Article discusses about Order which can be rectified under section 154 of Income Tax Act, 1961, Rectification of Income Tax order which is subject to appeal or revision, Initiation of rectification by whom, Time-limit for rectification, The procedure to be followed for making an application for rectification, etc.
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. The provisions relating to rectification of mistake under section 154 are discussed in this part.
Order which can be rectified under section 154
With a view to rectifying any mistake apparent from the record, an income-tax authority may, –
a) Amend any order passed under any provisions of the Income-tax Act.
b) Amend any intimation or deemed intimation sent under section 143(1).
c) Amend any intimation sent under section 200A(1) [section 200A deals with processing of statements of tax deducted at source i.e. TDS return].
d) 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.