Rectification of Mistake - Section 154 - Income Tax - Ready Reckoner - Income Tax

Rectification of Mistake - Section 154 Which order can be rectify Section 154(1) With a view to rectify any mistake apparent from record, an income-tax Authority referred u/s 116 may:- Amend any order passed by it. Amend any intimation or deemed intimation u/s 143(1) , Amend any intimation passed u/s 200A(1) , TDS intimation and section 206CB relating to processing of statement of TCS, The Commissioner is empowered to rectify any order passed by him in revision u/s 263 or 264 , The Commissioner (Appeals) may rectify any order passed by him u/s 250 . Notes:- (i) As per section 154 a Mistake apparent from Record can be rectified, Mistake apparent from Record means a mistake about which no two views are possible and about which there could be no arguments. (ii) When a mistake itself has to be determined on investigation of facts , it cannot be said that there is a mistake apparent from record and consequently rectification u/s 154 is not possible. (iii) The following Mistake which can be rectified:- The mistakes which can be rectified under this section are:- An error of law; or Fact; or A clerical; or Arithmetical mistake; or Error in determining written down value; or Overlooking the obligatory provisions of the Legislature; and Mistake arising as a result of subsequent retrospective amendment of Law- Southern Industrial Corporation Ltd. Versus Commissioner of Income- [2002 (8) TMI 84 - MADRAS High Court ] . Section 154(1A):- Rectification can be done for any matter other than the matter considered and decided in appeal/ revision :- 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 u/s 154. However, the matter which has not been considered and decided in the appeal/revision can be rectified under section 154. [Investment Opportunities Fund vs ACIT (2019)TMI 736 - BOMBAY HIGH COURT] Section 154(2):- Who can point out the mistake to be rectified An income-tax authority can rectify the mistake apparent from records on its own. An income-tax authority can rectify any mistake apparent from record if it has been brought to his notice by the assessee or deductor or collector. If there is mistake apparent from record in an order passed by the Commissioner (Appeals), the Joint Commissioner (Appeals)[Amended by FA, 2023 ] or the Commissioner (Appeals) can rectify the mistake if it has been brought to his notice by the assessee or deductor or collector or the Assessing Officer. Important case laws Successor Commissioner cannot refuse to entertain rectification application in respect of the order passed by his predecessor on the ground that, he being a succeeding Commissioner, cannot sit over the judgment of his predecessor and review his order under the guise of making rectification u/s 154 - Trustees Of Indore Cancer Foundation Charitable Trust Versus Union of India And Others - [ 2000 (10) TMI 40 - MADHYA PRADESH HC ]. Section 154(3):- Opportunity of being heard is necessary if rectification results into enhancement, etc :- 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 of the collector the authority concerned must give a notice to the assessee or the deductor of its intention to do so and an opportunity of being heard must be given to the assessee. Where action to be taken by the Assessing Officer Section 154(4):- Order passed in writting of rectification :- 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. Section 154(5):- Refund to be given in case rectification results into reduction of assessment :- Where any such amendment has the effect of reducing the assessment or otherwise reducing the liability of the assessee or the deductor of the collector, The Assessing Officer shall make any refund which may be due to such assessee or the deductor or the collector. Section 154(6):- Notice of demand to be issued in case rectification results in to enhancing the assessment, etc.:- 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, The Assessing officer shall seve on the assessee or the deductor or the collector a notice of demand in the prescribed form specifying the sum payable, and such notice of demand shall be deemed to be issued u/s 156 and the provision of the Income-Tax Act shall apply accordingly. Time Limit for rectification Suo Moto rectification [ Section 154(7) ] Other than provision mention the provided in section 155 or section 186(4), No amendment shall be made under this section after the expiry of four years from the end of the Financial Year in which the order sought to be amended was passed. Application made by the assessee/deductor/collector [ 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 to an Income-tax authority, the Income-tax 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. If order u/s 154 is not passed within 6 months as said above making the amendment or refusing to allow the claim, then the rectification application of the assessee shall be deemed to be allowed in favour of the assessee. Notes:- Rectification can be done only by the authority who has passed the order:- An authority under the Income-tax Act can rectify its own order. But where it gives effect to the order of the appellate authority, it is the appellate order, which is required to be implemented as a mandate from a higher appellate forum. [ Dhariwal Industries Ltd. v Deputy CIT (2009) 5 TMI (580) ITAT (Pune)] The power of rectification can be invoked with reference to the law prevailing at the time of the original order. The fact that subsequent decisions may lead to a different inference cannot justify rectification. [CIT v India Cements Ltd. (2001) (2) TMI 53 Madras High Court]