, at any time within thirty days from the date of the sale, apply
to the Tax Recovery Officer to set aside the sale of the immovable property on the ground that
notice was not served on the defaulter to pay the arrears as required by this Schedule or on the
ground of a material irregularity in publishing or conducting the sale:
Provided that—
(a) no sale shall be set aside on any such ground unless the Tax Recovery Officer is satisfied that
the applicant has sustained substantial injury by reason of the non-service or irregularity; and
(b) an application made by a defaulter under this rule shall be disallowed unless the applicant
deposits the amount recoverable from him in the execution of the certificate.
Setting aside sale where defaulter has no saleable interest.
62. At any time within thirty days of the sale, the purchaser may apply to the Tax Recovery Officer
to set aside the sale on the ground that the defaulter had no saleable interest in the property sold.
Confirmation of sale.
63. (1) Where no application is made for setting aside the sale under the foregoing rules or where
such an application is made and disallowed by the Tax Recovery Officer, the Tax Recovery Officer
shall (if the full amount of the purchase money has been paid) make an order confirming the sale,
and, thereupon, the sale shall become absolute.
(2) Where such application is made and allowed, and where, in the case of an application made to
set aside the sale on deposit of the amount and penalty and charges, the deposit is made within
thirty days from the date of the sale, the Tax Recovery Officer shall make an order setting aside the
sale :
Provided that no order shall be made unless notice of the application has been given to the persons
affected thereby.
Return of purchase money in certain cases.
64. Where a sale of immovable property is set aside, any money paid or deposited by the purchaser
on account of the purchase, together with the penalty, if any, deposited for payment to the
purchaser, and such interest as the Tax Recovery Officer may allow, shall be paid to the purchaser.
Sale certificate.
65. (1) Where a sale of immovable property has become absolute, the Tax Recovery Officer shall
grant a certificate specifying the property sold, and the name of the person who at the time of sale is
declared to be the purchaser.
(2) Such certificate shall state the date on which the sale became absolute.
Postponement of sale to enable defaulter to raise amount due under certificate.
66. (1) Where an order for the sale of immovable property has been made, if the defaulter can
satisfy the Tax Recovery Officer that there is reason to believe that the amount of the certificate
may be raised by the mortgage or lease or private sale of such property, or some part thereof, or of
any other immovable property of the defaulter, the Tax Recovery Officer may, on his application,
postpone the sale of the property comprised in the order for sale, on such terms, and for such period
as he thinks proper, to enable him to raise the amount.
(2) In such case, the Tax Recovery Officer shall grant a certificate to the defaulter, authorising him,
within a period to be mentioned therein, and notwithstanding anything contained in this Schedule,
to make the proposed mortgage, lease or sale:
Provided that all moneys payable under such mortgage, lease or sale shall be paid, not to the
defaulter, but to the Tax Recovery Officer:
Provided also that no mortgage, lease or sale under this rule shall become absolute until it has been
confirmed by the Tax Recovery Officer.
Fresh proclamation before re-sale.
67. Every re-sale of immovable property, in default of payment of the purchase money within the
period allowed for such payment, shall be made after the issue of a fresh proclamation in the
manner and for the period hereinbefore provided for the sale.
Bid of co-sharer to have preference.
68. Where the property sold is a share of undivided immovable property, and two or more persons,
of whom one is a co-sharer, respectively bid the same sum for such property or for any lot, the bid
shall be deemed to be the bid of the co-sharer.
84
[Acceptance of property in satisfaction of amount due from the defaulter.
68A. (1) Without prejudice to the provisions contained in this Part, an 85[Assessing] Officer, duly
authorised by the 86[86a[Principal Chief Commissioner or] Chief Commissioner or 86a[Principal
Commissioner or] Commissioner] in this behalf, may accept in satisfaction of the whole or any part
of the amount due from the defaulter the property, the sale of which has been postponed for the
reason mentioned in sub-rule (1) of rule 59, at such price as may be agreed upon between
the 87[Assessing] Officer and the defaulter.
(2) Where any property is accepted under sub-rule (1), the defaulter shall deliver possession of such
property to the 87[Assessing] Officer and on the date the possession of the property is delivered to
the 87[Assessing] Officer, the property shall vest in the Central Government and the Central
Government shall, where necessary, intimate the concerned Registering Officer appointed under
the Registration Act, 1908 (16 of 1908), accordingly.
(3) Where the price of the property agreed upon under sub-rule (1) exceeds the amount due from
the defaulter, such excess shall be paid by the 87[Assessing] Officer to the defaulter within a period
of three months from the date of delivery of possession of the property and where the 87[Assessing]
Officer fails to pay such excess within the period aforesaid, the Central Government shall, for the
period commencing on the expiry of such period and ending with the date of payment of the
amount remaining unpaid, pay simple interest at 88[one-half per cent for every month or part of a
month] to the defaulter on such amount.]
89
[Time limit for sale of attached immovable property.
68B. (1) No sale of immovable property shall be made under this Part after the expiry of three
years90 from the end of the financial year in which the order giving rise to a demand of any tax,
interest, fine, penalty or any other sum, for the recovery of which the immovable property has been
attached, has become conclusive under the provisions of section 245-I or, as the case may be, final
in terms of the provisions of Chapter XX:
Provided that where the immovable property is required to be re-sold due to the amount of highest
bid being less than the reserve price or under the circumstan-ces mentioned in rule 57 or rule 58 or
where the sale is set aside under rule 61, the aforesaid period of limitation for the sale of the
immovable property shall stand extended by one year.
(2) In computing the period of limitation under sub-rule (1), the period—
(i) during which the levy of the aforesaid tax, interest, fine, penalty or any other sum is stayed by
an order or injunction of any court; or
(ii) during which the proceedings of attachment or sale of the immovable property are stayed by
an order or injunction of any court; or
(iii) commencing from the date of the presentation of any appeal against the order passed by the
Tax Recovery Officer under this Schedule and ending on the day the appeal is decided,
shall be excluded :
Provided that where immediately after the exclusion of the aforesaid period, the period of
limitation for the sale of the immovable property is less than 180 days, such remaining period shall
be extended to 180 days and the aforesaid period of limitation shall be deemed to be extended
accordingly.
(3) Where any immovable property has been attached under this Part before the 1st day of June,
1992, and the order giving rise to a demand of any tax, interest, fine, penalty or any other sum, for
the recovery of which the immovable property has been attached, has also become conclusive or
final before the said date, that date shall be deemed to be the date on which the said order has
become conclusive or, as the case may be, final.
(4) Where the sale of immovable property is not made in accordance with the provisions of sub-rule
(1), the attachment order in relation to the said property shall be deemed to have been vacated on
the expiry of the time of limitation specified under this rule.]
PART IV
APPOINTMENT OF RECEIVER
Appointment of receiver for business.
69. (1) Where the property of a defaulter consists of a business, the Tax Recovery Officer may
attach the business and appoint a person as receiver to manage the business.
(2) Attachment of a business under this rule shall be made by an order prohibiting the defaulter
from transferring or charging the business in any way and prohibiting all persons from taking any
benefit under such transfer or charge, and intimating that the business has been attached under this
rule. A copy of the order of attachment shall be served on the defaulter, and another copy shall be
affixed on a conspicuous part of the premises in which the business is carried on and on the notice
board of the office of the Tax Recovery Officer.
Appointment of receiver for immovable property.
70. Where immovable property is attached, the Tax Recovery Officer may, instead of directing a
sale of the property, appoint a person as receiver to manage such property.
Powers of receiver.
71. (1) Where any business or other property is attached and taken under management under the
foregoing rules, the receiver shall, subject to the control of the Tax Recovery Officer, have such
powers as may be necessary for the proper management of the property and the realisation of the
profits, or rents and profits, thereof.
(2) The profits, or rents and profits, of such business or other property, shall, after defraying the
expenses of management, be adjusted towards discharge of the arrears, and the balance, if any,
shall be paid to the defaulter.
Withdrawal of management.
72. The attachment and management under the foregoing rules may be withdrawn at any time at the
discretion of the Tax Recovery Officer, or if the arrears are discharged by receipt of such profits
and rents or are otherwise paid.
PART V
ARREST AND DETENTION OF THE DEFAULTER
Notice to show cause.
73. (1) No order for the arrest and detention in civil prison of a defaulter shall be made unless the
Tax Recovery Officer has issued and served a notice upon the defaulter calling upon him to appear
before him on the date specified in the notice and to show cause why he should not be committed to
the civil prison, and unless the Tax Recovery Officer, for reasons recorded in writing, is satisfied—
(a) that the defaulter, with the object or effect of obstructing the execution of the certificate, has,
after 91[the drawing up of the certificate by the Tax Recovery Officer], dishonestly transferred,
concealed, or removed any part of his property, or
(b) that the defaulter has, or has had since 91[the drawing up of the certificate by the Tax Recovery
Officer], the means to pay the arrears or some substantial part thereof and refuses or neglects
or has refused or neglected to pay the same.
(2) Notwithstanding anything contained in sub-rule (1), a warrant for the arrest of the defaulter may
be issued by the Tax Recovery Officer if the Tax Recovery Officer is satisfied, by affidavit or
otherwise, that with the object or effect of delaying the execution of the certificate, the defaulter is
likely to abscond or leave the local limits of the jurisdiction of the Tax Recovery Officer.
(3) Where appearance is not made in obedience to a notice issued and served under sub-rule (1), the
Tax Recovery Officer may issue a warrant for the arrest of the defaulter.
92
[(3A) A warrant of arrest issued by a Tax Recovery Officer under sub-rule (2) or sub-rule (3) may
also be executed by any other Tax Recovery Officer within whose jurisdiction the defaulter may for
the time being be found.]
(4) Every person arrested in pursuance of a warrant of arrest under 93[this rule] shall be brought
before the Tax Recovery Officer 94[issuing the warrant] as soon as practicable and in any event
within twenty-four hours of his arrest (exclusive of the time required for the journey):
Provided that, if the defaulter pays the amount entered in the warrant of arrest as due and the costs
of the arrest to the officer arresting him, such officer shall at once release him.
94
[Explanation.—For the purposes of this rule, where the defaulter is a Hindu undivided family, the
karta thereof shall be deemed to be the defaulter.]
Hearing.
74. When a defaulter appears before the Tax Recovery Officer in obedience to a notice to show
cause or is brought before the Tax Recovery Officer under rule 73, 95[the Tax Recovery Officer
shall give the defaulter] an opportunity of showing cause why he should not be committed to the
civil prison.
Custody pending hearing.
75. Pending the conclusion of the inquiry, the Tax Recovery Officer may, in his discretion, order
the defaulter to be detained in the custody of such officer as the Tax Recovery Officer may think fit
or release him on his furnishing security to the satisfaction of the Tax Recovery Officer for his
appearance when required.
Order of detention.
76. (1) Upon the conclusion of the inquiry, the Tax Recovery Officer may make an order for the
detention of the defaulter in the civil prison and shall in that event cause him to be arrested if he is
not already under arrest:
Provided that in order to give the defaulter an opportunity of satisfying the arrears, the Tax
Recovery Officer may, before making the order of detention, leave the defaulter in the custody of
the officer arresting him or of any other officer for a specified period not exceeding 15 days, or
release him on his furnishing security to the satisfaction of the Tax Recovery Officer for his
appearance at the expiration of the specified period if the arrears are not so satisfied.
(2) When the Tax Recovery Officer does not make an order of detention under sub-rule (1) he shall,
if the defaulter is under arrest, direct his release.
Detention in and release from prison.
77. (1) Every person detained in the civil prison in execution of a certificate may be so detained,—
(a) where the certificate is for a demand of an amount exceeding two hundred and fifty rupees—
for a period of six months, and
(b) in any other case—for a period of six weeks:
Provided that he shall be released from such detention—
(i) on the amount mentioned in the warrant for his detention being paid to the officer-in-charge of
the civil prison, or
96
[(ii) on the request of the Tax Recovery Officer on any ground other than the grounds
mentioned in rules 78 and 79.]
97
[***]
(2) A defaulter released from detention under this rule shall not, merely by reason of his release, be
discharged from his liability for the arrears; but he shall not be liable to be rearrested under the
certificate in execution of which he was detained in the civil prison.
Release.
78. (1) The Tax Recovery Officer may order the release of a defaulter who has been arrested in
execution of a certificate upon being satisfied that he has disclosed the whole of his property and
has placed it at the disposal of the Tax Recovery Officer and that he has not committed any act of
bad faith.
(2) If the Tax Recovery Officer has ground for believing the disclosure made by a defaulter under
sub-rule (1) to have been untrue, he may order the rearrest of the defaulter in execution of the
certificate, but the period of his detention in the civil prison shall not in the aggregate exceed that
authorised by rule 77.
Release on ground of illness.
79. (1) At any time after a warrant for the arrest of a defaulter has been issued, the Tax Recovery
Officer may cancel it on the ground of his serious illness.
(2) Where a defaulter has been arrested, the Tax Recovery Officer may release him if, in the
opinion of the Tax Recovery Officer, he is not in a fit state of health to be detained in the civil
prison.
(3) Where a defaulter has been committed to the civil prison, he may be released therefrom by the
Tax Recovery Officer on the ground of the existence of any infectious or contagious disease, or on
the ground of his suffering from any serious illness.
(4) A defaulter released under this rule may be rearrested, but the period of his detention in the civil
prison shall not in the aggregate exceed that authorised by rule 77.
Entry into dwelling house.
80. For the purpose of making an arrest under this Schedule—
(a) no dwelling house shall be entered after sunset and before sunrise;
(b) no outer door of a dwelling house shall be broken open unless such dwelling house or a
portion thereof is in the occupancy of the defaulter and he or other occupant of the house
refuses or in any way prevents access thereto; but, when the person executing any such
warrant has duly gained access to any dwelling house, he may break open the door of any
room or apartment if he has reason to believe that the defaulter is likely to be found there;
(c) no room, which is in the actual occupancy of a woman who, according to the customs of the
country, does not appear in public, shall be entered into unless the officer authorised to make
the arrest has given notice to her that she is at liberty to withdraw and has given her
reasonable time and facility for withdrawing.
Prohibition against arrest of women or minors, etc.
81. The Tax Recovery Officer shall not order the arrest and detention in the civil prison of—
(a) a woman, or
(b) any person who, in his opinion, is a minor or of unsound mind.
PART VI
MISCELLANEOUS
Officers deemed to be acting judicially.
82. Every 98[98a[Principal Chief Commissioner or] Chief Commissioner or 98a[Principal
Commissioner or] Commissioner], Tax Recovery Officer or other officer acting under this
Schedule shall, in the discharge of his functions under this Schedule, be deemed to be acting
judicially within the meaning of the Judicial Officers Protection Act, 1850 (18 of 1850).
Power to take evidence.
83. Every 98[98a[Principal Chief Commissioner or] Chief Commissioner or 98a[Principal
Commissioner or] Commissioner], Tax Recovery Officer or other officer acting under the
provisions of this Schedule shall have the powers of a civil court while trying a suit for the purpose
of receiving evidence, administering oaths, enforcing the attendance of witnesses and compelling
the production of documents.
Continuance of certificate.
84. No certificate shall cease to be in force by reason of the death of the defaulter.
Procedure on death of defaulter.
85. 99[If at any time after the certificate is drawn up by the Tax Recovery Officer] the defaulter
dies, the proceedings under this Schedule (except arrest and detention) may be continued against
the legal representative of the defaulter, and the provisions of this Schedule shall apply as if the
legal representative were the defaulter.
Appeals.
86. 1[(1) An appeal from any original order passed by the Tax Recovery Officer under this
Schedule, not being an order which is conclusive, shall lie to the 1a[Principal Chief Commissioner
or] Chief Commissioner or 1a[Principal Commissioner or] Commissioner.]
(2) Every appeal under this rule must be presented within thirty days from the date of the order
appealed against.
(3) Pending the decision of any appeal, execution of the certificate may be stayed if the appellate
authority so directs, but not otherwise.
2
[(4) Notwithstanding anything contained in sub-rule (1), where a 2a[Principal Chief Commissioner
or] Chief Commissioner or 2a[Principal Commissioner or] Commissioner is authorised to exercise
powers as such in respect of any area, then, all appeals against the orders passed before the date of
such authorisation by any Tax Recovery Officer authorised to exercise powers as such in respect of
that area, or an area which is included in that area, shall lie to such 2a[Principal Chief
Commissioner or] Chief Commissioner or 2a[Principal Commissioner or] Commissioner.]
Review.
87. Any order passed under this Schedule may, after notice to all persons interested, be reviewed by
the 3[3a[Principal Chief Commissioner or] Chief Commissioner or 3a[Principal Commissioner
or]Commissioner], Tax Recovery Officer or other officer who made the order, or by his successor
in office, on account of any mistake apparent from the record.
Recovery from surety.
88. Where any person has under this Schedule become surety for the amount due by the defaulter,
he may be proceeded against under this Schedule as if he were the defaulter.
Penalties.
89. [Omitted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989.]
Subsistence allowance.
90. (1) When a defaulter is arrested or detained in the civil prison, the sum payable for the
subsistence of the defaulter from the time of arrest until he is released shall be borne by the 4[Tax
Recovery Officer].
(2) Such sum shall be calculated on the scale fixed by the State Government for the subsistence of
judgment-debtors arrested in execution of a decree of a civil court.
(3) Sums payable under this rule shall be deemed to be costs in the proceeding:
Provided that the defaulter shall not be detained in the civil prison or arrested on account of any
sum so payable.
Forms.
91. The Board may prescribe the form to be used for any order, notice, warrant, or certificate to be
issued under this Schedule.
Power to make rules.
92. (1) The Board may make rules, consistent with the provisions of this Act, regulating the
procedure to be followed by 5[5a[Principal Chief Commissioners or] Chief
5a
Commissioners, [Principal Commissioners or] Commissioners], Tax Recovery Officers and other
officers acting under this Schedule.
(2) In particular, and without prejudice to the generality of the power conferred by sub-rule (1),
such rules may provide for all or any of the following matters, namely:—
(a) the area within which 5[5a[Principal Chief Commissioners or] Chief
Commissioners, 5a[Principal Commissioners or] Commissioners] or Tax Recovery Officers
may exercise jurisdiction;
(b) the manner in which any property sold under this Schedule may be delivered;
(c) the execution of a document or the endorsement of a negotiable instrument or a share in a
corporation, by or on behalf of the Tax Recovery Officer, where such execution or
endorsement is required to transfer such negotiable instrument or share to a person who has
purchased it under a sale under this Schedule;
(d) the procedure for dealing with resistance or obstruction offered by any person to a purchaser
of any immovable property sold under this Schedule, in obtaining possession of the property;
(e) the fees to be charged for any process issued under this Schedule;
(f) the scale of charges to be recovered in respect of any other proceeding taken under this
Schedule;
(g) recovery of poundage fee;
(h) the maintenance and custody, while under attachment, of livestock or other movable property,
the fees to be charged for such maintenance and custody, the sale of such livestock or
property, and the disposal of proceeds of such sale;
(i) the mode of attachment of business.
Saving regarding charge.
93. Nothing in this Schedule shall affect any provision of this Act whereunder the tax is a first
charge upon any asset.
6
[Continuance of certain pending proceedings and power to remove difficulties.
94. All proceedings for the recovery of tax pending immediately before the coming into force of the
amendments to this Schedule by the Direct Tax Laws (Amendment) Act, 1987 shall be continued
under this Schedule as amended by that Act from the stage they had reached, and, for this purpose,
every certificate issued by the 7[Assessing] Officer under section 222 before such amendment shall
be deemed to be a certificate drawn up by the Tax Recovery Officer under that section after such
amendment, and, if any difficulty arises in continuing the said proceedings, the Board may issue
(whether by way of modification, not affecting the substance, of any rule in this Schedule or
otherwise) general or special orders which appear to it to be necessary or expedient for the purpose
of removing the difficulty.]
 THE THIRD SCHEDULE
PROCEDURE FOR DISTRAINT BY 34[ASSESSING OFFICER]35[OR TAX RECOVERY
OFFICER]
[See section 226(5)]
Distraint and sale.
Where any distraint and sale of movable property are to be effected by any 34[Assessing
Officer] 35[or Tax Recovery Officer] authorised for the purpose, such distraint and sale shall be
made, as far as may be, in the same manner as attachment and sale of any movable property
attachable by actual seizure, and the provisions of the Second Schedule relating to attachment and
sale shall, so far as may be, apply in respect of such distraint and sale.

