Amended and updated notes on section 154 of Income Tax Act 1961 as amended by the Finance Act 2022 and Income-tax Rules, 1962. Detail discussion on provisions and rules related to rectification of mistake.
Chapter XIV (Sections 139 to 158) of the Income Tax Act 1961 deals with the provisions related to procedure for assessment. Section 154 of IT Act 1961 provides for rectification of mistake.
Recently, we have discussed in detail section 153D (Prior approval necessary for assessment in cases of search or requisition) of IT Act 1961. Today, we learn the provisions of section 154 of Income-tax Act 1961. The amended provision of section 154 is effective for financial year 2022-23 relevant to the assessment year 2023-24.
In this article, you will learn detail of the provisions of section 154 of the Income Tax Act, 1961 Bare Act read with the Income-tax Rules, 1962 as provided by Ministry of Law and Justice, Government of India.
Section-154: Rectification of Mistake
Section 154(1) of Income Tax Act
With a view to rectifying any mistake apparent from the record an income- tax authority referred to in section 116 may,—
- (a) amend any order passed by it under the provisions of this Act;
- (b) amend any intimation or deemed intimation under sub-section (1) of section 143;
- (c) amend any intimation under sub-section (1) of section 200A;
- (d) amend any intimation under sub-section (1) of section 206CB.
Section 154(1A) of Income Tax Act
Where any matter has been considered and decided in any proceeding 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 any law for the time being in force, amend the order under that sub-section in relation to any matter other than the matter which has been so considered and decided.
Section 154(2) of Income Tax Act
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 brought to its notice by the assessee or by the deductor or by the collector, and where the authority concerned is the Commissioner (Appeals), by the Assessing Officer also.
Section 154(3) of Income Tax Act
An amendment, which 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, shall not be made under this section unless the authority concerned has given notice to the assessee or the deductor or the collector of its intention so to do and has allowed the assessee or the deductor or the collector a reasonable opportunity of being heard.
Section 154(4) of Income Tax Act
Where an amendment is made under this section, an order shall be passed in writing by the income-tax authority concerned.
Section 154(5) of Income Tax Act
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.
Section 154(6) of Income Tax Act
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 this Act shall apply accordingly.
Section 154(7) of Income Tax Act
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 the financial year in which the order sought to be amended was passed.
Section 154(8) of Income Tax Act
Without prejudice to the provisions of sub-section (7), where an application for amendment under this section is made by the assessee or by the deductor or by the collector on or after the 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 the month in which the application is received by it,—
- (a) making the amendment; or
- (b) refusing to allow the claim.