Introduction
Sometimes there may be a mistake in
any order passed by the Assessing Officer. In such a situation, mistake which
is apparent from the record can be rectified under section 154. This article
discusses provisions relating to rectification of mistake under section
154 of Income Tax Act, 1961.
Order which can be rectified under
section 154
With a view to rectifying any
mistake apparent from the record, an income-tax authority may, –
1. Amend any order passed under any
provisions of the Income-tax Act.
2. Amend any intimation or deemed
intimation sent under section 143(1).
3. Amend any intimation sent under
section 200A(1)(*) [section 200A deals with processing of statements of tax
deducted at source i.e. TDS return].
4. amend any intimation under section
206CB*.
(*) Under section 200A, a TDS
statement is processed after making correction of any arithmetical error in the
statement or after correcting an incorrect claim, apparent from any information
in the statement
Similarly a new section 206CB is
inserted by Finance Act, 2015 to provide for the processing of TCS statement.
If due to rectification of mistake,
the tax liability of the taxpayer is enhanced or refund is reduced, the
taxpayer shall be given an opportunity of being heard.
Rectification of order which is
subject to appeal or revision
If an order is the subject-matter of
any appeal or revision, any matter which is decided in such an appeal or
revision cannot be rectified by the Assessing Officer. In other words, if an
order is subject matter of any appeal, then the Assessing Officer can rectify
only those matters which are not decided in such appeal.
Initiation of rectification by whom
The income-tax authority can rectify
the mistake on its own motion.
The taxpayer can intimate the
mistake to the income-tax authority by making an application to rectify the
mistake.
If the order is passed by the
Commissioner (Appeals), then the Commissioner (Appeals) can rectify mistake
which has been brought to notice by the Assessing Officer or by the taxpayer.
Time-limit for rectification
No order of rectification can be
passed after the expiry of 4 years from the end of the financial year in which
order sought to be rectified was passed. The period of 4 years is from the date
of order sought to be rectified and not 4 years from original order. Hence, if
an order is revised, set aside, etc., then the period of 4 years will be
counted from the date of such fresh order and not from the date of original
order.
In case an application for
rectification is made by the taxpayer, the authority shall amend the order or
refuse to allow the claim within 6 months from the end of the month in which
the application is received by the authority.
The procedure to be followed for
making an application of rectification
Before making any rectification
application the taxpayer should keep following points in mind.
- The taxpayer should carefully study the order against
which he wants to file the application for rectification.
- Many times the taxpayer may feel that there is any
mistake in the order passed by the Income-tax Department but actually the
taxpayer’s calculations could be incorrect and the CPC might have
corrected these mistakes, e.g., the taxpayer may have computed incorrect
interest in return of income and in the intimation the interest might have
been computed correctly.
- Hence, to avoid application of rectification in above
discussed cases the taxpayer should study the order and should confirm the
existence of mistake in the intimation, if any.
- If he observes any mistake in the order then only he
should proceed for making an application for rectification under section
154.
- Further, he should confirm that the mistake is one
which is apparent from the records and it is not a mistake which requires
debate, elaboration, investigation, The taxpayer can file an online
application for rectification of mistake.
- For rectification of intimation under Section
200A(1)/206CB online correction statement is to be filed;
- An amendment or rectification which has the effect of
enhancing the assessment or reducing a refund or otherwise increasing the
liability of the taxpayer (or deductor) shall not be made unless the
authority concerned has given notice to the taxpayer or the deductor of
its intention to do so and allowed the taxpayer (or the deductor) a
reasonable opportunity of being heard.
Extract of Section 154 of Income Tax
Act, 1961
Section – 154, Income-tax Act,
1961-2015
Rectification of mistake.
154. (1) With a view to rectifying any
mistake apparent from the record an income-tax authority referred to in section
116 may,—
(a) amend any order passed by it
under the provisions of this Act ;
(b) amend any intimation or deemed
intimation under sub-section (1) of section 143;
(c) amend any intimation under
sub-section (1) of section 200A;
[(d) amend any intimation under
sub-section (1) of section 206CB.]
(1A) Where any matter has been
considered and decided in any proceeding by way of appeal or revision relating
to an order referred to in sub-section (1), the authority passing such order
may, notwithstanding anything contained in any law for the time being in force,
amend the order under that sub-section in relation to any matter other than the
matter which has been so considered and decided.
(2) Subject to the other provisions
of this section, the authority concerned—
(a) may make an amendment
under sub-section (1) of its own motion, and
(b) shall make such amendment for
rectifying any such mistake which has been brought to its notice by the
assessee or by the deductor or by the collector, and where the authority
concerned is the Commissioner (Appeals), by the Assessing Officer also.
(3) 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 or the collector, shall not
be made under this section unless the authority concerned has given notice to
the assessee or the deductor or the collector of its intention so to do
and has allowed the assessee or the deductor or the collector a reasonable
opportunity of being heard.
(4) Where an amendment is made under
this section, an order shall be passed in writing by the income-tax authority
concerned.
(5) Where any such amendment has the
effect of reducing the assessment or otherwise reducing the liability of the
assessee or the deductor or the collector, the Assessing Officer shall
make any refund which may be due to such assessee or the deductor or the
collector.
(6) Where any such amendment has the
effect of enhancing the assessment or reducing a refund already made or
otherwise increasing the liability of the assessee or the deductor or the
collector, the Assessing Officer shall serve on the assessee or the
deductor or the collector, as the case may be a notice of demand in the
prescribed form specifying the sum payable, and such notice of demand shall be
deemed to be issued under section 156 and the provisions of this Act shall
apply accordingly.
(7) Save as otherwise provided in
section 155 or sub-section (4) of section 186 no amendment under this section
shall be made after the expiry of four years from the end of the financial year
in which the order sought to be amended was passed.
(8) Without prejudice to the
provisions of sub-section (7), where an application for amendment under this
section is made by the assessee or by the deductor or by the collector on
or after the 1st day of June, 2001 to an income-tax authority referred to in sub-section
(1), the authority shall pass an order, within a period of six months from the
end of the month in which the application is received by it,—
(a) making the amendment; or
(b) refusing to allow the
claim.
Source- Income Tax Act, Rules and
http://www.incometaxindia.gov.in/