[Penalty for under-reporting and misreporting of income.

270A. (1) The Assessing Officer or the Commissioner (Appeals) or the Principal Commissioner or
Commissioner may, during the course of any proceedings under this Act, direct that any person who has under-
reported his income shall be liable to pay a penalty in addition to tax, if any, on the under-reported income.
(2) A person shall be considered to have under-reported his income, if—
(a) the income assessed is greater than the income determined in the return processed under clause (a) of
sub-section (1) of section 143;
(b) the income assessed is greater than the maximum amount not chargeable to tax, where no return of
income has been furnished;
(c) the income reassessed is greater than the income assessed or reassessed immediately before such
reassessment;
(d) the amount of deemed total income assessed or reassessed as per the provisions of section
115JB or section 115JC, as the case may be, is greater than the deemed total income determined in the
return processed under clause (a) of sub-section (1) of section 143;
(e) the amount of deemed total income assessed as per the provisions of section 115JB or section 115JC is
greater than the maximum amount not chargeable to tax, where no return of income has been filed;
(f) the amount of deemed total income reassessed as per the provisions of section 115JB or section 115JC,
as the case may be, is greater than the deemed total income assessed or reassessed immediately before
such reassessment;
(g) the income assessed or reassessed has the effect of reducing the loss or converting such loss into
income.
(3) The amount of under-reported income shall be,—
(i) in a case where income has been assessed for the first time,—
(a) if return has been furnished, the difference between the amount of income assessed and the
amount of income determined under clause (a) of sub-section (1) of section 143;
(b) in a case where no return has been furnished,—
(A) the amount of income assessed, in the case of a company, firm or local authority; and
(B) the difference between the amount of income assessed and the maximum amount not
chargeable to tax, in a case not covered in item (A);
(ii) in any other case, the difference between the amount of income reassessed or recomputed and the
amount of income assessed, reassessed or recomputed in a preceding order:
Provided that where under-reported income arises out of determination of deemed total income in accordance
with the provisions of section 115JB or section 115JC, the amount of total under-reported income shall be
determined in accordance with the following formula—
(A — B) + (C — D)
where,
A = the total income assessed as per the provisions other than the provisions contained in section
115JB or section 115JC (herein called general provisions);
B = the total income that would have been chargeable had the total income assessed as per the general
provisions been reduced by the amount of under-reported income;
C = the total income assessed as per the provisions contained in section 115JB or section 115JC;
D = the total income that would have been chargeable had the total income assessed as per the provisions
contained in section 115JB or section 115JC been reduced by the amount of under-reported income:
Provided further that where the amount of under-reported income on any issue is considered both under the
provisions contained in section 115JB or section 115JC and under general provisions, such amount shall not be
reduced from total income assessed while determining the amount under item D.
Explanation.—For the purposes of this section,—
(a) "preceding order" means an order immediately preceding the order during the course of which the
penalty under sub-section (1) has been initiated;
(b) in a case where an assessment or reassessment has the effect of reducing the loss declared in the return
or converting that loss into income, the amount of under-reported income shall be the difference
between the loss claimed and the income or loss, as the case may be, assessed or reassessed.
(4) Subject to the provisions of sub-section (6), where the source of any receipt, deposit or investment in any
assessment year is claimed to be an amount added to income or deducted while computing loss, as the case may
be, in the assessment of such person in any year prior to the assessment year in which such receipt, deposit or
investment appears (hereinafter referred to as "preceding year") and no penalty was levied for such preceding
year, then, the under-reported income shall include such amount as is sufficient to cover such receipt, deposit or
investment.
(5) The amount referred to in sub-section (4) shall be deemed to be amount of income under-reported for the
preceding year in the following order—
(a) the preceding year immediately before the year in which the receipt, deposit or investment appears,
being the first preceding year; and
(b) where the amount added or deducted in the first preceding year is not sufficient to cover the receipt,
deposit or investment, the year immediately preceding the first preceding year and so on.
(6) The under-reported income, for the purposes of this section, shall not include the following, namely:—
(a) the amount of income in respect of which the assessee offers an explanation and the Assessing Officer
or the Commissioner (Appeals) or the Commissioner or the Principal Commissioner, as the case may
be, is satisfied that the explanation is bona fide and the assessee has disclosed all the material facts to
substantiate the explanation offered;
(b) the amount of under-reported income determined on the basis of an estimate, if the accounts are correct
and complete to the satisfaction of the Assessing Officer or the Commissioner (Appeals) or the
Commissioner or the Principal Commissioner, as the case may be, but the method employed is such
that the income cannot properly be deduced therefrom;
(c) the amount of under-reported income determined on the basis of an estimate, if the assessee has, on his
own, estimated a lower amount of addition or disallowance on the same issue, has included such
amount in the computation of his income and has disclosed all the facts material to the addition or
disallowance;
 (d) the amount of under-reported income represented by any addition made in conformity with the arm's
length price determined by the Transfer Pricing Officer, where the assessee had maintained information
and documents as prescribed under section 92D, declared the international transaction under Chapter X,
and, disclosed all the material facts relating to the transaction; and
(e) the amount of undisclosed income referred to in section 271AAB.
(7) The penalty referred to in sub-section (1) shall be a sum equal to fifty per cent of the amount of tax payable
on under-reported income.
(8) Notwithstanding anything contained in sub-section (6) or sub-section (7), where under-reported income is in
consequence of any misreporting thereof by any person, the penalty referred to in sub-section (1) shall be equal
to two hundred per cent of the amount of tax payable on under-reported income.
(9) The cases of misreporting of income referred to in sub-section (8) shall be the following, namely:—
(a) misrepresentation or suppression of facts;
(b) failure to record investments in the books of account;
(c) claim of expenditure not substantiated by any evidence;
(d) recording of any false entry in the books of account;
(e) failure to record any receipt in books of account having a bearing on total income; and
(f) failure to report any international transaction or any transaction deemed to be an international
transaction or any specified domestic transaction, to which the provisions of Chapter X apply.
(10) The tax payable in respect of the under-reported income shall be—
(a) where no return of income has been furnished and the income has been assessed for the first time, the
amount of tax calculated on the under-reported income as increased by the maximum amount not
chargeable to tax as if it were the total income;
(b) where the total income determined under clause (a) of sub-section (1) of section 143 or assessed,
reassessed or recomputed in a preceding order is a loss, the amount of tax calculated on the under-
reported income as if it were the total income;
(c) in any other case, determined in accordance with the formula—
(X—Y)
where,
X = the amount of tax calculated on the under-reported income as increased by the total income
determined under clause (a) of sub-section (1) of section 143 or total income assessed, reassessed or
recomputed in a preceding order as if it were the total income; and
Y = the amount of tax calculated on the total income determined under clause (a) of sub-section (1)
of section 143 or total income assessed, reassessed or recomputed in a preceding order.
(11) No addition or disallowance of an amount shall form the basis for imposition of penalty, if such addition or
disallowance has formed the basis of imposition of penalty in the case of the person for the same or any other
assessment year.
(12) The penalty referred to in sub-section (1) shall be imposed, by an order in writing, by the Assessing
Officer, the Commissioner (Appeals), the Commissioner or the Principal Commissioner, as the case may be.]
Reference to Valuation Officer.
55A. With a view to ascertaining the fair market value of a capital asset for the purposes of this Chapter, the
Assessing Officer may refer the valuation of capital asset to a Valuation Officer—
(a) in a case where the value of the asset as claimed by the assessee is in accordance with the estimate made
by a registered valuer, if the Assessing Officer is of opinion that the value so claimed is at variance with
its fair market value;
(b) in any other case, if the Assessing Officer is of opinion—
 (i) that the fair market value of the asset exceeds the value of the asset as claimed by the assessee by
more than such percentage3 of the value of the asset as so claimed or by more than such amount3 as
may be prescribed in this behalf ; or
(ii) that having regard to the nature of the asset and other relevant circumstances, it is necessary so to
do,
4
and where any such reference is made, the provisions of sub-sections (2), (3), (4), (5) and (6) of section 16A,
clauses (ha) and (i) of sub-section (1) and sub-sections (3A) and (4) of section 23, sub-section (5) of section 24,
section 34AA, section 35 and section 37 of the Wealth-tax Act, 1957 (27 of 1957), shall with the necessary
modifications, apply in relation to such reference as they apply in relation to a reference made by the Assessing
Officer under sub-section (1) of section 16A of that Act.
Explanation.—In this section, "Valuation Officer" has the same meaning, as in clause (r) of section 2 of the
Wealth-tax Act, 1957 (27 of 1957).
When assessee deemed to be in default.
218. If any assessee does not pay on the date specified in sub-section (1) of section 211, any instalment of the
advance tax that he is required to pay by an order of the Assessing Officer under sub-section (3) or sub-section
(4) of section 210 and does not, on or before the date on which any such instalment as is not paid becomes due,
send to the Assessing Officer an intimation under sub-section (5) of section 210 or does not pay on the basis of
his estimate of his current income the advance tax payable by him under sub-section (6) of section 210, he shall
be deemed to be an assessee in default in respect of such instalment or instalments.
Certificate for deduction at lower rate.
197. 93(1) Subject to rules made under sub-section (2A), where, in the case of any income of any person or sum
payable to any person, income-tax is required to be deducted at the time of credit or, as the case may be, at the
time of payment at the rates in force under the provisions of sections
192, 193, 194, 194A, 194C, 194D, 194G, 194H, 194-I, 194J, 194K, 194LA 94[, 194LBB, 194LBC] and195, the
Assessing Officer is satisfied that the total income of the recipient justifies the deduction of income-tax at any
lower rates or no deduction of income-tax, as the case may be, the Assessing Officer shall, on an application
made by the assessee in this behalf, give to him such certificate as may be appropriate.
(2) Where any such certificate is given, the person responsible for paying the income shall, until such certificate
is cancelled by the Assessing Officer, deduct income-tax at the rates specified in such certificate or deduct no
tax, as the case may be.
(2A) The Board may, having regard to the convenience of assessees and the interests of revenue, by notification
in the Official Gazette, make rules specifying the cases in which, and the circumstances under which, an
application may be made for the grant of a certificate under sub-section (1) and the conditions subject to which
such certificate may be granted and providing for all other matters connected therewith.
(3) [***]
Special provision for full value of consideration in certain cases.
50C. (1) Where the consideration received or accruing as a result of the transfer by an assessee of a capital
asset, being land or building or both, is less than the value adopted or assessed or assessable by any authority of
a State Government (hereafter in this section referred to as the "stamp valuation authority") for the purpose of
payment of stamp duty in respect of such transfer, the value so adopted or assessed or assessable shall, for the
purposes of section 48, be deemed to be the full value of the consideration received or accruing as a result of
such transfer :
84
[Provided that where the date of the agreement fixing the amount of consideration and the date of registration
for the transfer of the capital asset are not the same, the value adopted or assessed or assessable by the stamp
valuation authority on the date of agreement may be taken for the purposes of computing full value of
consideration for such transfer:
Provided further that the first proviso shall apply only in a case where the amount of consideration, or a part
thereof, has been received by way of an account payee cheque or account payee bank draft or by use of
electronic clearing system through a bank account, on or before the date of the agreement for transfer.]
Following third proviso shall be inserted after the second proviso to sub-section (1) of section 50C by the
Finance Act, 2018, w.e.f. 1-4-2019 :
Provided also that where the value adopted or assessed or assessable by the stamp valuation authority does not
exceed one hundred and five per cent of the consideration received or accruing as a result of the transfer, the
consideration so received or accruing as a result of the transfer shall, for the purposes of section 48, be deemed
to be the full value of the consideration.
(2) Without prejudice to the provisions of sub-section (1), where—
(a) the assessee claims before any Assessing Officer that the value adopted or assessed or assessable by the
stamp valuation authority under sub-section (1) exceeds the fair market value of the property as on the
date of transfer;
(b) the value so adopted or assessed or assessable by the stamp valuation authority under sub-section (1)
has not been disputed in any appeal or revision or no reference has been made before any other
authority, court or the High Court,
the Assessing Officer may refer the valuation of the capital asset to a Valuation Officer and where any such
reference is made, the provisions of sub-sections (2), (3), (4), (5) and (6) of section 16A, clause (i) of sub-
section (1) and sub-sections (6) and (7) of section 23A, sub-section (5) of section 24, section 34AA, section 35
and section 37 of the Wealth-tax Act, 1957 (27 of 1957), shall, with necessary modifications, apply in relation
to such reference as they apply in relation to a reference made by the Assessing Officer under sub-section (1) of
