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

Under section 32 of the Black Money Act, 2015, a debtor receives a notice under sub-section (4) for a tax arrear of Rs 6,00,000 of the assessee. The debtor owes the assessee Rs 4,00,000 on the date of the notice, ignores the notice and pays the whole Rs 4,00,000 to the assessee. What is his personal liability to the Assessing Officer?

His personal liability is Rs 4,00,000. Under section 32(13), a debtor who pays the assessee after receiving the notice is liable to the extent of the liability discharged or the assessee's dues, whichever is less; here the discharged Rs 4,00,000 is lower than the Rs 6,00,000 arrear.

  1. ARs 6,00,000, the whole arrear
  2. BRs 2,00,000, the shortfall of debt over arrear
  3. CRs 4,00,000, being the lower of the liability discharged and the arrearCorrect
  4. DNil, since payment to the assessee discharges him

Explanation

Under section 32(13), a person discharging liability to the assessee after receiving the notice is personally liable to the extent of his own liability so discharged or the assessee's liability under the Act, whichever is less. Discharged amount is Rs 4,00,000 and the arrear is Rs 6,00,000, so the lower, Rs 4,00,000, applies. Rs 6,00,000 exceeds the amount he discharged.

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