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CMA Final · Direct Tax Laws and International Taxation · Black Money Act, 2015

An Assessing Officer issues a notice under section 32(4) of the Black Money Act, 2015 to Kaveri Bank Ltd., which owes Rs 8,00,000 to the assessee, Mr. Ravi, whose tax arrear is Rs 5,00,000. What is the maximum the bank can be required to pay under the notice?

The bank can be required to pay Rs 5,00,000. Section 32(4) lets the officer demand an amount sufficient to meet the tax arrear, capped at the debt owed. Since the arrear is lower than the Rs 8,00,000 debt, only the arrear amount is payable.

  1. ARs 8,00,000, the full debt
  2. BRs 3,00,000, the excess of debt over arrear
  3. CRs 13,00,000, debt plus arrear
  4. DRs 5,00,000, the amount sufficient to meet the arrear and not exceeding the debtCorrect

Explanation

Section 32(4) allows the officer to require the debtor to pay an amount, not exceeding the debt, sufficient to meet the tax arrear. Arrear is Rs 5,00,000 and debt is Rs 8,00,000, so Rs 5,00,000 can be demanded. Demanding the full Rs 8,00,000 would exceed what is needed to meet the arrear.

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