section 16A of that Act.
Explanation 1.—For the purposes of this section, "Valuation Officer" shall have the same meaning as in clause
(r) of section 2 of the Wealth-tax Act, 1957 (27 of 1957).
Explanation 2.—For the purposes of this section, the expression "assessable" means the price which the stamp
valuation authority would have, notwithstanding anything to the contrary contained in any other law for the
time being in force, adopted or assessed, if it were referred to such authority for the purposes of the payment of
stamp duty.
(3) Subject to the provisions contained in sub-section (2), where the value ascertained under sub-section (2)
exceeds the value adopted or assessed or assessable by the stamp valuation authority referred to in sub-section
(1), the value so adopted or assessed or assessable by such authority shall be taken as the full value of the
consideration received or accruing as a result of the transfer.
Interest payable by assessee in case of under-estimate, etc.
216. Where, on making the regular assessment, the Assessing Officer finds that any assessee has—
(a) under section 209A or section 212 under-estimated the advance tax payable by him and thereby reduced
the amount payable in either of the first two instalments; or
(b) under section 213 wrongly deferred the payment of advance tax on a part of his income ;
he may direct that the assessee shall pay simple interest at fifteen per cent per annum—
(i) in the case referred to in clause (a), for the period during which the payment was deficient, on the
difference between the amount paid in each such instalment and the amount which should have been
paid, having regard to the aggregate advance tax actually paid during the year; and
(ii) in the case referred to in clause (b), for the period during which the payment of advance tax was so
deferred.
Explanation.—For the purposes of this section, any instalment due before the expiry of six months from the
commencement of the previous year in respect of which it is to be paid shall be deemed to have become due
fifteen days after the expiry of the said six months.
Liability of directors of private company in liquidation.
179. (1) Notwithstanding anything contained in the Companies Act, 195630 (1 of 1956), where any tax due from
a private company in respect of any income of any previous year or from any other company in respect of any
income of any previous year during which such other company was a private company cannot be recovered,
then, every person who was a director of the private company at any time during the relevant previous year shall
be jointly and severally liable for the payment of such tax unless he proves that the non-recovery cannot be
attributed to any gross neglect, misfeasance or breach of duty on his part in relation to the affairs of the
company.
(2) Where a private company is converted into a public company and the tax assessed in respect of any income
of any previous year during which such company was a private company cannot be recovered, then, nothing
contained in sub-section (1) shall apply to any person who was a director of such private company in relation to
any tax due in respect of any income of such private company assessable for any assessment year commencing
before the 1st day of April, 1962.
Explanation.—For the purposes of this section, the expression "tax due" includes penalty, interest or any other
sum payable under the Act.
Liability of representative assessee.
161. (1) Every representative assessee, as regards the income in respect of which he is a representative assessee,
shall be subject to the same duties, responsibilities and liabilities as if the income were income received by or
accruing to or in favour of him beneficially, and shall be liable to assessment in his own name in respect of that
income; but any such assessment shall be deemed to be made upon him in his representative capacity only, and
the tax shall, subject to the other provisions contained in this Chapter, be levied upon and recovered from him in
like manner and to the same extent as it would be leviable upon and recoverable from the person represented by
him.
(1A) Notwithstanding anything contained in sub-section (1), where any income in respect of which the person
mentioned in clause (iv) of sub-section (1) of section 160 is liable as representative assessee consists of, or
includes, profits and gains of business, tax shall be charged on the whole of the income in respect of which such
person is so liable at the maximum marginal rate :
Provided that the provisions of this sub-section shall not apply where such profits and gains are receivable
under a trust declared by any person by will exclusively for the benefit of any relative dependent on him for
support and maintenance, and such trust is the only trust so declared by him.
(2) Where any person is, in respect of any income, assessable under this Chapter in the capacity of a
representative assessee, he shall not, in respect of that income, be assessed under any other provision of this
Act.
Intimation of loss.
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 under the provisions of sub-section
(1) of section 72, sub-section (2) of section 73, sub-section (1) or sub-section (3) of section 74 or sub-section (3)
of section 74A, 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 sub-section (1) of section 72, sub-section (2) of section 73, sub-section (1)
or sub-section (3) of section 74or sub-section (3) of section 74A.
Other amendments.
155. (1) Where, in respect of any completed assessment of a partner in a firm for the assessment year
commencing on the 1st day of April, 1992, or any earlier assessment year, it is found—
(a) on the assessment or reassessment of the firm, or
(b) on any reduction or enhancement made in the income of the firm under this section, section
154, section 250, section 254, section 260, section 262, section 263 or section 264, or
(c) on any order passed under sub-section (4) of section 245D on the application made by the firm,
that the share of the partner in the income of the firm has not been included in the assessment of the partner or,
if included, is not correct, the Assessing Officer may amend the order of assessment of the partner with a view
to the inclusion of the share in the assessment or the correction thereof, as the case may be; and the provisions
of section 154 shall, so far as may be, apply thereto, the period of four years specified in sub-section (7) of that
section being reckoned from the end of the financial year in which the final order was passed in the case of the
firm.
(1A) Where in respect of any completed assessment of a firm it is found—
(a) on the assessment or reassessment of the firm, or
(b) on any reduction or enhancement made in the income of the firm under this section, section
154, section 250, section 254, section 260, section 262, section 263 or section 264, or
(c) on any order passed under sub-section (4) of section 245D on the application made by the firm,
that any remuneration to any partner is not deductible under clause (b) of section 40, the Assessing Officer may
amend the order of assessment of the partner with a view to adjusting the income of the partner to the extent of
the amount not so deductible ; and the provisions of section 154 shall, so far as may be, apply thereto, the period
of four years specified in sub-section (7) of that section being reckoned from the end of the financial year in
which the final order was passed in the case of the firm.
(2) Where in respect of any completed assessment of a member of an association of persons or of a body of
individuals it is found—
(a) on the assessment or reassessment of the association or body, or
(b) on any reduction or enhancement made in the income of the asso-ciation or body under this
section, section 154, section 250, section 254, section 260, section 262, section 263 or section 264, or
(c) on any order passed under sub-section (4) of section 245D on the application made by the association or
body,
that the share of the member in the income of the association or body, as the case may be, has not been included
in the assessment of the member or, if included, is not correct, the Assessing Officer may amend the order of
assessment of the member with a view to the inclusion of the share in the assessment or the correction thereof,
as the case may be ; and the provisions of section 154 shall, so far as may be, apply thereto, the period of four
years specified in sub-section (7) of that section being reckoned from the end of the financial year in which the
final order was passed in the case of the association or body, as the case may be.
(3) [***]
(4) Where as a result of proceedings initiated under section 147, a loss or depreciation has been recomputed and
in consequence thereof it is necessary to recompute the total income of the assessee for the succeeding year or
years to which the loss or depreciation allowance has been carried forward and set off under the provisions of
sub-section (1) of section 72, or sub-section (2) of section 73, or sub-section (1) or sub-section (3) of section 74,
or sub-section (3) of section 74A, the Assessing Officer may proceed to recompute the total income in respect
of such year or years and make the necessary amendment ; and the provisions of section 154 shall, so far as may
be, apply thereto, the period of four years specified in sub-section (7) of that section being reckoned from the
end of the financial year in which the order was passed under section 147.
(4A) Where an allowance by way of investment allowance has been made wholly or partly to an assessee in
respect of a ship or an aircraft or any machinery or plant in any assessment year undersection 32A and
subsequently—
(a) at any time before the expiry of eight years from the end of the previous year in which the ship or
aircraft was acquired or the machinery or plant was installed, the ship, aircraft, machinery or plant is
sold or otherwise transferred by the assessee to any person other than the Government, a local authority,
a corporation established by a Central, State or Provincial Act or a 20Government company as defined
in section 617 of the Companies Act, 1956 (1 of 1956), or in connection with any amalgamation or
succession referred to in sub-section (6) or sub-section (7) of section 32A ; or
 (b) at any time before the expiry of ten years from the end of the previous year in which the ship or aircraft
was acquired or the machinery or plant was installed, the assessee does not utilise the amount credited
to the reserve account under sub-section (4) of section 32A for the purposes of acquiring a new ship or
a new aircraft or new machinery or plant (other than machinery or plant of the nature referred to in
clauses (a), (b) and (d) of the second proviso to sub-section (1) of section 32A) for the purposes of the
business of the undertaking ; or
(c) at any time before the expiry of ten years referred to in clause (b) the assessee utilises the amount
credited to the reserve account under sub-section (4) of section 32A—
(i) for distribution by way of dividends or profits ; or
(ii) for remittance outside India as profits or for the creation of any asset outside India ; or
(iii) for any other purpose which is not a purpose of the business of the undertaking,
the investment allowance originally allowed shall be deemed to have been wrongly allowed, and the Assessing
Officer may, notwithstanding anything contained in this Act, recompute the total income of the assessee for the
relevant previous year and make the necessary amendment; and the provisions of section 154 shall, so far as
may be, apply thereto, the period of four years specified in sub-section (7) of that section being reckoned,—
(i) in a case referred to in clause (a), from the end of the previous year in which the sale or other transfer
took place ;
(ii) in a case referred to in clause (b), from the end of the ten years referred to in that clause ;
(iii) in a case referred to in clause (c), from the end of the previous year in which the amount was utilised.
Explanation.—For the purposes of clause (b), "new ship" or "new aircraft" or "new machinery or plant" shall
have the same meanings as in the Explanation below sub-section (2) of section 32A.
(5) Where an allowance by way of development rebate has been made wholly or partly to an assessee in respect
of a ship, machinery or plant installed after the 31st day of December, 1957, in any assessment year
under section 33 or under the corresponding provisions of the Indian Income-tax Act, 1922 (11 of 1922), and
subsequently—
(i) at any time before the expiry of eight years from the end of the previous year in which the ship was
acquired or the machinery or plant was installed, the ship, machinery or plant is sold or otherwise
transferred by the assessee to any person other than the Government, a local authority, a corporation
established by a Central, State or Provincial Act or a 21Government company as defined in section 617
of the Companies Act, 1956 (1 of 1956), or in connection with any amalgamation or succession referred
to in sub-section (3) or sub-section (4) of section 33 ; or
(ii) at any time before the expiry of the eight years referred to in sub-section (3) of section 34, the assessee
utilises the amount credited to the reserve account under clause (a) of that sub-section—
(a) for distribution by way of dividends or profits ; or
(b) for remittance outside India as profits or for the creation of any asset outside India ; or
(c) for any other purpose which is not a purpose of the business of the undertaking,
the development rebate originally allowed shall be deemed to have been wrongly allowed, and the Assessing
Officer may, notwithstanding anything contained in this Act, recompute the total income of the assessee for the
relevant previous year and make the necessary amendment; and the provisions of section 154 shall, so far as
may be, apply thereto, the period of four years specified in sub-section (7) of that section being reckoned from
the end of the previous year in which the sale or transfer took place or the money was so utilised.
(5A) Where an allowance by way of development allowance has been made wholly or partly to an assessee in
respect of the cost of planting in any area in any assessment year under section 33Aand subsequently—
(i) at any time before the expiry of eight years from the end of the previous year in which such allowance
was made, the land is sold or otherwise transferred by the assessee to any person other than the
Government, a local authority, a corporation established by a Central, State or Provincial Act or a
 Government company22 as defined in section 617 of the Companies Act, 1956 (1 of 1956), or in
connection with any amalgamation or succession referred to in sub-section (5) or sub-section (6)
of section 33A ; or
(ii) at any time before the expiry of the eight years referred to in sub-section (3) of section 33A, the
assessee utilises the amount credited to the reserve account under clause (ii) of that sub-section—
(a) for distribution by way of dividends or profits ; or
(b) for remittance outside India as profits or for the creation of any asset outside India ; or
(c) for any other purpose which is not a purpose of the business of the undertaking ;
the development allowance originally allowed shall be deemed to have been wrongly allowed, and the
Assessing Officer may, notwithstanding anything contained in this Act, recompute the total income of the
assessee for the relevant previous year and make the necessary amendment ; and the provisions of section
154 shall, so far as may be, apply thereto, the period of four years specified in sub-section (7) of that section
being reckoned from the end of the previous year in which the sale or transfer took place or the money was so
