Sometimes mistakes can occur in an order passed by AO (Assessing Officer). In such a situation, a mistake appearing in the record may be rectified under Section 154. Provisions for the rectification of mistakes under the provisions of Section 154 are discussed in this article.
Orders can be rectified according to Section 154 To rectify any mistake appearing in the record, the income tax authority may:
Amend any order issued under any provisions of the Income Tax Act, 1961.
Amend any notification/intimation or deemed notification/ intimation sent under Section 143(1) of the Income Tax Act, 1961.
Amend any notification sent under Section 200A (1) [Section 200A of the Income Tax Act deals with “Processing of statements of TDS (tax deducted at source)”].
Amend any notification under Section 206CB [Section 206CB of Income Tax Act deals with “Processing of statements of TCS (tax collected at source)”]. Note: According to Section 200A, a TDS report is processed after any calculation errors have been corrected and after any incorrect claim has been corrected.
Rectification of appeal or revision order If the order is the subject of an appeal or revision, the assessing officer will not be able to rectify any matters decided in such an appeal or revision. In other words, if the order is the subject of the appeal, the assessing officer can only rectify those matters that were not decided in the appeal.
Initiation of rectification by whom
The tax authority can rectify the mistake on its motion or Suo moto.
A taxpayer can inform the income tax authorities of a mistake by applying to rectify it. The taxpayer will be allowed to be heard. If, as a result of rectification of mistake, the taxpayer’s tax liability is increased or the refund is reduced]mistake.
If there is a condition where the commissioner (Appeals) passes the order, the commissioner can rectify the mistake reported by the assessing officer or the taxpayer.
Time-limit for rectification A rectification order cannot be passed after four years from the end of the financial year in which it was passed. This is because the four years are calculated from the date of the order seeking the rectification, not the four years of the original order. Therefore, if an order is revised, set aside, etc., the four years will be calculated from the date of the new order, not from the date of the original order.
Upon receiving a taxpayer’s rectification request, the authorities will amend the order or reject the claim within six months of receiving the application.
The procedure to be followed for making a rectification application Before making any rectification application, taxpayers must consider the following points:
The taxpayer should carefully study the order in which they wish to file a rectification application.
In many cases, the taxpayer may feel that the order passed by the income tax department is wrong for income tax return. Still, in reality, the taxpayer’s calculations may not be correct, and the Central Processing Centre (CPC) may have corrected these mistakes. For example, the taxpayer may have estimated the wrong interest in the return of income, but the interest may have been estimated correctly.
Therefore, to avoid applying the rectification in the above circumstances, the taxpayer must study the order and confirm a mistake in the intimation (if any).
If the taxpayer fined any mistake in the order, then the only taxpayer should proceed with making an application for rectification under Section 154.
In addition, the taxpayer should confirm that the mistake is evident from the records and not one that requires further discussion, explanation, investigation, etc. A taxpayer can rectify a mistake online by submitting an application.
The procedure for filing an online correction statement for rectification of intimation under Section 200A (1)/206CB.
An amendment or rectification that has the effect of increasing the assessment, reducing a refund, or otherwise increasing the taxpayer’s (or deductor’s) liability shall not be made unless the authority concerned has given the taxpayer or deductor notice of its intention to do so and provided the taxpayer (or deductor) with a reasonable opportunity to be heard.
At AJSH, we assist our clients in dealing with various income tax compliances, including income tax assessments, TDS returns, ITR filings, tax advisory and other related services, by providing them adequate support and guidance from our end. If you have any questions or wish to know more about rectification of mistake under Section 154, kindly contact us.
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