Rectification of Mistakes in any Order passed by the Accessing Officer (Section 154)

1. Rectification only when mistake apparent from the record and by the authority who passed the order [Section 154(1)]:

2. When can Rectification be made [Section 154(2)]:

3. Rectification can be done for any matter other than the matter considered and decided in Appeal / Revision [Section 154(1A)]:

4. Opportunity of being heard is necessary if Rectification results into Enhancement, etc. [Section 154(3)]:

5. Order of Rectification [Section 154(4)]:

6. Refund to be given in case Rectification results into Reduction of Assessment [Section 154(5)]:

7. Notice of Demand to be issued in case Rectification results in to Enhancing the Assessment, etc. [Section 154(6)]:

8. Time limit for Rectification [Section 154(7)]:

9. Time Limit for Passing an Order of Rectification if Application for Amendment made by the Assessee under Section 154 [Section 154(8)]:

10. Rectification of Order which is subject to Appeal or Revision

11. Initiation of Rectification by whom

12. The Procedure to be followed for making an Application of Rectification

13. MCQ on Rectification of Mistake under Section 154

(A) Rectification only when mistake apparent from the record and by the authority who passed the order [Section 154(1)]:

It may be possible that an Income-tax authority may commit a mistake while passing the order of assessment, appeal, revision, etc. With a view to rectifying any mistake, apparent from the record, the income-tax authority is empowered as under:

1. The Assessing Officer is empowered to rectify any order of assessment or of refund or any other order passed by him.

2. The Assessing Officer/designated income tax authority is empowered to amend any intimation or deemed intimation under section 143(1).

3. The Assessing Officer/designated income tax authority may amend any intimation

   1. under section 200A(1) relating to processing of statement of tax deducted at source, or

   2. under section 206CB(1) relating to processing of TCS statement [Inserted by the Finance Act, 2015 w.e.f. 1.6.2015]

4. The Commissioner is empowered to rectify any order passed by him in revision under section 263 or 264.

5. The Commissioner (Appeals) may rectify any order passed by him under section 250.

6. Other Income-tax Authorities mentioned under section 116 may also amend any order passed by it.

(B) When can Rectification be made [Section 154(2)]:

The Income-tax authorities may make the rectification:

1. on its own motion; or

2. on application made by the assessee or the deductor or by the collector bringing the mistake to the notice of the authority concerned.

Where the authority concerned is Commissioner (Appeals), besides the above, such mistake can be brought to his notice by the Assessing Officer also.

The Appellate Tribunal can rectify its order under section 254(2) but not under section 154 as it is not an income-tax authority.

(C) Rectification can be done for any matter other than the matter considered and decided in Appeal / Revision [Section 154(1A)]:

Where any matter had been considered and decided in any proceeding by way of appeal or revision, rectification of such matter cannot be done by Assessing Officer under section 154. However, the matter which has not been considered and decided in the appeal/revision can be rectified under section 154.

Assessing Officer could not pass order suo motu under section 154 levying interest under sections 234B and 234C when superior authority had already passed an order against levy of interest.

(D) Opportunity of being heard is necessary if Rectification results into Enhancement, etc. [Section 154(3)]:

If such rectification order 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 the authority concerned must give a notice to the assessee or the deductor or the collector of its intention to do so and an opportunity of being heard must be given to the assessee of the deductor or the collector.

(E) Order of Rectification [Section 154(4)]:

Where any rectification is made under this section, an order of rectification shall be passed in writing by the income-tax authority concerned. Refusal to make rectification shall also require an order under this section.

(F) Refund to be given in case Rectification results into Reduction of Assessment [Section 154(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.

(G) Notice of Demand to be issued in case Rectification results in to Enhancing the Assessment, etc. [Section 154(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 the Income-tax Act shall apply accordingly.

(H) Time limit for Rectification [Section 154(7)]:

Rectification of an order under this section can be made only within four years from the end of the financial year in which the order sought to be amended was passed. However, this time limitation shall not apply to cases where amendment is made under section 155.

