In this article,following topics are covered:
- Section 154 of Income Tax Act 1961
- Rectification under section 154 of Income Tax Act 1961
- Notice under section 154 of Income Tax Act 1961
Manner of rectification of a mistake apparent from the record
With a view to rectifying any mistake apparent from the record, an income tax authority referred to in section 116 may:
- Amend any order passed by it under the provisions of this Act
- Amend any intimation u/s 206CB(1)
- Amend any intimation or deemed intimation u/s 143(1)
- Amend any intimation u/s 200A(1)
What is Mistake apparent from the record
The jurisdiction of any authority under the Act to make an order under section 154 depends upon the existence of a mistake apparent on the face of the record.
Mistake apparent from the record may be a mistake of fact as well as mistake of law:
For example, the treatment of non-agricultural income as agricultural income and granting exemption in respect of such income is an obvious mistake of law which could be rectified under section 154.
Mere change of opinion cannot be basis for rectification:
A mere change of opinion, however, cannot be the basis on which the same or the successor Assessing Officer can treat a case as one of rectification of mistake. A mistake is one apparent from the record in case, where it is a glaring, obvious, patent or self-evident. Mistake, which has to be discovered by a long drawn process of reasoning or examination or arguments on points, where there may be two opinions, cannot be said to be mistake or error apparent from the record.
Subsequent decision of Supreme Court:
A mistake arising as a result of subsequent interpretation of law by the Supreme Court would also constitute error apparent from the record.
Retrospective amendment of law:
It could also lead to rectification if an order is plainly and obviously inconsistent with the specific and clear provision, as amended retrospectively.
Doctrine of Partial Merger:
Where any matter has been considered and decided in any proceeding by way of appeal or revision relating to a rectifiable order, the authority passing such order may, amend the order in relation to any matter other than the matter which has been so considered and decided.
Amendment may be suo motu or the same may be brought to notice by the assessee or deductor:
The concerned authority may make an amendment on its own motion.However, he should mandatorily make the amendment for rectifying any such mistake which has been brought to its notice by the assessee or the deductor. Where the authority concerned is the Deputy Commissioner (Appeals) or the Commissioner (appeals), the mistake can be pointed out by the Assessing Officer also.
Opportunity of being heard to be given to the assessee or deductor before enhancing an assessment or reducing a refund:
An amendment which has the effect of enhancing an assessment or reducing a refund or otherwise increasing the liability of the assessee or the deductor, shall not be made unless the authority concerned has given notice to the assessee or the deductor of its intention so to do and has allowed the assessee or the deductor a reasonable opportunity of being heard.
Action to be taken by the Assessing Officer depending upon the effect of the amendment made:
|Sr.No.||Case||Action to be taken by A.O.|
|1.||Where an amendment is made under this section||An order shall be passed in writing by the authority concerned|
|2.||Where any such amendment has the effect of reducing the assessment, or otherwise reducing the liability of the assessee or the deductor||The Assessing Officer shall make any refund due to such assessee or the deductor|
|3.||Where any such amendment has the effect of enhancing the assessment or reducing the refund already made or otherwise increasing the liability of the assessee or the deductor||The Assessing Officer shall serve on the assessee or the deductor, as the case may be a notice of demand in the prescribed form specifying the sum payable|
Time limit for rectification:
Except in cases which are specifically covered by section 155 or section 186(4) dealing with cancellation or registration, no amendment under this section shall be made after the expiry of 4 years from end of the financial year in which the order sought to be amended was passed.
Where an application for amendment is made by the assessee or by the deductor or by the collector, the income-tax authority shall pass an order within a period of 6 months from the end of the month in which the application is received by it, either making the amendment or refusing the claim.
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Frequently Asked Questions(FAQ’s)
What is Section 154 of Income Tax Act 1961?
Section 154 of Income Tax Act 1961 deals with the rectification of the mistakes that might have happened in the official records of income tax or because of any mistakes occurred in any order that is passed by the Assessing Officer.
What is the time limit for rectification under section 154?
For Suo moto rectification:-
4 years from the end of the F.Y. in which the order sought to be amended was passed.
Where application is made by the assessee/deductor/ collector:-
6 months from the end of the month in which the application is received.
How to file rectification under section 154?
1.Logon to ‘e-Filing’ Portal
2.Go to the ‘e-File’ menu and Click ‘Rectification’ link
3.Choose the options of ‘Order/Intimation to be rectified’ and ‘Assessment Year’ from the dropdown list. Click ‘Continue’
4.Select any one of the following relevant options of ‘Request Type’ from drop down list.
How to reply to intimation u/s 154?
There will be two responses and you can tick on either one i.e. ‘Rectification Proposal Agreed’ or ‘Rectification Proposal Not Agreed’. You need to specify the reason for not agreeing to the rectification proposal by the Income Tax Department.
How to check rectification status?
You will get an Order u/s 154 once the Rectification is processed. To view the status of your e-Filed Rectification, LOGIN and GO TO ‘My Account’ → ‘Rectification status’.