Rectification of Income Tax Return u/s 154

Grounds necessary for requesting rectification to the Income Tax Department

As mentioned above, only on some specific grounds rectification is requested. These grounds are normally termed as “mistake apparent from records”. If we interpret the phrase in a layman language we can develop an understanding that those mistakes can be rectified which are traceable from documentary records. These records are normally the supporting based on which we filed our ITR such as form 16, form 26AS, income statements, deduction proofs, notifications or pronouncements made by IT department etc. Till date law has not prescribed any list. But professionals could conclude some pointers such as:

• Any provision of law becomes effective from retrospective date
• Mathematical and clerical mistakes
• Decision of jurisdictional high court not followed while considering this particular case
• Wrong application of any provisions of the Income Tax Act (by any means i.e. overlooking any provision, misinterpretation etc)
• Not giving the credit of TDS / Taxes as per Form 26AS
• Any factual errors

Orders which can be rectified u/s 154

The key lies in the fact that rectification cannot be made freely for any mistake. Also, there is a specified process through which rectification can be resorted to. The following orders can be rectified on request or on the discretion of income tax officer as per section 154

• a) Any order passed under any provisions of the Income-tax Act
• b) Any intimation or deemed intimation under section 143(1)
• c) Any intimation sent under section 200A(1) in relation to processing of TDS return
• d) Any intimation under section 206CB(1) in relation to processing of TCS return

“Return processed at CPC can only be Rectified. Even if it is a belated return.”

Rectification of an order which was subjected to appeal or revision

Rectification u/s 154 can be done for any matter which is not considered and decided in appeal/ revision. Further, any matter which has already been considered and decided in any proceedings by way of appeal or revision, the rectification of such matter is not possible under section 154.

Example : Suppose, the A.O.(Assessing officer) has made the following adjustments to the returned income of PQR Ltd.

i) Certain expenses of Rs. 1,00,000 were disallowed
ii) Addition u/s 43B made for Rs 1,25,000 as proof of payment was not furnished

Now, following are the current position of assessee i.e. PQR Ltd.

• The assessee has already filed an appeal against the first matter of disallowing Rs 1,00,000 expenditure and the appeal is decided against the assessee.

On submitting the rectification application the Assessing Officer rejected the same, giving reasoning that this particular case has already been decided by appellate authority hence, no rectification request can be admitted in such a scenario.

The process of making the online rectification request under section 154 to IT Department

The power to seek rectification is mutual. Which means, it can also be exercised by an IT officer if he finds the necessity of corrections in his decision made. You can easily raise an online request for rectification by following the simple series of steps as mentioned below :

• A. Login to www.incometaxindiaefiling.gov.in

  

• B. From the drop down “Efile” select “Rectification”

  

• C. Mention the credentials asked like

  Order or intimation to be rectified - Select between Income Tax or Wealth Tax from the drop down menu

  1. Assessment Year

  

• D. Select the rectification request type

  There are four types of request from which you can choose

  1. Tax Credit mismatch correction only

     By selecting this option you can make multiple corrections (Maximum of 10 sub categories at a time) in Income Tax amount, TDS (Tax Deduction at source) amount and TCS (Tax Collection at source) amount you specified in Income Tax Return.

     

  2. Return data Correction (XML)

     Choose reasons(max. 4 can be selected and schedules for which you are requesting rectification.You need to upload xml for the changes desired.

     

  3. Only Reprocess the return

     Through choosing this option you can request to reconsider the areas of Tax credit mismatch or 26AS details. No xml to be uploaded in this case.

     

  4. Additional Information for 234C

     Need to fill here the details as asked in the columns

     

• E. Click on submit below the screen. Next select OK on pop up asking for confirmation that your TDS entries are in sync with 26AS

• F. A reference number is generated followed by successful submission of request.

  

Generation of reference number ensures successful submission of your rectification request with the IT Authorities. Order under section 154 will be received by you after the request is processed successfully.

In nutshell, the Rectification of income tax return gives you and the income tax officer the same right to make corrections in return. You cannot seek corrections after 4 years from the end of the financial year (from passing of order sought to be rectified).

Pre-Requisites to file online Rectification Request U/s 154

For filing a valid Rectification Request u/s 154 following pointers should be adhered to

• The Income Tax Return corresponding to the relevant Assessment Year should have been processed.
• Income Tax Department must have issued either intimation u/s 143(1)/154.
• In case, Intimation u/s 143(1)/154 is not available with you, then you can apply for new service request for intimation on efiling website.
• In case you have mistakenly submitted/uploaded wrong documents, you can withdraw your rectification request within end of the day of request . And, submit a new rectification request.
• Submission of Rectification can be done also in cases where rectification rights transferred to AO
• Only online rectification can be filed in the case of electronic returns.
• You can file a rectification request only if previous rectification request is processed (if any)
• You need not upload XML file in case you are correcting Tax Credits.
• You should be a registered user on an efiling portal to file rectification request.
• In case the refund has been adjusted against the demand of other Assessment Years. In such a case, if problems are related to the other assessment year then, rectification requests should be filed for the other assessment years i.e., demand year and not for the current year.
  
  Example : For F.Y.2021-22, in which refund amounting Rs.45,000/- was arising. However, there was a demand pending for F.Y. 2017-18 amounting to Rs. 15,000 due to TDS not reflecting in 26AS but now Form 26AS is updated.
  
  While return for F.Y. 2021-22 was processed, CPC adjusted demand of Rs. 15,000 for F.Y. 2017-18 with refund of F.Y. 2018-19 and net amount of refund issued Rs. 30,000/- Now in this case, a rectification request should be filed for F.Y. 2014-15.