Rectification delay should not bar merits-based review where exempt income was wrongly included in taxable income.

A rectification application under section 154 should not be rejected solely because it was filed belatedly where the alleged mistake requires consideration on merits. The Tribunal noted that the assessee had included exempt income in total income, resulting in a tax demand, and held that the delay should not prevent substantive examination of the rectification claim. It found that interests of justice required the first appellate authority to decide the matter afresh without being influenced by the filing date of the application. The delay was therefore condoned and the matter remanded for fresh adjudication on merits.

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Issues: Whether the assessee's rectification application under section 154 could be rejected merely because it was filed belatedly, and whether the matter required remand for fresh adjudication on merits.

Analysis: The assessee had included exempt income in the total income, leading to a tax demand, and sought rectification. The Tribunal held that the core controversy was whether the alleged mistake could be corrected under the rectification provision and that the delay in filing the application should not defeat consideration of the claim on merits. It found that the interests of justice required a fresh decision by the first appellate authority without being influenced by the date of filing of the rectification request.

Conclusion: The delay in filing the rectification application was condoned and the matter was remanded to the Commissioner (Appeals) for fresh adjudication on merits.

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