utilised.
Explanation.—For the purposes of this sub-section, where an assessee having any leasehold or other right of
occupancy in any land transfers such right, he shall be deemed to have sold or otherwise transferred such land.
(5B) Where any deduction in respect of any expenditure on scientific research has been made in any assessment
year under sub-section (2B) of section 35 and the assessee fails to furnish a certificate of completion of the
programme obtained from the prescribed authority within one year of the period allowed for its completion by
such authority, the deduction originally made in excess of the expenditure actually incurred shall be deemed to
have been wrongly made, and the Assessing Officer may, notwithstanding anything contained in this Act,
recompute the total income of the assessee for the relevant previous year and make the necessary amendment;
and the provisions of section 154 shall, so far as may be, apply thereto, the period of four years specified in sub-
section (7) of that section being reckoned from the end of the previous year in which the period allowed for the
completion of the programme by the prescribed authority expired.
(6) [Omitted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1992.]
(7) Where as a result of any proceeding under this Act, in the assessment for any year of a company in whose
case an order under section 104 has been made for that year, it is necessary to recompute the distributable
income of that company, the Assessing Officer may proceed to recompute the distributable income and
determine the tax payable on the basis of such recomputation and make the necessary amendment ; and the
provisions of section 154 shall, so far as may be, apply thereto, the period of four years specified in sub-section
(7) of that section being reckoned from the end of the financial year in which the final order was passed in the
case of the company in respect of that proceeding.
(7A) [Omitted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1992.]
(7B) Where in the assessment for any year, the capital gain arising from the transfer of a capital asset is not
charged under section 45 by virtue of the provisions of clause (iv) or, as the case may be, clause (v) of section
47, but is deemed under section 47A to be income chargeable under the head "Capital gains" of the previous
year in which the transfer took place by reason of—
(i) such capital asset being converted by the transferee company into, or being treated by it, as stock-in-
trade of its business ; or
(ii) the parent company or its nominees or, as the case may be, the holding company ceasing to hold the
whole of the share capital of the subsidiary company,
at any time before the expiry of the period of eight years from the date of such transfer, the Assessing Officer
may, notwithstanding anything contained in this Act, recompute the total income of the transferor company for
the relevant previous year and make the necessary amendment ; and the provisions of section 154 shall, so far as
may be, apply thereto, the period of four years specified in sub-section (7) of that section being reckoned from
the end of the previous year in which the capital asset was so converted or treated or in which the parent
company or its nominees or, as the case may be, the holding company ceased to hold the whole of the share
capital of the subsidiary company.
(8) [Omitted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1992.]
(8A) [Omitted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1992.]
(9) [Omitted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1992.]
(9A) [Omitted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1992.]
(10) [Omitted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1992.]
(10A) Where in the assessment for any year, a capital gain arising from the transfer of a long-term capital asset,
is charged to tax and within a period of six months after the date of such transfer, the assessee has made any
investment or deposit in any specified asset within the meaning of Explanation 1 to sub-section (1) of section
54E, the Assessing Officer shall amend the order of assessment so as to exclude the amount of the capital gain
not chargeable to tax under the provisions of sub-section (1) of section 54E ; and the provisions of section
154 shall, so far as may be, apply thereto, the period of four years specified in sub-section (7) of that section
being reckoned from the end of the financial year in which the assessment was made.
(10B) [Omitted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1992.]
(10C) [Omitted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1992.]
(11) Where in the assessment for any year, a capital gain arising from the transfer of any original asset as is
referred to in section 54H is charged to tax and within the period extended under that section the assessee
acquires the new asset referred to in that section or, as the case may be, deposits or invests the amount of such
capital gain within the period so extended, the Assessing Officer shall amend the order of assessment so as to
exclude the amount of the capital gain not chargeable to tax under any of the sections referred to in section 54H;
and the provisions of section 154 shall, so far as may be, apply thereto, the period of four years specified in sub-
section (7) of section 154 being reckoned from the end of the previous year in which the compensation was
received by the assessee.
(11A) Where in the assessment for any year, the deduction under section 10A or section 10B or section
10BA has not been allowed on the ground that such income has not been received in convertible foreign
exchange in India, or having been received in convertible foreign exchange outside India, or having been
converted into convertible foreign exchange outside India, has not been brought into India, by or on behalf of
the assessee with the approval of the Reserve Bank of India or such other authority as is authorised under any
law for the time being in force for regulating payments and dealings in foreign exchange and subsequently such
income or part thereof has been or is received in, or brought into, India in the manner aforesaid, the Assessing
Officer shall amend the order of assessment so as to allow deduction under section 10A or section
10B or section 10BA, as the case may be, in respect of such income or part thereof as is so received in, or
brought into, India, and the provisions of section 154 shall, so far as may be, apply thereto, and the period of
four years shall be reckoned from the end of the previous year in which such income is so received in, or
brought into, India.
(12) Where in the assessment for any year commencing before the 1st day of April, 1988, the deduction
under section 80-O in respect of any income, being the whole or any part of income by way of royalty,
commission, fees or any similar payment as is referred to in that section, has not been allowed on the ground
that such income has not been received in convertible foreign exchange in India, or having been received in
convertible foreign exchange outside India, or having been converted into convertible foreign exchange outside
India, has not been brought into India, by or on behalf of the assessee in accordance with any law for the time
being in force for regulating payments and dealings in foreign exchange and subsequently such income or part
thereof has been or is received in, or brought into, India in the manner aforesaid, the Assessing Officer shall
amend the order of assessment so as to allow deduction under section 80-O in respect of such income or part
thereof as is so received in, or brought into, India; and the provisions of section 154 shall, so far as may be,
apply thereto, the period of four years specified in sub-section (7) of that section being reckoned from the end of
the previous year in which such income is so received in, or brought into, India; so, however, that the period
from the 1st day of April, 1988 to the 30th day of September, 1991 shall be excluded in computing the period of
four years.
(13) Where in the assessment for any year, the deduction under section 80HHB or section 80HHC or section
80HHD or section 80HHE or section 80-O or section 80R or section 80RR or section 80RRA has not been
allowed on the ground that such income has not been received in convertible foreign exchange in India, or
having been received in convertible foreign exchange outside India, or having been converted into convertible
foreign exchange outside India, has not been brought into India, by or on behalf of the assessee with the
approval of the Reserve Bank of India or such other authority as is authorised under any law for the time being
in force for regulating payments and dealings in foreign exchange and subsequently such income or part thereof
has been or is received in, or brought into, India in the manner aforesaid, the Assessing Officer shall amend the
order of assessment so as to allow deduction under section 80HHB or section 80HHC or section
80HHD or section 80HHE or section 80-O or section 80R or section 80RR or section 80RRA, as the case may
be, in respect of such income or part thereof as is so received in, or brought into, India; and the provisions
of section 154 shall, so far as may be, apply thereto, and the period of four years shall be reckoned from the end
of the previous year in which such income is so received in, or brought into, India.
(14) Where in the assessment for any previous year or in any intimation or deemed intimation under sub-section
(1) of section 143 for any previous year, credit for tax deducted or collected in accordance with the provisions
of section 199 or, as the case may be, section 206C has not been given on the ground that the certificate
furnished under section 203 or section 206C was not filed with the return and subsequently such certificate is
produced before the Assessing Officer within two years from the end of the assessment year in which such
income is assessable, the Assessing Officer shall amend the order of assessment or any intimation or deemed
intimation under sub-section (1) of section 143, as the case may be, and the provisions of section 154 shall, so
far as may be, apply thereto :
Provided that nothing contained in this sub-section shall apply unless the income from which the tax has been
deducted or income on which the tax has been collected has been disclosed in the return of income filed by the
assessee for the relevant assessment year.
23
[(14A) Where in the assessment for any previous year or in any intimation or deemed intimation under sub-
section (1) of section 143 for any previous year, credit for income-tax paid in any country outside India or a
specified territory outside India referred to in section 90, section 90A or section 91 has not been given on the
ground that the payment of such tax was under dispute, and if subsequently such dispute is settled; and the
assessee, within six months from the end of the month in which the dispute is settled, furnishes to the Assessing
Officer evidence of settlement of dispute and evidence of payment of such tax along with an undertaking that no
credit in respect of such amount has directly or indirectly been claimed or shall be claimed for any other
assessment year, the Assessing Officer shall amend the order of assessment or any intimation or deemed
intimation under sub-section (1) of section 143, as the case may be, and the provisions of section 154 shall, so
far as may be, apply thereto:
Provided that the credit of tax which was under dispute shall be allowed for the year in which such income is
offered to tax or assessed to tax in India.]
(15) Where in the assessment for any year, a capital gain arising from the transfer of a capital asset, being land
or building or both, is computed by taking the full value of the consideration received or accruing as a result of
the transfer to be the value adopted or assessed by any authority of a State Government for the purpose of
payment of stamp duty in accordance with sub-section (1) ofsection 50C, and subsequently such value is
revised in any appeal or revision or reference referred to in clause (b) of sub-section (2) of that section, the
Assessing Officer shall amend the order of assessment so as to compute the capital gain by taking the full value
of the consideration to be the value as so revised in such appeal or revision or reference; and the provisions
of section 154 shall, so far as may be, apply thereto, and the period of four years shall be reckoned from the end
of the previous year in which the order revising the value was passed in that appeal or revision or reference.
(16) Where in the assessment for any year, a capital gain arising from the transfer of a capital asset, being a
transfer by way of compulsory acquisition under any law, or a transfer, the consideration for which was
determined or approved by the Central Government or the Reserve Bank of India, is computed by taking the
compensation or consideration as referred to in clause (a) or, as the case may be, the compensation or
consideration enhanced or further enhanced as referred to in clause (b) of sub-section (5) of section 45, to be the
full value of consideration deemed to be received or accruing as a result of the transfer of the asset and
subsequently such compensation or consideration is reduced by any court, Tribunal or other authority, the
Assessing Officer shall amend the order of assessment so as to compute the capital gain by taking the
compensation or consideration as so reduced by the court, Tribunal or any other authority to be the full value of
consideration; and the provisions of section 154 shall, so far as may be, apply thereto, and the period of four
years shall be reckoned from the end of the previous year in which the order reducing the compensation was
passed by the court, Tribunal or other authority.
(17) Where a deduction has been allowed to an assessee in any assessment year under section 80RRB in respect
of any patent, and subsequently by an order of the Controller or the High Court under the Patents Act, 1970 (39
of 1970),—
(i) the patent was revoked, or
(ii) the name of the assessee was excluded from the patents register as patentee in respect of that patent,
the deduction from the income by way of royalty attributable to the period during which the patent had been
revoked or the period for which the assessee's name was excluded as patentee in respect of that patent, shall be
deemed to have been wrongly allowed and the Assessing Officer may, notwithstanding anything contained in
this Act, recompute the total income of the assessee for the relevant previous year and make necessary
amendment; and the provisions of section 154 shall, so far as may be, apply thereto, the period of four years
specified in sub-section (7) of that section being reckoned from the end of the previous year in which such order
of the Controller referred to in clause (b) of sub-section (1), or the High Court referred to in clause (i) of sub-
section (1) of section 2, of the Patents Act, 1970 (39 of 1970), as the case may be, was passed.
Explanation.—For the purposes of this section,—
(a) "additional compensation" shall have the meaning assigned to it in clause (1) of the Explanation to sub-
section (2) of section 54;
(b) "additional consideration", in relation to the transfer of any capital asset the consideration for which
was determined or approved by the Central Government or the Reserve Bank of India, means the
difference between the amount of consideration for such transfer as enhanced by any court, tribunal or
other authority and the amount of consideration which would have been payable if such enhancement
had not been made.
Search and seizure.
35
132. 36(1) Where the Principal Director General or Director General or Principal Director or Director or the
Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner or
Additional Director or Additional Commissioner or Joint Director or Joint Commissioner in consequence of
information in his possession, has reason to believe that—
(a) any person to whom a summons under sub-section (1) of section 37 of the Indian Income-tax Act, 1922
(11 of 1922), or under sub-section (1) of section 131 of this Act, or a notice under sub-section (4) of
section 22 of the Indian Income-tax Act, 1922, or under sub-section (1) of section 142 of this Act was
issued to produce, or cause to be produced, any books of account or other documents has omitted or
failed to produce, or cause to be produced, such books of account or other documents as required by
such summons or notice, or
(b) any person to whom a summons or notice as aforesaid has been or might be issued will not, or would
not, produce or cause to be produced, any books of account or other documents which will be useful
for, or relevant to, any proceeding under the Indian Income-tax Act, 1922 (11 of 1922), or under this
Act, or
(c) any person is in possession of any money, bullion, jewellery or other valuable article or thing and such
money, bullion, jewellery or other valuable article or thing represents either wholly or partly income or
property which has not been, or would not be, disclosed for the purposes of the Indian Income-tax Act,
 1922 (11 of 1922), or this Act (hereinafter in this section referred to as the undisclosed income or
property),
then,—
(A) the Principal Director General or Director General or Principal Director or Director or the Principal
Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, as the case
may be, may authorise any Additional Director or Additional Commissioner or Joint Director, Joint
Commissioner, Assistant Director or Deputy Director, Assistant Commissioner or Deputy
Commissioner or Income-tax Officer, or
(B) such Additional Director or Additional Commissioner or Joint Director, or Joint Commissioner, as the
case may be, may authorise any Assistant Director or Deputy Director, Assistant Commissioner or
Deputy Commissioner or Income-tax Officer,
(the officer so authorised in all cases being hereinafter referred to as the authorised officer) to—
(i) enter and search any building, place, vessel, vehicle or aircraft where he has reason to suspect that such
books of account, other documents, money, bullion, jewellery or other valuable article or thing are kept;
(ii) break open the lock of any door, box, locker, safe, almirah or other receptacle for exercising the powers
conferred by clause (i) where the keys thereof are not available;
(iia) search any person who has got out of, or is about to get into, or is in, the building, place, vessel, vehicle
or aircraft, if the authorised officer has reason to suspect that such person has secreted about his person
any such books of account, other documents, money, bullion, jewellery or other valuable article or
thing;
(iib) require any person who is found to be in possession or control of any books of account or other
documents maintained in the form of electronic record as defined in clause (t) of sub-section (1) of
section 2 of the Information Technology Act, 2000 (21 of 2000), to afford the authorised officer the
necessary facility to inspect such books of account or other documents;
(iii) seize any such books of account, other documents, money, bullion, jewellery or other valuable article or
thing found as a result of such search:
Provided that bullion, jewellery or other valuable article or thing, being stock-in-trade of the business,
found as a result of such search shall not be seized but the authorised officer shall make a note or
inventory of such stock-in-trade of the business;
(iv) place marks of identification on any books of account or other documents or make or cause to be made
extracts or copies therefrom;
(v) make a note or an inventory of any such money, bullion, jewellery or other valuable article or thing :
Provided that where any building, place, vessel, vehicle or aircraft referred to in clause (i) is within the area of
jurisdiction of any Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or
Commissioner, but such Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or
Commissioner has no jurisdiction over the person referred to in clause (a) or clause (b) or clause (c), then,
notwithstanding anything contained in section 120, it shall be competent for him to exercise the powers under
this sub-section in all cases where he has reason to believe that any delay in getting the authorisation from the
Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner having
jurisdiction over such person may be prejudicial to the interests of the revenue :
Provided further that where it is not possible or practicable to take physical possession of any valuable article
or thing and remove it to a safe place due to its volume, weight or other physical characteristics or due to its
being of a dangerous nature, the authorised officer may serve an order on the owner or the person who is in
immediate possession or control thereof that he shall not remove, part with or otherwise deal with it, except
with the previous permission of such authorised officer and such action of the authorised officer shall be
deemed to be seizure of such valuable article or thing under clause (iii):
Provided also that nothing contained in the second proviso shall apply in case of any valuable article or thing,
being stock-in-trade of the business:
Provided also that no authorisation shall be issued by the Additional Director or Additional Commissioner or
Joint Director or Joint Commissioner on or after the 1st day of October, 2009 unless he has been empowered by
the Board to do so.
37
[Explanation.—For the removal of doubts, it is hereby declared that the reason to believe, as recorded by the
income-tax authority under this sub-section, shall not be disclosed to any person or any authority or the
Appellate Tribunal.]
(1A) Where any Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or
Commissioner, in consequence of information in his possession, has reason to suspect that any books of
account, other documents, money, bullion, jewellery or other valuable article or thing in respect of which an
officer has been authorised by the Principal Director General or Director General or Principal Director or
Director or any other Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or
Commissioner or Additional Director or Additional Commissioner or Joint Director or Joint Commissioner to
take action under clauses (i) to (v) of sub-section (1) are or is kept in any building, place, vessel, vehicle or
aircraft not mentioned in the authorisation under sub-section (1), such Principal Chief Commissioner or Chief
Commissioner or Principal Commissioner or Commissioner may, notwithstanding anything contained in section
120, authorise the said officer to take action under any of the clauses aforesaid in respect of such building,
place, vessel, vehicle or aircraft.
38
[Explanation.—For the removal of doubts, it is hereby declared that the reason to suspect, as recorded by the
income-tax authority under this sub-section, shall not be disclosed to any person or any authority or the
Appellate Tribunal.]
(2) The authorised officer may requisition the services of any police officer or of any officer of the Central
Government, or of both, to assist him for all or any of the purposes specified in sub-section (1) or sub-section
(1A) and it shall be the duty of every such officer to comply with such requisition.
(3) The authorised officer may, where it is not practicable to seize any such books of account, other documents,
money, bullion, jewellery or other valuable article or thing, for reasons other than those mentioned in the second
proviso to sub-section (1), serve an order on the owner or the person who is in immediate possession or control
thereof that he shall not remove, part with or otherwise deal with it except with the previous permission of such
officer and such officer may take such steps as may be necessary for ensuring compliance with this sub-section.
Explanation.—For the removal of doubts, it is hereby declared that serving of an order as aforesaid under this
sub-section shall not be deemed to be seizure of such books of account, other documents, money, bullion,
jewellery or other valuable article or thing under clause (iii) of sub-section (1).
(4) The authorised officer may, during the course of the search or seizure, examine on oath any person who is
found to be in possession or control of any books of account, documents, money, bullion, jewellery or other
valuable article or thing and any statement made by such person during such examination may thereafter be
used in evidence in any proceeding under the Indian Income-tax Act, 1922 (11 of 1922), or under this Act.
Explanation.—For the removal of doubts, it is hereby declared that the exami-nation of any person under this
sub-section may be not merely in respect of any books of account, other documents or assets found as a result of
the search, but also in respect of all matters relevant for the purposes of any investigation connected with any
proceeding under the Indian Income-tax Act, 1922 (11 of 1922), or under this Act.
(4A) Where any books of account, other documents, money, bullion, jewellery or other valuable article or thing
are or is found in the possession or control of any person in the course of a search, it may be presumed—
(i) that such books of account, other documents, money, bullion, jewellery or other valuable article or thing
belong or belongs to such person;
(ii) that the contents of such books of account and other documents are true ; and
(iii) that the signature and every other part of such books of account and other documents which purport to
be in the handwriting of any particular person or which may reasonably be assumed to have been signed
 by, or to be in the handwriting of, any particular person, are in that person's handwriting, and in the case
of a document stamped, executed or attested, that it was duly stamped and executed or attested by the
person by whom it purports to have been so executed or attested.
(5) [***]
(6) [***]
(7) [***]
(8) The books of account or other documents seized under sub-section (1) or sub-section (1A) shall not be
retained by the authorised officer for a period exceeding thirty days from the date of the order of assessment
under section 153A or clause (c) of section 158BC unless the reasons for retaining the same are recorded by
him in writing and the approval of the Principal Chief Commissioner or Chief Commissioner, Principal
Commissioner or Commissioner, Principal Director General or Director General or Principal Director or
Director for such retention is obtained :
Provided that the Principal Chief Commissioner or Chief Commissioner, Principal Commissioner or
Commissioner, Principal Director General or Director General or Principal Director or Director shall not
authorise the retention of the books of account and other documents for a period exceeding thirty days after all
the proceedings under the Indian Income-tax Act, 1922 (11 of 1922), or this Act in respect of the years for
which the books of account or other documents are relevant are completed.
(8A) An order under sub-section (3) shall not be in force for a period exceeding sixty days from the date of the
order.
(9) The person from whose custody any books of account or other documents are seized under sub-section (1)
or sub-section (1A) may make copies thereof, or take extracts therefrom, in the presence of the authorised
officer or any other person empowered by him in this behalf, at such place and time as the authorised officer
may appoint in this behalf.
(9A) Where the authorised officer has no jurisdiction over the person referred to in clause (a) or clause (b) or
clause (c) of sub-section (1), the books of account or other documents, or any money, bullion, jewellery or other
valuable article or thing (hereafter in this section and in sections 132A and 132B referred to as the assets) seized
under that sub-section shall be handed over by the authorised officer to the Assessing Officer having
jurisdiction over such person within a period of sixty days from the date on which the last of the authorisations
for search was executed and thereupon the powers exercisable by the authorised officer under sub-section (8) or
sub-section (9) shall be exercisable by such Assessing Officer.
39
[(9B) Where, during the course of the search or seizure or within a period of sixty days from the date on which
the last of the authorisations for search was executed, the authorised officer, for reasons to be recorded in
writing, is satisfied that for the purpose of protecting the interest of revenue, it is necessary so to do, he may
with the previous approval of the Principal Director General or Director General or the Principal Director or
Director, by order in writing, attach provisionally any property belonging to the assessee, and for the said
purposes, the provisions of the Second Schedule shall, mutatis mutandis, apply.
(9C) Every provisional attachment made under sub-section (9B) shall cease to have effect after the expiry of a
period of six months from the date of the order referred to in sub-section (9B).
(9D) The authorised officer may, during the course of the search or seizure or within a period of sixty days from
the date on which the last of the authorisations for search was executed, make a reference to a Valuation Officer
referred to in section 142A, who shall estimate the fair market value of the property in the manner provided
under that section and submit a report of the estimate to the said officer within a period of sixty days from the
date of receipt of such reference.]
(10) If a person legally entitled to the books of account or other documents seized under sub-section (1) or sub-
section (1A) objects for any reason to the approval given by the Principal Chief Commissioner or Chief
Commissioner, Principal Commissioner or Commissioner, Principal Director General or Director General or
Principal Director or Director under sub-section (8), he may make an application to the Board stating therein the
reasons for such objection and requesting for the return of the books of account or other documents and the
Board may, after giving the applicant an opportunity of being heard, pass such orders as it thinks fit.
(11) [***]
(11A) [***]
(12) [***]
(13) The provisions of the Code of Criminal Procedure, 1973 (2 of 1974), relating to searches and seizure shall
apply, so far as may be, to searches and seizure under sub-section (1) or sub-section (1A).
40
(14) The Board may make rules in relation to any search or seizure under this section ; in particular, and
without prejudice to the generality of the foregoing power, such rules may provide for the procedure to be
followed by the authorised officer—
(i) for obtaining ingress into any building, place, vessel, vehicle or aircraft to be searched where free
ingress thereto is not available ;
(ii) for ensuring safe custody of any books of account or other documents or assets seized.
41
[Explanation 1.—For the purposes of sub-sections (9A), (9B) and (9D), with respect to "execution of an
authorisation for search", the provisions of sub-section (2) of section 153B shall apply.]
Explanation 2.—In this section, the word "proceeding" means any proceeding in respect of any year, whether
under the Indian Income-tax Act, 1922 (11 of 1922), or this Act, which may be pending on the date on which a
search is authorised under this section or which may have been completed on or before such date and includes
also all proceedings under this Act which may be commenced after such date in respect of any year.

