No it is not advisable to do so.
Wether a Demand should be accepted or not depends upon the genuineness of the demand.
Lack of funds cannot be a valid reason for not accepting a demand.
Thank you for your response! But in this case, the intimation does not provide the reason or calculations for arriving at such demand outstanding amount. Hence, I am not able to assess the genuineness of the demand!
Although I have a theory! In the ITR V pertaining to the AY 2012-13 I can see a tax payable of Rs 19420, which is usually not the case as we are supposed to pay self assessment tax and square it off. I don't even understand how the return was filed in the first place. Now I feel that it is the same amount plus some interest (Rs 21900-demand amt) that is being demanded without any explanations! What should I do? Looking forward to your response!
If the the return was e-filed without your knowledge then someone must have your login id and password.
Another question is how was the return verified. Did someone sign and send it to Bangalore??
From what you have mentioned the return has been filed without paying SA tax.
As per section 140A if the assessee fails to pay the whole amount of tax and interest the assessee shall deemed to be assessee in default and all the provisions of the Income Tax Act shall apply accordingly.
Pay up the amount or sort the matter at the earliest to avoid any action from the Income Tax Department.