Rectification power under section 154 cannot review a concluded appellate order, and denial of hearing vitiates the amendment.

Rectification under section 154 of the Income-tax Act is limited to correcting mistakes apparent from the record and cannot be used to review, recall or reverse a concluded appellate order on a debatable issue. The article also notes that where an adverse rectification is made without issuing notice and giving the assessee a hearing under section 154(3), the amendment is procedurally defective and ex parte. On these principles, the appellate rectification was held unsustainable for breach of the mandatory hearing requirement and for exceeding the scope of rectification power.

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Issues: (i) Whether the rectification order was vitiated for want of notice and opportunity of hearing under section 154(3) of the Income-tax Act, 1961. (ii) Whether the appellate authority could use rectification powers under section 154 of the Income-tax Act, 1961 to review, recall or reverse its earlier appellate order.

Issue (i): Whether the rectification order was vitiated for want of notice and opportunity of hearing under section 154(3) of the Income-tax Act, 1961.

Analysis: The impugned order was passed without issuing notice to the assessee before making the amendment. The statutory requirement of affording an opportunity of being heard before an adverse rectification was treated as mandatory, and non-compliance rendered the order ex parte.

Conclusion: The rectification order was invalid on account of breach of the mandatory hearing requirement and was liable to be set aside.

Issue (ii): Whether the appellate authority could use rectification powers under section 154 of the Income-tax Act, 1961 to review, recall or reverse its earlier appellate order.

Analysis: Rectification under section 154 is confined to correcting a mistake apparent from the record. It cannot be used as a substitute for review or as a means to revisit a concluded appellate decision on a debatable issue. The earlier appellate order in favour of the assessee could not be reopened through rectification.

Conclusion: The rectification exceeded the permissible scope of section 154 and was unsustainable.

Final Conclusion: The assessee succeeded on the jurisdictional and procedural challenge, and the adverse rectification order was set aside.

Ratio Decidendi: Rectification under section 154 cannot be used to review a concluded order, and any amendment made without the mandatory opportunity of hearing is legally unsustainable.

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