Section 154 of ITA, 1961 : Section 154: Rectification Of Mistake

Explanation using Example

Example Scenario:

Mr. Sharma received an intimation from the Income Tax Department under section 143(1) stating that there was a mismatch in the income reported and the TDS (Tax Deducted at Source) credited. On reviewing his tax return, Mr. Sharma realized that he had made a mistake in entering the TDS amount. He had accidentally entered a lower amount than what was actually deducted by his employer.

Mr. Sharma wrote to the Assessing Officer (AO) requesting a rectification of the mistake. The AO, upon verifying the records and the TDS certificate provided by Mr. Sharma, found that there was indeed a mistake apparent from the record. Utilizing the powers granted under Section 154 of the Income Tax Act, 1961, the AO issued an order rectifying the mistake and amending the intimation under section 143(1).

The amendment resulted in a reduction of the tax liability for Mr. Sharma, and he was eligible for a refund of the excess tax paid. The AO, following the procedure laid out in the Act, processed the refund due to Mr. Sharma.

It's important to note that Mr. Sharma's request for rectification was made within four years from the end of the financial year in which the original intimation was issued, complying with the time limit specified in Section 154(7).