Ex. Mr.X has been served a notice u/s. 201 for interest on late payment of TDS for FY 2005-06 on 24.1.2012. So thats almost six years after the end of the FY!! But still the interest was paid within the time limit as per the notice. The notice also directed Mr.X to file a correction return for the relevant quarter.
But the correction statement wasn't filed. Thereafter another notice was served to him u/s. 221 for being in default of non-filing of the correction return.
My questions: (i) What is the time period within which a recovery of interest of the said interest can be made i.e. is it correct if the ITO demands for interest after almost 6 yrs of end of the financial year??
(ii) Can a notice u/s. 221 be served for non filing of the correction return because as far as I remember the said section imposes penalty only in case of default in payment of taxes, etc.
Thanks.
CAclubindia
