TaxTMI 
TaxTMI 
30 Sep 2026 
Rectification of orders to be passed by any income-tax authority on an application of assessee or application by Ld. AO - passing of order is mandatory. In case of no order, it can be deemed to have been allowed based on principals laid down by the honourable Supreme Court.
Sections are reproduced and relevant portion of provisions relevant for the subject matter of this article are reproduced with highlight below in columnar manner for ITA 2025 and ITA 1961.
| Observations | ||
| Rectification of mistake. | Rectification of mistake. |
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| 287. (1) An income-tax authority referred to in section 236, for rectifying any mistake apparent from the record, may amend any-
| 154. 1[(1) With a view to rectifying any mistake apparent from the record an income-tax authority referred to in section 116 may, -
| With necessary changes and read with other clauses it is on same lines, having same significance. Suo moto rectification is discretionary upon authority. |
| (a) order passed by it under the provisions of this Act;
(b) intimation or deemed intimation under section 270(1);
(c) intimation under section 399.
| (a) amend any order passed by it under the provisions of this Act ; (b) amend any intimation or deemed intimation under sub-section (1) of section 143; (c) amend any intimation under sub-section (1) of section 200A. (d) amend any intimation under sub-section (1) of section 206CB. | With necessary changes and read with other clauses it is on same lines, having same significance. Suo moto rectification is discretionary upon authority. |
| (2) Irrespective of anything contained in any law in force, the authority concerned may, amend any order or intimation under sub-section (1) in relation to any matter, other than the matter considered and decided in any proceeding by way of appeal or revision, relating to such order or intimation.
| (1A) Where any matter has been considered and decided in any proceeding by way of appeal or revision relating to an order referred to in sub-section (1), the authority passing such order may, notwithstanding anything contained in any law for the time being in force, amend the order under that sub-section in relation to any matter other than the matter which has been so considered and decided. | On same line. Amendment of any matter covered in the order, which has not been considered in appeal or revision can be amended by authority. It is discretionary . |
| (3) Subject to the other provisions of this section, the authority concerned,--
| (2) Subject to the other provisions of this section, the authority concerned-
| Similar |
| (a) may make an amendment under sub-section (1) of its own motion; and
| (a) may make an amendment under sub-section (1) of its own motion, and
| May make amendment at its own motion. |
| (b) shall make such amendment for rectifying any such mistake which has been brought to its notice by-
| (b) shall make such amendment for rectifying any such mistake which has been brought to its notice by | It is mandatory to pass order on application |
| (i) the assessee or the deductor or the collector; or
| the assessee or by the deductor or by the collector,
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| (ii) the Assessing Officer, if the authority concerned is the Joint Commissioner (Appeals) or the Commissioner (Appeals).
| and where the authority concerned is the Joint Commissioner (Appeals) or the Commissioner (Appeals)] by the Assessing Officer also. | In case of first appeal, Ld. AO and assessee both can make application. It is similar under both. |
| (4) No amendment that enhances an assessment, reduces a refund or otherwise increases the liability of the assessee or the deductor or the collector, shall be made under this section by the authority concerned without giving to such assessee or deductor or collector, as the case may be,--
| (3) 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 or the collector, shall not be made under this section unless the authority concerned has given | An amendment that affect adversely assessee, deductor, collector shall not be made unless requirement of: |
| (a) a notice of its intention of making such amendment; and (b) a reasonable opportunity of being heard.
| notice to the assessee or the deductor or the collector of its intention so to do and has allowed the assessee or the deductor or the collector a reasonable opportunity of being heard. | notice and reasonable opportunity of hearing are complied with |
| (5) The income-tax authority concerned shall pass an order in writing, if an amendment is made under this section. | (4) Where an amendment is made under this section, an order shall be passed in writing by the income-tax authority concerned.
| In case of amendment an order shall be passed in writing by the income-tax authority concerned.
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| (6) The Assessing Officer shall make refund which may be due to the assessee or the deductor or the collector, where an amendment reduces the assessment or otherwise reduces the liability of such assessee or the deductor or the collector.
| (5) Where any such amendment has the effect of reducing the assessment or otherwise reducing the liability of the assessee or the deductor or the collector, the Assessing Officer shall make any refund which may be due to such assessee or the deductor or the collector. | Ld. AO shall make refund, if any arises on rectification order / amendment made by it. |
| (7) The Assessing Officer shall serve on the assessee or the deductor or the collector, a notice of demand in such form as may be prescribed specifying the sum payable,-
| (6) Where any such amendment has the effect of enhancing the assessment or reducing a refund already made or otherwise increasing the liability of the assessee or the deductor or the collector, the Assessing Officer shall serve on the assessee or the deductor, or the collector as the case may be a notice of demand in the prescribed form specifying the sum payable, | In case due to amendment a demand arises, for any reason like enhancement ot assessment, reduced credit of taxes paid, interest, the ld. AO shall serve up on assessee a demand notice for such demand in prescribed form under respective enactments. |
| (a) where an amendment enhances the assessment or reduces a refund already made or otherwise increases the liability of such assessee or the deductor or the collector; and
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| (b) such notice shall be deemed to be issued under section 289 and the provisions of this Act shall apply accordingly. | and such notice of demand shall be deemed to be issued under section 156 and the provisions of this Act shall apply accordingly.
| Such notice shall be deemed ot be notice of demand issued under specific provision of two enactments relating to demands. |
| (8) No amendment under this section, except as provided in section 288, shall be made after four years from the end of the financial year in which the order or intimation sought to be amended was passed.
