Ankit Gupta

Ankit GuptaHello readers, we all understand rectification just as correction in any order passed by Income tax authority concerned so let’s review every clause of section 154 in detail with relevant judgement and my significant findings to it.

Now you can first read the extract of Act in Bold Italic and its explanation thereafter below:

(1) With a view to rectify any mistake apparent from record an Income Tax Authority referred under section 116 may

(a) Amend any order passed by it

(b) Amend intimation or deemed intimation under section 143(1)

(c) Amend intimation under section 200A(1)

Income Tax Authority referred under section 116 (which does not include Tribunal) may amend any ORDER passed by it or Intimation under section 143(1) or 200A(1) if found any MISTAKE APPARENT FROM RECORD.

Note 1 – Order does not necessarily means original order, it include amended order and rectified order. [Hind Wire Industries Ltd. V CIT (1995) 212 ITR 639 SC]

Note 2 – Obvious mistake of law cannot be rectified under section 154, while mistake of fact apparent from record can be rectified. [Venkatachalam (M.K.) ITO V Bombay Dying & Mfg Co.Ltd 1958 34 ITR 143 SC, AIR 1958 SC 875, 1959 SCR 703]

Note 3 – Records must show that that there has been an error and that error may be rectified; Reference of documents outside the record and the law is impermissible when applying the provisions of section 154. [CIT V Keshri Metal Pvt Ltd. (1999) 237 ITR 165 SC]

Note 4 – Mistake means commission that is not designed and which is obvious and something which has no two opinions or which is debatable. [CIT V Lakshmi Prasad Lahkar (1996) 220 ITR 100 (GAU)]

(1A) Where the matter has been considered and decided in any proceedings 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 the law for the time being in force, amend the order under the sub section in relation to any matter other than the matter which has been so considered and decided.

Where an assessee has filed an appeal or revision again any order referred under sub section (1) then the authority to which appeal or revision has been made may rectify any mistake in the order appealed against even if it is out of the ambit of grounds of appeal or revision.

(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 bought to its notice by the assessee [or by deductor], and where the authority concerned is the Commissioner (Appeals), by the Assessing Officer also.

The Income tax Authority MAY pass rectification order suo moto.

SHALL pass rectification order if the mistake is bought into notice by Assessee.

CIT (APPEALS) SHALL pass rectification order if the order is passed by it and mistake is bought into notice by Assessing Officer.

(3) An amendment which has the effect of enhancing an assessment or reducing refund or otherwise increasing the liability of assessee ( or the deductor ) , shall not be made under this section unless the authority concerned has given notice to the assessee ( or the deductor) of its intention to do so and has allowed the assessee or the deductor a reasonable opportunity of being

No order shall be passed under this section without giving an opportunity of being heard which increases the assessment or reduce refund.

(4) Where an amendment is made under this section, an order shall be passed in writing by the Income Tax Authority concerned.

All order passed under this should be in writing only.

(5) Where any such amendment is made under this section, an order shall be passed in writing by the Income Tax Authority concerned.

(6) Where any such amendment has the effect of enhancing the assessment or reducing a refund, 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 act apply accordingly.

Where any amendment has the effect of increasing assessment or reducing refund then such shall be deemed as notice of demand under section 156. And shall be disposed off fully within 30 days otherwise the assessee would be deemed to be the assessee in default and become liable to pay interest under section 220 and penalty under section 221.

(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 financial year in which the order sought to be amended was passed).

It can better be understood with the help of small illustration :

If the order under section 143 (3) is passed on 10.01.2015

Then the order under under section 154 can be passed till 31.03.2019 only.

(8)Without prejudice to the provisions of sub section (7), where an application under this section is made by the assessee (or by the deductor) on or after 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 month in which the application is received by it,-

(a) Making the amendment or

(b) ‘refusing to all the claim

The order under this section shall be passed by the authority concerned within 6 months from the end of month in which the application is received by it.

AND

As per CIRCULAR NO. 14/2001 Dated- 9-11-2001 Issued by CBDT clarified that

Considering the absence of any specific time-limits regarding disposal of application for rectification under section 154, and with a view to ensure time-bound disposal of rectification applications, the Act has inserted a new sub-section (8) in section 154 to provide that where an application for amendment under this section is made by an assessee on or after 1st June, 2001 to an income-tax authority referred to in the said section, the authority shall pass an order within six months from the end of the month in which the application is received by it, either making the amendment or refusing to allow the claim. The overall time-limit of four years provided in the section for passing any rectification order shall however continue to apply. In other words, the period of six months mentioned in the new sub-section (8) cannot extend, under any circumstances, beyond the overall time-limit of four years from the end of the financial year in which the order sought to be rectified was passed.

These amendments will take effect from 1st June, 2001.

Means if 6 months lapse then also the authority concerned can pass order within four years from the end of financial year in which the order sought to be amended.

