penalty

Hi Seema,

Penalty under Section 221 is a general penalty and can be levied in all the cases where the taxpayer is treated as an "assessee in default" like :

• Filing return without payment of complete tax, interest and fees (if any)
• Defaulting in payment of demand within specified time on service of demand notice u/s 156 etc.

Before charging penalty u/s 221, department will need to issue a SCN to the assessee and no penalty will be levied if it is satisfied with the response of assessee that default is due to good and sufficient reason.

Whereas Penalty u/s 220(2) of 1% shall be levied in all cases of non-payment/ delayed payment of demand in response to demand notice u/s 156 within the specified time period. There is no requirement of SCN from department for the application of this penalty.

Hope I was able to help you.