Section 154 of the Income Tax Act, 1961, allows the Assessing Officer (AO), Commissioner (Appeals), or other tax authorities to correct apparent mistakes in their orders, including:
- Arithmetical errors(e.g., incorrect tax calculations).
- Factual oversights(e.g., missed deductions).
- Legal mistakes(e.g., misapplication of tax provisions).
1. Key Features of Section 154
(A) Who Can File a Rectification?
- Taxpayer: Can apply for corrections within 4 yearsfrom the end of the financial year (FY) in which the order was passed.
- Tax Authority: Can initiate suo motu (on its own) rectification.
(B) Types of Mistakes Covered
- Patent errors(obvious mistakes visible on record).
- Non-discretionary corrections(e.g., missed TDS credit).
- Errors in intimation orders (Section 143(1)).
(C) Exclusions
- Debatable issues(e.g., interpretation of tax laws).
- New claims(must be filed via revised return under Section 139(5)).
2. Procedure for Rectification
- Application:
- Taxpayer submits a request via the e-filing portalor in writing.
- Must specify the mistake and supporting evidence.
- AO’s Decision:
- Must pass an order within 6 monthsof receiving the application.
- If rejected, a reasoned ordermust be issued.
- Appeal:
- Can challenge rejections before CIT(A)within 30 days.
3. Time Limits
| SCENARIO | TIME LIMIT |
| Taxpayer’s application | 4 years from FY end of the original order |
| AO’s suo motu action | No strict limit, but must be reasonable |
| Order issuance | 6 months from application date |