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).
53
(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:
54
[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.
Interest for defaults in furnishing return of income.
234A. (1) Where the return of income for any assessment year under sub-section (1) or sub-section (4)
of section 139, or in response to a notice under sub-section (1) of section 142, is furnished after the due date, or
is not furnished, the assessee shall be liable to pay simple interest at the rate of one per cent for every month or
part of a month comprised in the period commencing on the date immediately following the due date, and,—
(a) where the return is furnished after the due date, ending on the date of furnishing of the return; or
(b) where no return has been furnished, ending on the date of completion of the assessment under section
144,
on the amount of the tax on the total income as determined under sub-section (1) of section 143, and where a
regular assessment is made, on the amount of the tax on the total income determined under regular assessment,
as reduced by the amount of,—
(i) advance tax, if any, paid;
(ii) any tax deducted or collected at source;
(iii) any relief of tax allowed under section 90 on account of tax paid in a country outside India;
(iv) any relief of tax allowed under section 90A on account of tax paid in a specified territory outside India
referred to in that section;
(v) any deduction, from the Indian income-tax payable, allowed under section 91, on account of tax paid in
a country outside India; and
(vi) any tax credit allowed to be set off in accordance with the provisions of section 115JAA or section
115JD.
Explanation 1.—In this section, "due date" means the date specified in sub-section (1) of section 139 as
applicable in the case of the assessee.
Explanation 2.—In this sub-section, "tax on the total income as determined under sub-section (1) of section
143" shall not include the additional income-tax, if any, payable under section 143.
Explanation 3.—Where, in relation to an assessment year, an assessment is made for the first time under section
147 or section 153A, the assessment so made shall be regarded as a regular assessment for the purposes of this
section.
Explanation 4.—[* * *]
(2) The interest payable under sub-section (1) shall be reduced by the interest, if any, paid under section
140A towards the interest chargeable under this section.
(3) Where the return of income for any assessment year, required by a notice under section 148 or section
153A issued after the determination of income under sub-section (1) of section 143 or after the completion of an
assessment under sub-section (3) of section 143 or section 144 or section 147, is furnished after the expiry of
the time allowed under such notice, or is not furnished, the assessee shall be liable to pay simple interest at the
rate of one per cent for every month or part of a month comprised in the period commencing on the day
immediately following the expiry of the time allowed as aforesaid, and,—
(a) where the return is furnished after the expiry of the time aforesaid, ending on the date of furnishing the
return; or
(b) where no return has been furnished, ending on the date of completion of the reassessment or
recomputation under section 147 or reassessment under section 153A,
on the amount by which the tax on the total income determined on the basis of such reassessment or
recomputation exceeds the tax on the total income determined under sub-section (1) of section 143 or on the
basis of the earlier assessment aforesaid.
Explanation.—[* * *]
(4) 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 263 or section 264 or an order of the Settlement Commission under sub-section
(4) of section 245D, the amount of tax on which interest was payable under sub-section (1) or sub-section (3) of
this section has been increased or reduced, as the case may be, the interest shall be increased or reduced
accordingly, and—
(i) in a case where the interest is increased, the Assessing Officer shall serve on the assessee a notice of
demand in the prescribed form specifying the sum payable, and such notice of demand shall be deemed
to be a notice under section 156 and the provisions of this Act shall apply accordingly;
(ii) in a case where the interest is reduced, the excess interest paid, if any, shall be refunded.
(5) The provisions of this section shall apply in respect of assessments for the assessment year commencing on
the 1st day of April, 1989 and subsequent assessment years.

