Payment of Advance Tax Pursuant to Assessing Officer’s Order [Section 210(3) & 210(4)]

1. Overview

When a taxpayer fails to pay advance tax voluntarily, the Assessing Officer (AO) can issue an order under Section 210(3) demanding payment based on:

• The taxpayer’s last assessed income, or
• The returned income(if higher than the last assessed income).

If the AO later revises this demand (e.g., due to new information), an amended order under Section 210(4) may be issued.

2. Key Provisions

(A) AO’s Order Under Section 210(3)

1. Basis of Demand:
   • The AO calculates advance tax liability using:
     • The last assessed income(from previous years), or
     • The returned income(if higher).
   • Example: If Ravi’s last assessed income was ₹10 lakh but his current return shows ₹12 lakh, the AO will use ₹12 lakh for calculation.
2. Instalment Schedule:
   • The taxpayer must pay as per Section 211due dates (15th June, Sept, Dec, March).
   • The AO’s order will specify the amounts for each instalment.
3. Taxpayer’s Options:
   • Comply: Pay the demanded amount by due dates.
   • Challenge: If the taxpayer believes their current income is lower, they can:
     • Submit a revised estimateunder Section 210(5).
     • Pay tax based on their own calculation (but must justify if audited).

(B) Amended Order Under Section 210(4)

• The AO may revise the original demand if:
  • New income details emerge (e.g., unreported earnings).
  • The taxpayer’s estimate is proven inaccurate.
• The taxpayer must adjust subsequent instalments

3. Consequences of Non-Compliance

• Interest under Section 234B: 1% per month if <90% of tax is paid by 31st March.
• Interest under Section 234C: 1% per month for deferred instalments.
• Penalty under Section 221: Up to 1% per month for non-payment.

4. Practical Example

Scenario:

• Kapoor’slast assessed income (AY 2023-24): ₹15 lakh.
• AO’s Order (Sec 210(3)): Demands advance tax on ₹15 lakh.
• Kapoor’s Response:
  • If his actual FY 2024-25 income is ₹12 lakh, he can:

1. 1. Pay as per AO’s order(risk overpayment).
   2. Submit a revised estimate (Sec 210(5))with proof of lower income.

5. Summary