OTHER RELEVANT JUDGEMENTS:

1. When mistake apparent from record is bought to the notice of Assessing Officer, he is mandatorily bound to pass such order. [ Hirday Narain (L) V ITO (1970) 78 ITR 26 (SC)]

2. The power to rectify the error must extend to the elimination of error, may be the error may be such as to go to the root of order and its elimination may result in the whole order falling to the [Blue Star Engineering Co. (Bombay) Pvt. Ltd V CIT (1969) 73 ITR 283]

3. Subsequent interpretation of law by Supreme Court would constitute as Mistake Apparent from Record. [ Seshvatram (B V K) V CIT (1994) 210 ITR 633 AP

4. ITAT can make rectification subject to the provisions of Section 254(2)

“Now After Understanding This Section In Detail A Question Arise In My Mind … That What Are The Consequences If The Income Tax Authority Fails To Pass Order Within Four Years From The End Of Financial Year In Which The Order Sought To Be Amended Was Passed.

And You Will Be Shocked To Know That I Found No High Court Or Supreme Court Case And Judgment Thereon So It’s Still A Mystery That Whether Asses See Can Presumed That It Is Deemed To Be Passed In Favour Of Assessee Or Not.”

(Author can be reached at 9811985576, Ankitg2711@gmail.com)

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32 responses to “Rectification Under Section 154 of Income Tax Act,1961”

  1. venkat says:

    reg AY 2017-18. in the return under TDS under not salary I made an error in TAN. as it is invalid tan cpc issued tax amount due. I entered the correct TAN in rectification request. when can I expect re-processing ny cpc

  2. rajani sathyanarayana says:

    Dear Sir, I have filed my original return on time. This query is regarding the filing of revised return. My last date for filing revised return is over. should I wait for the assessing officer to process my return and later file a rectification return claiming a major mistake in entering the acquisition cost in the return which is affecting my computation of tax liability to a very large extent?

  3. Pooran mal natani says:

    After refusal of Sec.154, Whether Assesse can file request under Sec.154 again to reconsider the apparent mistake.

  4. mukesh says:

    I filed ITR-7 instead of ITR-5 of trust not registered under section 12AA and claim deduction u/s 11, intimation received u/s 143(1) and assessed tax without allowing any expenditure. Ref: AY 2015-16

    What to do. Can i rectified the same via 154, this is mistake apparent from the record.

    Please reply.

    Thanks

  5. Somnath Banerjee 9437562426 says:

    Intimation u/s 143 1 received with demand . Rectification request filled with communication ref no under intimation and same is pending at cpc.In the mean time ITO issued rectification order so moto u/s 154 reducing part of the demand with refence to same commu ref no. Now the communication ref no is nullified. Revised filled by us not only totally nullify the demand but some refund is also due to us. But after 154 order by ITO no demand is raised at portal at cpc yet (under pending action) only email is received.

    In this case kindly advise us whether rectification filled by us pending at cpc prior to 154 order will now be processed and amount will be refunded or a fresh rectification/revised is to be filled at cpc.

    Please advise.

  6. Vishul says:

    Whether Asses See Can Presumed That It Is Deemed To Be Passed In Favour Of Assessee Or Not.”
    Did you get any evidence for it

  7. VARUN says:

    I HAVE FILED A TDS RETURN BEFORE DUE DATE FOR Q4 AND NOW I FIND I FORGET TO INCLUDE A CHALLAN. ON 7 DEC I ADDED THE CHALLAN ONLINE AND NOW I RECD INTIMATION US154 FOR RS660. WHAT SHOULD I DO

  8. Alok kumar says:

    I got demand notice for order passed u/s 154 by AO without considering self assessment tax paid whic is clearly appearing in form 26AS for same AY. What course of action pls guide..

  9. Alok kumar says:

    Whether there is a specific format for application for rectification u/s154.

  10. Sri Hari says:

    if you received intimation U/s 143(1) you cannot revise the return but you can file rectification U/s 154 along with refund and interest amount (including Rs 10000) .

    If you not received Intimation U/s 143(1) then you can file the Revised Return (Same Procedure).

    For any query you can call Mr Sri Hari (8904440690)

  11. VAIBHAV BAJAJ says:

    HI Jagjit make a written application u/s 154 to your jurisdiction officer, along with a copy of 26 AS

  12. VAIBHAV BAJAJ says:

    hi kamlesh,

    I think query still persists..so as far as rectification is concerned.
    You have to file an online rectification after login to your account
    go to>e-file>rectification request>select assessment year>in options select TDS credit mismatch.

    then submit the application.

  13. gaurav says:

    I have filed an ITR for AY 2014-15. Now i have received a massage showing
    Rectification return for PAN CNI******AY 2014-15 and Ack No. ************* has been processed at CPC order u/s 154
    I would like to know the clear meaning of this massage. please guide me, about what should i do

  14. vijendra kumar tyagi says:

    Sir, I have filled ITR online for AY 2015-16 on 27.07.2015 I have got an intimation u/s 143(1)to deposit Rs. 5710.00 asITfor AY 2015-16 My department head CMO,Baghpat,U.P already deducted TDS Rs.3200.00 from my salaries march 2014 to june 2014.I taken my retirement in june 2014.Either this amount not deposited or defaulter to submit form 24 to ITO .Guilty is my department .I am not defaulter.A sum of Rs. 26290.00 to be refunded to me. Please guide me what should I do in this condition

    • Narender Kumar says:

      Seek online rectification. Before rectification check Tax Credit in 26AS. TDS must be same as mentioned in 26 AS. If tax in 26 AS is less, then ask your deductor to revise TDS return.

