Outstanding Tax Demand of AY 2015-16

Hello, I am facing a problem for the Income Tax of AY 2015-16. For this assessment year I was in USA and have income from USA, for this year I was in India for more than 182 days so the total income is taxable in India. I have chosen the wrong ITR (ITR1 instead of ITR2) and submitted after due date. I wanted to submit ITR2 and claim foreign tax credit. I have submitted the revised return but it was rejected. Now there is a outstanding tax demand on my name for 160K, I have contacted some auditors and some are saying I need to pay some are saying that don’t pay. I spoke to ITO and he said that I cant do anything and I need to pay the full amount that is 160K. Now I have paid the full amount in the same time ITO sent a letter to Bank to deduct money from my account and pay to ITO. Now bank hold the above mentioned about as lien, when I ask bank employee to release the lien as I have paid the outstanding tax they are saying that ITO didn’t agree to release the amount as he is going to calculate the interest and penalties on this amount. My questions: 1. If he calculate the Interest on this amount on a simple interest basis the interest alone will be 200K. 2. Is there anything that I can do to avoid re-calculation of interest and penalties. Now I am in USA and my Uncle is going to meet the ITO and I don’t want to truble my uncle further on this issues. Please let me know if there is anything I can on this to close this issue permanently. Thanks, Surendra