Certificate to Tax Recovery Officer55.

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 56specifying the amount of
arrears due from the assessee (such statement being hereafter in this Chapter and in the Second Schedule
referred to as "certificate") 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—
(a) attachment and sale of the assessee's movable property;
(b) attachment and sale of the assessee's immovable property;
(c) arrest of the assessee and his detention in prison;
(d) appointing a receiver for the management of the assessee's movable and immovable properties.
Explanation.—For the purposes of this sub-section, the assessee's movable or immovable property shall include
any property which has been transferred, directly or indirectly on or after the 1st day of June, 1973, by the
assessee to his spouse or minor child or son's wife or son's minor child, otherwise than for adequate
consideration, and which is held by, or stands in the name of, any of the persons aforesaid; and so far as the
movable or immovable property so transferred to his minor child or his son's minor child is concerned, it shall,
even after the date of attainment of majority by such minor child or son's minor child, as the case may be,
continue to be included in the assessee's movable or immovable property for recovering any arrears due from
the assessee in respect of any period prior to such date.
(2) The Tax Recovery Officer may take action under sub-section (1), notwithstanding that proceedings for
recovery of the arrears by any other mode have been taken.
Other modes of recovery.
226. (1) Where no certificate has been drawn up under section 222, the Assessing Officer may recover the tax
by any one or more of the modes provided in this section.
(1A) Where a certificate has been drawn up under section 222, the Tax Recovery Officer may, without
prejudice to the modes of recovery specified in that section, recover the tax by any one or more of the modes
provided in this section.
(2) If any assessee is in receipt of any income chargeable under the head "Salaries", the Assessing Officer or
Tax Recovery Officer may require any person paying the same to deduct from any payment subsequent to the
date of such requisition any arrears of tax due from such 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 :
Provided that any part of the salary exempt from attachment in execution of a decree of a civil court under
section 60 of the Code of Civil Procedure, 1908 (5 of 1908), shall be exempt from any requisition made under
this sub-section.
(3) (i) 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 either forthwith upon the money becoming due or being held or at or within the time specified
in the notice (not being before the money becomes due or is held) so much of the money as is 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.
(ii) A notice under this sub-section may be issued to any person who holds or may subsequently hold any
money for or on account of the assessee jointly with any other person and for the purposes of this sub-section,
the shares of the joint holders in such account shall be presumed, until the contrary is proved, to be equal.
(iii) A copy of the notice shall be forwarded to the assessee at his last address known to the Assessing Officer or
Tax Recovery Officer, and in the case of a joint account to all the joint holders at their last addresses known to
the Assessing Officer or Tax Recovery Officer.
(iv) Save as otherwise provided in this sub-section, every person to whom a notice is issued under this sub-
section shall be bound to comply with such notice, and, in particular, where any such notice is issued to a post
office, banking company or an insurer, it shall not be necessary for any pass book, deposit receipt, policy or any
other document to be produced for the purpose of any entry, endorsement or the like being made before
payment is made, notwithstanding any rule, practice or requirement to the contrary.
(v) Any claim respecting any property in relation to which a notice under this sub-section has been issued
arising after the date of the notice shall be void as against any demand contained in the notice.
(vi) Where a person to whom a notice under this sub-section is sent objects to it by a statement on oath that the
sum demanded or any part thereof is not due to the assessee or that he does not hold any money for or on
account of the assessee, then nothing contained in this sub-section shall be deemed to require such person to pay
any such sum or part thereof, as the case may be, but if it is discovered that such statement was false in any
material particular, such person shall be personally liable to the Assessing Officer or Tax Recovery Officer to
the extent of his own liability to the assessee on the date of the notice, or to the extent of the assessee's liability
for any sum due under this Act, whichever is less.
(vii) The Assessing Officer or Tax Recovery Officer may, at any time or from time to time, amend or revoke
any notice issued under this sub-section or extend the time for making any payment in pursuance of such notice.
(viii) The Assessing Officer or Tax Recovery Officer shall grant a receipt for any amount paid in compliance
with a notice issued under this sub-section, and the person so paying shall be fully discharged from his liability
to the assessee to the extent of the amount so paid.
(ix) Any person discharging any liability to the assessee after receipt of a notice under this sub-section shall be
personally liable to the Assessing Officer or Tax Recovery Officer to the extent of his own liability to the
assessee so discharged or to the extent of the assessee's liability for any sum due under this Act, whichever is
less.
(x) If the person to whom a notice under this sub-section is sent fails to make payment in pursuance thereof to
the Assessing Officer or Tax Recovery Officer, he shall be deemed to be an assessee in default in respect of the
amount specified in the notice and further proceedings may be taken against him for the realisation of the
amount as if it were an arrear of tax due from him, in the manner provided in sections 222 to 225 and the notice
shall have the same effect as an attachment of a debt by the Tax Recovery Officer in exercise of his powers
under section 222.
(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.
(5) The Assessing Officer or Tax Recovery Officer may, if so authorised by the Principal Chief Commissioner
or Chief Commissioner or Principal 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.