  15. JAGJIT SINGH AHUJA says:

    Till today I have not received Orders under Section 143(1)on my Return for the AY 2009-10. This return was filed by hand at Hyderabad . I am suppose to get refund of excess Tax paid . The return and the Assessment Order are not traceable .

    Where should I file my Rectification under Section 154 ? Which Section provides relief ?

  16. Kamlesh Sinha says:

    Sir,
    I filled online income tax return for the assessment year 2015-16 on 11/7/2015. I got an intimation under section 143(1) through which I could come to know that the TAN number was wrongly fed. As a result of which I was denied with the benefit of tax deducted at source. If I need to file the rectification request, what suould I do now

    1. What rectification request should I select
    2. How will I get the file in which the correction is required

    Please help me to overcome this problem
    Thanks in anticipation
    KKS

  17. ashish says:

    sir i filed a it return for assessment year 201-15 , after it due date and i got the full refund .. but i made a mistake in filling in claiming the amnt. i made a claim 5000 as returnable income but it is actually 15000, what should i do now as it seems it cannot be revised since i filed it after due date

    guide pls

  18. S. Purkait says:

    Sir, I wrongly entered the name and TAN of my old deductor in my itr for ay-2014-15. Later on I filed a revised return with right credentials. Both were e-filed within 31/03/2015. But the original return has been processed and I received an intimation letter claiming tax. May I rectify the return processed? Please reply.

  19. Dr T R Lakshminarayanan says:

    The CPC, Bangalore has made a demand of Rs 38380 for the AY2009-10 under section 154 even though I have paid the advance tax of Rs 30000 through IOB in time. It is the Bank’s fault that it has not correctly made the payment and is not able to alter the error in feeding the data of payment to CPC. Bank official has informed CPC that they are not able to make correction but CPC is not obliging. What should I do to rectify the mistake?

  20. Sujeet Kumar Jha says:

    sir my tds already deducated by the my debtors but not deposited and also not returne filed of tds. i filled the return but my account mismatch with a notification issued by the income tax department sir please tell me about what soluation.

  21. shish pal says:

    Dear sir
    Maine a.y. 2014-15 ki return offline bhari thi. Or refund ka chq (SBI bank) ka Mumbai se bheja gya tha Jo gum ho gya ab mujhe duplicate ya chq reissue krwana h to kya krna pdega
    Guide me

  22. sandeep says:

    sir i am working the road transport authority my tds already deducated by the road transport authority but not depoists . i filled the return but my account mismatch with a notification issued by the income tax department sir please tell me about what soulation . and transport authority not tds return filled . not depoists of my tds .

  23. B Sudhakar says:

    I have filled my tax returns for 2011-12 in online but i made mistake filling gross income instead of taxable income. Recently i received notice under 245 for due amount to be paid. And i upload my rectification request online but CPC saying the rectification cannot be done due to your authorization from the concern assessing officer of your jurisdiction. Please give advice..

  24. Megha says:

    For AY 2008-09, I have filed a rectification request u/s 154 on 17.08.2010. Till date I have received no response from the Income Tax Officer and thus my consequent assessment is pending fo AY 2013-14 & 14-15. I recently received u/s 245 for adjusting my refund with the previous demand.
    What should I do now?
    I would be glad if you could respond

  25. adv. kapil banginwar says:

    Hi.plz file rectification on latest order of cpc ref no by tab tds data correction online. U will definately get refund very soon..

  26. Govind Rathi says:

    Thanks Ankit….

    Gud…

  27. ANKIT GUPTA says:

    Dear Joginder

    You can claim whole 14840 if its shown in your 26AS and if the department does not allow that , then you should go to assessing officer’s chamber with your reminder application and every other document and enforce them to make correction.

  28. joginder sud says:

    In my income tax return for assessment year 2012, I have claimed TDS as per form 26As data. In one deductor case, amount of TDS is 14840 but CPC allowed only 7000 as matched and 7840 as not matched. According we filed rectification u/s 154 under the option ” assessee correcting data for TDS mismatch” but assessing officer again showed 7000 as matched and 7840 not matched.
    We wrote detailed letter to CPC and annexed copy of form 26As etc. CPC replied saying that I must file rectification on line. Again I filed rectification u/s 154 under the option ” No data correction required, reprocess the case” but again CPC allowed only 7000.

    What should I do now ? Why they are not giving credit as per form 26As, TDS certificate?
    Your expert guidance is requested.

  29. motichand gupta says:

    Thanks Ankit,
    it helped to understand Sec 154.

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