Income Tax notice for Short deduction of tax at source for fy 2007-08

Dear All I am working in a government/Local authority where income tax notice for previous year 2007-08 regarding the short deduction of tax is received.

My query is as we have deducted short tax while making interest payment to the deductee. The deductee has filed the return and paid the all taxes due, after taking into consideration i.e. short deduction amount and tds amount.

Now what should be the reply to IT so that demand can be deleted?

Thank you

Sumit Anand

9569464884