Procedure. – HEARING THE ASSESSEE BEFORE LEVYING PENALTY

274. (1) No order imposing a penalty under this Chapter shall be made unless the assessee has been heard, or
has been given a reasonable opportunity of being heard.
(2) No order imposing a penalty under this Chapter shall be made—
(a) by the Income-tax Officer, where the penalty exceeds ten thousand rupees;
(b) by the Assistant Commissioner or Deputy Commissioner, where the penalty exceeds twenty thousand
rupees,
except with the prior approval of the Joint Commissioner.
(3) An income-tax authority on making an order under this Chapter imposing a penalty, unless he is himself the
Assessing Officer, shall forthwith send a copy of such order to the Assessing Officer.

Penalty for failure to furnish report under section 92E.

271BA. If any person fails to furnish a report from an accountant as required by section 92E, the Assessing
Officer may direct that such person shall pay, by way of penalty, a sum of one hundred thousand rupees =
Rs.1,00,000/-.

Penalty for failure to comply with the provisions of section 269SS.

271D. (1) If a person takes or accepts any loan or deposit or specified sum in contravention of the provisions
of section 269SS, he shall be liable to pay, by way of penalty, a sum equal to the amount of the loan or deposit
or specified sum so taken or accepted.
(2) Any penalty imposable under sub-section (1) shall be imposed by the Joint Commissioner.

[Penalty for failure to comply with provisions of section 269ST.

271DA. (1) If a person receives any sum in contravention of the provisions of section 269ST, he shall be liable
to pay, by way of penalty, a sum equal to the amount of such receipt:
Provided that no penalty shall be imposable if such person proves that there were good and sufficient reasons
for the contravention.
(2) Any penalty imposable under sub-section (1) shall be imposed by the Joint Commissioner.]

Penalty where search has been initiated.

271AAB. (1) The Assessing Officer may, notwithstanding anything contained in any other provisions of this
Act, direct that, in a case where search has been initiated under section 132 on or after the 1st day of July,
2012 42[but before the date on which the Taxation Laws (Second Amendment) Bill, 2016 receives the assent of
the President], the assessee shall pay by way of penalty, in addition to tax, if any, payable by him,—
(a) a sum computed at the rate of ten per cent of the undisclosed income of the specified previous year, if
such assessee—
(i) in the course of the search, in a statement under sub-section (4) of section 132, admits the
undisclosed income and specifies the manner in which such income has been derived;
(ii) substantiates the manner in which the undisclosed income was derived; and
(iii) on or before the specified date—
(A) pays the tax, together with interest, if any, in respect of the undisclosed income; and
 (B) furnishes the return of income for the specified previous year declaring such undisclosed
income therein;
(b) a sum computed at the rate of twenty per cent of the undisclosed income of the specified previous year,
if such assessee—
(i) in the course of the search, in a statement under sub-section (4) of section 132, does not admit the
undisclosed income; and
(ii) on or before the specified date—
(A) declares such income in the return of income furnished for the specified previous year; and
(B) pays the tax, together with interest, if any, in respect of the undisclosed income;
(c) a sum 43[computed at the rate of sixty per cent] of the undisclosed income of the specified previous
year, if it is not covered by the provisions of clauses (a) and (b).
44
[(1A) The Assessing Officer may, notwithstanding anything contained in any other provisions of this Act,
direct that, in a case where search has been initiated under section 132 on or after the date on which the
Taxation Laws (Second Amendment) Bill, 2016 receives the assent of the President, the assessee shall pay by
way of penalty, in addition to tax, if any, payable by him,—
(a) a sum computed at the rate of thirty per cent of the undisclosed income of the specified previous year, if
the assessee—
(i) in the course of the search, in a statement under sub-section (4) of section 132, admits the
undisclosed income and specifies the manner in which such income has been derived;
(ii) substantiates the manner in which the undisclosed income was derived; and
(iii) on or before the specified date—
(A) pays the tax, together with interest, if any, in respect of the undisclosed income; and
(B) furnishes the return of income for the specified previous year declaring such undisclosed
income therein;
(b) a sum computed at the rate of sixty per cent of the undisclosed income of the specified previous year, if
it is not covered under the provisions of clause (a).]
(2) No penalty under the provisions of 45[section 270A or] clause (c) of sub-section (1) of section 271 shall be
imposed upon the assessee in respect of the undisclosed income referred to in sub-section (1) 45a[or sub-section
(1A)].
(3) The provisions of sections 274 and 275 shall, as far as may be, apply in relation to the penalty referred to in
this section.
Explanation.—For the purposes of this section,—
(a) "specified date" means the due date of furnishing of return of income under sub-section (1) of section
139 or the date on which the period specified in the notice issued under section 153A for furnishing of
return of income expires, as the case may be;
(b) "specified previous year" means the previous year—
(i) which has ended before the date of search, but the date of furnishing the return of income under
sub-section (1) of section 139 for such year has not expired before the date of search and the
assessee has not furnished the return of income for the previous year before the date of search; or
(ii) in which search was conducted;
(c) "undisclosed income" means—
(i) any income of the specified previous year represented, either wholly or partly, by any money,
bullion, jewellery or other valuable article or thing or any entry in the books of account or other
documents or transactions found in the course of a search under section 132, which has—
 (A) not been recorded on or before the date of search in the books of account or other documents
maintained in the normal course relating to such previous year; or
(B) otherwise not been disclosed to the Principal Chief Commissioner or Chief Commissioner or
Principal Commissioner or Commissioner before the date of search; or
(ii) any income of the specified previous year represented, either wholly or partly, by any entry in
respect of an expense recorded in the books of account or other documents maintained in the
normal course relating to the specified previous year which is found to be false and would not
have been found to be so had the search not been conducted.