Procedure for assessmentCentral

Section 290 of Income Tax Act 2025 in hindi

(1)Where,—
1. (a)any tax, interest, penalty, fine or any other sum in respect of which a notice of demand has been issued earlier under section 289; and
2. (b)such tax, interest, penalty, fine or any other sum is reduced as a result of an order of the Adjudicating Authority as defined in section 5(1) of the Insolvency and Bankruptcy Code, 2016 (31 of 2016),

the Assessing Officer shall serve on the assessee a modified notice of demand specifying the sum payable, if any, and such notice shall be treated as a notice under section 289 and the provisions of this Act shall accordingly apply in relation to such notice.

(2)The modified notice of demand as referred to in sub-section (1) shall be revised where the order referred to in sub-section (1)(b) is modified by the National Company Law Appellate Tribunal or the Supreme Court.

Summary

Modifies an earlier notice of demand issued under Section 289 when the demanded amount is reduced.
Requires the Assessing Officer to serve a modified notice of demand on the taxpayer.
Triggered specifically when the tax, interest, penalty, fine, or other sum is reduced by an order of the Adjudicating Authority (meaning the designated court or judge) defined under Section 5(1) of the Insolvency and Bankruptcy Code, 2016.
Treats the modified notice as if it were a notice under Section 289, applying all standard tax collection rules to it.
Mandates a further revision of the modified notice if the reducing order is modified by the National Company Law Appellate Tribunal or the Supreme Court.

Practical examples

1ABC Limited had an outstanding tax demand of 20,00,000 rupees under Section 289. During insolvency proceedings, the Adjudicating Authority (as defined in Section 5(1) of the Insolvency and Bankruptcy Code, 2016) passes an order reducing the tax liability to 5,00,000 rupees. Under Section 290, the Assessing Officer serves a modified notice of demand showing 5,00,000 rupees.

2XYZ Private Limited has its penalty of 8,00,000 rupees reduced to 2,00,000 rupees by the Adjudicating Authority. The Assessing Officer serves a modified notice for 2,00,000 rupees. The National Company Law Appellate Tribunal later modifies this order, increasing the penalty back to 4,00,000 rupees. The Assessing Officer revises the modified notice of demand to show the updated sum of 4,00,000 rupees.

FAQ

1. Who issues a modified notice of demand under Section 290?

The Assessing Officer must serve the modified notice of demand on the taxpayer.

2. What legal order triggers a modification under Section 290?

An order passed by the Adjudicating Authority under Section 5(1) of the Insolvency and Bankruptcy Code, 2016 that reduces the tax, interest, penalty, fine, or other sum.

3. What happens if the Adjudicating Authority's order is modified on appeal?

If the order is modified by the National Company Law Appellate Tribunal or the Supreme Court, the Assessing Officer must revise the modified notice of demand.

4. How is a modified notice of demand treated?

It is treated exactly like an original notice of demand issued under Section 289, and all standard provisions of the Act apply to it.

Test yourself

Q1.Under Section 290, what must the Assessing Officer serve when a debt is reduced by the Adjudicating Authority?

Q2.Which appellate bodies can modify the Adjudicating Authority's order, requiring a further revision of the modified notice?

Q3.Which Code is referenced for the definition of "Adjudicating Authority" under Section 290?

289PreviousSection 289 Notice of demand 291NextSection 291 Intimation of loss

←Section 289 Section 291→