Last updated: March 30th, 2020 12:39 PM

Mistake in Income Tax Order

An income tax order is a communication forwarded to a taxpayer by an assessing officer, informing that a certain amount of tax is payable. At the time of passing an order, an assessing officer may commit a mistake. The present article deals with the procedure to be followed in case the officer commits a mistake in the income tax order.

Rectification Apparent from Record

An Assessment officer may commit a mistake while passing the order of assessment, appeal, revision, and so on. If those mistakes are apparent from the record, the assessing officer is entitled to do the following:

• The Assessing Officer is entitled to rectify any order of assessment, refund, or any order passed by him.
• The Assessing Officer or designated Income Tax authority is empowered to amend any notice, deemed or otherwise. Notices must be issued to the assessee before the initiation of assessment procedures.
• The Commissioner is empowered to amend any orders passed by him under Section 263. Section 263 of the Income Tax Act, 1961, confers the power upon the Commissioner to call for and examine the records of a proceeding under the Act and revise any orders if he considers it to be erroneous and prejudicial to interests of the revenue.
• The Commissioner (Appeals) may rectify any orders passed by him under Section 250. Section 250 deals with appeals and other similar issues, and the Commissioner plays a vital role in relation to such issues.
• The Income Tax authorities mentioned under Section 116, (Section 116 deals with the various Deputy Commissioners) are also entitled to amend any orders passed by them.

In general, the only authority who can rectify the order is the one who made it. Hence, under the law, there is no scope for cross-functioning. Further, orders subject to appeals/revision cannot be rectified by the authority, especially the particular provision under appeal, which is to say, any other aspects of the order can be revised, except the ones under appeal.

Requesting Rectification for Mistake in Income Tax Order

Income Tax authorities can make rectification on their own motion or on an application made by the assessee/deductor/collector bringing the mistake to the notice of the concerned authorities. If a mistake is committed by a Commissioner (Appeals), it can be brought to his notice by the Assessing Officer. The Appellate Tribunal can also rectify any of his mistakes, subject to the prescribed conditions.

Time Limit for Rectifying Mistake in Income Tax Order

No orders can be passed after the expiry of four years from which the order was sought to be passed. This is not to be confused with the date of the original order. Hence, if an order is revised, set aside etc, then the period would be four years from the order of the same.

Hearing

The assessee must be provided with an opportunity to be heard, especially on scenarios where the concerned person might be at risk. Risks could be in the form of 'enhancing an assessment, reducing a refund, or increase in liability'.

Revised Income Tax Order

Before taking up the task of rectification, the concerned authority must pass an order in writing. The authority is directed to do the same if he/she chooses to not rectify. Post rectification, if the assessee is required to make an additional tax payment, a notice of demand stating the same must be issued to the assessee/deductor/collector. Notice of demand is a notice which demands the assessee to make the required payments.