Section 154 of the Income Tax Act: Rectification of Mistake Simplified

Section 154 of the Income Tax Act: Rectification of Mistake Simplified

Ever received an income tax intimation that had a calculation error? Or maybe your TDS wasn’t considered correctly? You don’t always need to panic or go into appeal. There’s a simple solution: Section 154 of the Income Tax Act.

This provision is a taxpayer-friendly tool that allows rectification of mistakes made in orders passed by the Income Tax Department. In other words, if there’s a clear error in your assessment or processing, it can be fixed without any long-drawn legal battle.

Let’s understand everything you need to know about rectification under Section 154 of the Income Tax Act, 1961.

What Is Section 154 of the Income Tax Act?

Section 154 provides for rectification of any mistake apparent from the record. This includes factual or clerical errors in an order passed under the Income Tax Act by the Assessing Officer (AO), the CPC (Centralised Processing Centre), or any other income tax authority. "

Common examples include:

• Incorrect calculation of tax
• Ignored deductions (like 80C, 80D)
• Omitted TDS credits
• Duplicate income entries
• Mistakes in MAT/AMT calculation
• Mismatch in advance tax paid vs considered

In simple terms, rectification under Section 154 of the Income Tax Act is the correction of a clear, visible mistake.

Who Can File a Rectification Under Section 154?

• The taxpayer (assessee)
• The Assessing Officer (suo moto)

Yes, that’s right. Even the department can rectify its error. But most importantly, you can file a rectification under Section 154 if there is a mistake in:

• Intimation under Section 143(1)
• Any assessment, reassessment, or order under the Income Tax Act
• TDS/TCS processing

How to File an Application Under Section 154 of the Income Tax Act

Here’s how you can file for rectification:

1. Log in to the Income Tax Portal
2. Go to ‘e-File’ > Rectification > ‘New Request’
3. Select the relevant assessment year
4. Choose the type of request (e.g., TDS mismatch, income mismatch, etc.)
5. Upload supporting documents (Form 26AS, proof of deduction, computation sheet, etc.)
6. Submit your request and note the acknowledgement number

The process is entirely online, making it convenient for taxpayers across India.

Time Limit Under Section 154 of the Income Tax Act

You can file a rectification application within 4 years from the end of the financial year in which the order sought to be rectified was passed.

For example, if the intimation under Section 143(1) was issued on 15th May 2021, then the rectification can be filed till 31st March 2026.

However, it’s advisable to act quickly to avoid delays and to maintain records. "

How the Department Responds

After receiving your application:

• The AO or CPC will review the rectification request
• If found valid, they will issue a rectified order
• You will be notified via email and SMS
• If rejected, the reason will be provided

You may also track the rectification status online via the portal.

Important Case Laws on Section 154 of the Income Tax Act

Judicial rulings have emphasised that only obvious errors, not those that require long investigation or debate, can be rectified under this section. Some landmark case laws on Section 154 include:

• T.S. Balaram v. Volkart Bros (SC): No rectification for debatable issues.
• CIT v. Hero Cycles: Clerical or computational errors can be rectified easily.

These judgments have helped clarify the scope of rectification under Section 154.

What If My Rectification Request Is Rejected?

If your request is rejected and you believe the error is genuine:

• You can file an appeal with the CIT(Appeals) within 30 days
• Or file another rectification with better documentation
• Or submit a grievance via the e-Nivaran portal

Final Thoughts

In the world of income tax, errors—both human and system-based—are inevitable. Thankfully, Section 154 of the Income Tax Act provides a cost-free and time-efficient mechanism to fix these mistakes.

Let’s recap:

• Rectification of mistakes is allowed by the Income Tax Department
• You can file a rectification under Section 154 of the Income Tax Act online
• The time limit under Section 154 is 4 years from the end of the financial year
• You can correct errors in tax calculation, TDS credits, or deduction mismatches
• Both the taxpayer and the tax officer can initiate the rectification

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