(I) Time Limit for Passing an Order of Rectification if Application for Amendment made by the Assessee under Section 154 [Section 154(8)]:

Without prejudice to the provisions of section 154(7), where an application for amendment under this section is made by the assessee or the deductor or the collector to an income-tax authority referred to in section 154(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—

1. making the amendment; or

2. refusing to allow the claim.

(J) 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.

(K) 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.

(L) 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, etc. The taxpayer can file an online application for rectification of mistake. Before making an online application for rectification the taxpayer should refer to the rectification procedure prescribed at https://incometaxindiaefiling.gov.in/
  

• For rectification of intimation under Section 200A(1)/206CB online correction statement is to be filed; the procedure thereof is given at http://contents.tdscpc.gov.in/en/filing-correction-etutorial.html
  

• 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.

(M) MCQ on Rectification of Mistake under Section 154

Q1. Any mistake which is apparent from the record in any order passed by the Assessing Officer can be rectified under section _______________________________ .
(a) 143           (b) 147
(c) 154           (d) 156

Correct answer: (c)

Justification of correct answer :
Any mistake which is apparent from the record in an order passed by the Assessing Officer can be rectified under section 154.

Thus, option (c) is the correct option.

Q2. Any mistake apparent from the record in any intimation passed under section 200A(1) can be rectified by the Income Tax Authorities under section 154.
(a) True                                              (b) False

Correct answer : (a)

Justification of correct answer :

As per section 154, any mistake apparent from the record can be rectified by the Income Tax Authorities in following cases:

1. Any order passed under any provisions of the Income-tax Act.
2. Any intimation or deemed intimation sent under section 143(1).
3. Any intimation passed 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.

Thus, the statement given in the question is true and hence, option (a) is the correct option.

Q3. If an order is the subject-matter of any appeal or revision, then any matter which is decided in such an appeal or revision cannot be rectified.
(a) True         (b)False

Correct answer : (a)

Justification of correct answer :

If an order is the subject-matter of any appeal or revision, then any matter which is decided in such an appeal or revision cannot be rectified. In other words, if an order is subject matter of any appeal, then the Assessing Officer can rectify the matter which is not decided in by the appellate authority.

Thus, the statement given in the question is true and hence, option (a) is the correct option.

Q4. The income-tax authority cannot rectify the mistake on his own.
(a) True        (b) False

Correct answer : (b)

Justification of correct answer :

The income-tax authority can rectify the mistake on his own.The taxpayer can also 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.

Thus, the statement given in the question is false and hence, option (b) is the correct option.

Q5. No order of rectification can be passed after the expiry of ________________  from the
end of the financial year in which order sought to be rectified was passed.
(a) 2       (b) 3
(c) 4       (d) 5

Correct answer : (c)

Justification of correct answer :

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 the date of 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 original order.

Thus, option (c) is the correct option.

Q6. In case of an application made by the taxpayer, the authority shall amend the
order/refuse the amendment within ___________  from the end of the month in which the
application is received by the authority.
(a) 4 years            (b) 2 years
(c) 1 year              (d) 6 months

Correct answer : (d)

Justification of correct answer :

In case of an application made by the taxpayer, the authority shall amend the order/refuse to do so within 6 months from the end of the month in which the application is received by the authority.

Thus option (d) is the correct option.

Q7. The taxpayer cannot file an online application for rectification of mistake under section 154.
(a) True     (b) False

Correct answer : (b)

Justification of correct answer :

The taxpayer can file an online application for rectification of mistake.Before making an
online application for rectification the taxpayer should refer to the rectification procedure
prescribed at https://incometaxmdiaefilmg.gov.in Thus, the statement given in the question is false and hence, option (b) is the correct option.

Q8. 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 be made after giving the taxpayer (or the deductor) a reasonable opportunity of being heard.

(a) True     (b) False

Correct answer : (a)

Justification of correct answer :