| (7) Save as otherwise provided in section 155 or sub-section (4) of section 186 no amendment under this section shall be made after the expiry of four years 10[from the end of the financial year in which the order sought to be amended was passed.] | Limitation is similar under existing normal and common provisions under both enactments. |
| (9) Subject to sub-section (8), an income-tax authority referred to in sub-section (1), shall pass an order for making the amendment or refusing to allow the claim within six months from the end of the month in which the application for amendment under this section is received by it from the assessee or the deductor or the collector.
| (8) Without prejudice to the provisions of sub-section (7), where an application for amendment under this section is made by the assessee or by the deductor or by the collector on or after the 1st day of June, 2001 to an income-tax authority referred to in sub-section (1), the authority shall pass an order, within a period of six months from the end of the month in which the application is received by it,- (a) making the amendment; or (b) refusing to allow the claim.]
| In case of amendment on application of assessee / deductor/ or collector before any authority,
and by Ld. AO in case of application for rectification of order in first appeal,
the concerned authority shall pass an order in writing : (a) making the amendment; or (b) refusing to allow the claim. And limitation is to pass such order within a period of six months from the end of the month in which the application is received by it |
On a bare reading of the highlighted provisions concerning application for rectification by assessee before any authority who passed order to be rectified or an application for rectification by the Ld. AO before first appellate authority it is mandatory to pass order in writing either allowing or rejecting the petition.
As per principals of natural justice, in case of intended rejection of application the authority should give a notice to applicant and allow a reasonable opportunity of hearing.
It is mandatory to pass order:
Significance of phrase "shall pass an order", is important. In view of learned author the concerned authority, before whom an application is made ( i,e, original authority who passed order to be rectified) is bound to pass an order in case of application made by assessee or the Ld. AO.as the case may be.
This view find support from a judgment of the Supreme Court as discussed hereafter.
No.- Civil Appeal No. 1478 of 2016 [@ Special Leave Petition (C) No. 9705 of 2009]
Dated:- February 16, 2016
Read with judgment of High Court reported as
Provision considered in above case - this we find vide para 4 of the judgment of High Court which reads as follows with highlights added:
4. Section 12AA(2) reads as follows:
12AA(2) Every order granting or refusing registration under Clause (b) of Sub-section (1) shall be passed before the expiry of six months from the end of the month in which the application was received under Clause (a) [or Clause (aa) of Sub-section (1)] of Section 12A.]
Un quote:
The above section is similar to S.154 regarding passing of order by any authority on an application. In S.154 also it is mandatory to pass order if an application is made by assessee or the AO before concerned authority.
The honourable Allahabad High Court after detailed discussion and consideration of several judgments of the Supreme Cout held that the application will be considered allowed, even if the CIT(E) failed to allow opportunity of hearing and pass an order on application filed by assesse trust.
Relevant paragraph are reproduced below:
"19. Considering the pros and cons of the two views, we are of the opinion that by far the better interpretation would be to hold that the effect of non-consideration of the application for registration within the time fixed by Section 12AA(2) would be a deemed grant of registration. We do not find any good reason to make the assessee suffer merely because the Income Tax Department is not able to keep its officers under check and control, so as to take timely decisions in such simple matters such as consideration of applications for registration even within the large six month period provided by Section 12AA(2) of the Act.
20. We accordingly direct the respondents, subject to any order which may be passed under Section 12AA(3), to treat the Petitioner Society as an Institution duly approved and registered under Section 12AA and to recompute its income by applying the provision of Section 11 of the Act. Accordingly, a formal certificate of approval will be issued forthwith to the petitioner by the respondent No. 2.
21. The writ petition is allowed to the above extent."
Un quote:
Therefore, application was considered as fully allowed, when it remained not considered within time prescribed.
Revenue preferred appeal before the Supreme Court, and the honourable judges heard the advocates of revenue. There was no representation of the assessee. The Supreme Court confirmed the order and judgment of Allahabad High Court. The judgment of the Supreme Court is reproduced below:
Kurian Joseph And Rohinton Fali Nariman, JJ.
JUDGMENT
Kurian, J.
1. Leave granted.
2. There is no appearance on behalf of the sole respondent despite service of notice and adjournment sought for on a couple of occasions earlier.
3. The short issue is with regard to the deemed registration of an application under Section 12AA of the Income Tax Act. The High Court has taken the view that once an application is made under the said provision and in case the same is not responded to within six months, it would be taken that the application is registered under the provision.
4. The learned Additional Solicitor General appearing for the appellants, has raised an apprehension that in the case of the respondent, since the date of application was of 24.02.2003, at the worst, the same would operate only after six months from the date of the application.
5. We see no basis for such an apprehension since that is the only logical sense in which the Judgment could be understood. Therefore, in order to disabuse any apprehension, we make it clear that the registration of the application under Section 12AA of the Income Tax Act in the case of the respondent shall take effect from 24.08.2003.
6. Subject to the above clarification and leaving all other questions of law open, the appeal is disposed of with no order as to costs."
Unquote:
As noted above, the case was represented by revenue and was heard. The Supreme Court has decided finally and approving order of High Court that if on an application CIT( E ) has not acted and has not passed any order, then the application is deemed allowed on the expiry of six month period from the end of month in which application for registration was made.
The Supreme Court has not left this question of law open.
Only all other question of law has been kept open.
Provision of S.12AA vis a vis provisions of S.154 - administrative action:
Both provisions require that concerned authority shall pass an order is writing by allowing or rejecting the application.
If no objection has been raised and no order of rejection has been served then the applicant can consider that his application is allowed.
This principal can be applicable under other laws also therefore, this is posted under other topics.