Rectification of Mistakes [Section 154] :
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 section 143(1);
(c) amend any intimation under section 200A(1);
(d) amend any intimation under section 206CB(1).
The jurisdiction of any authority under the Act to make an order under section 154 depends upon the existence of a mistake apparent on the face of the record. It may be a mistake of fact as well as mistake of law. For instance, the treatment of a non-agricultural income as agricultural income and granting exemption in respect of such income is an obvious mistake of law which could be rectified under section 154. However, a mere change of opinion cannot be the basis on which the same or the successor Assessing Officer can treat a case as one of rectification of mistake. A mistake is one apparent from the record in case, where it is a glaring, obvious, patent or self-evident. Mistake, which has to be discovered by a long drawn process of reasoning or examination or arguments on points, where there may be two opinions, cannot be said to be mistake or error apparent from the record. A mistake arising a s a result of subsequent interpretation of law by the Supreme Court would also constitute error apparent from the record. Retrospective amendment of law could also lead to rectification if an order is plainly and obviously inconsistent with the specific and clear provision, as amended retrospectively.
Where any matter has been considered and decided in any proceeding by way of appeal or revision relating to a rectifiable order the authority passing such order may, amend the order in relation to any matter other than the matter which has been so considered and decided.
The concerned authority may make an amendment of its own motion.
However, he should mandatorily make the amendment for rectifying any such mistake which has been brought to its notice by the assessee or the deductor. Where the authority concerned is the Deputy Commissioner (Appeals) or the Commissioner (appeals) the mistake can be printed out by the Assessing Officer also.
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, shall not be made unless the authority concerned has given notice to the assessee or the deductor of its intention so to do and has allowed the assessee or the deductor a reasonable opportunity of being heard.
Where an amendment is made under this section, an order shall be passed in writing by the authority concerned. Where any such amendment has the effect of reducing the assessment, or otherwise reducing the liability of the assessee or the deductor, the Assessing Officer shall make any refund due to such assessee or the deductor. Where any such amendment has the effect of enhancing the assessment or reducing the refund already made or otherwise reducing the liability of the assessee or the deductor, the Assessing Officer shall serve on the assessee or the deductor, as the case may be, a notice of demand in the prescribed form specifying the sum payable. Except in cases which are specifically covered by section 155 or section 186(4) dealing with cancellation or registration no amendment under this section shall be made after the expiry of four years from the date of the order sought to be amended.
It is further provided that where an application for amendment is made by the assessee or the deductor, the income-tax authority shall pass an order within six months from the end of the month in which the order is received, either making the amendment or refusing the claim.