TaxTMI 
TaxTMI 
TaxTMI 
Procedural Safeguards and Rectification under Indian Tax Law : Clause 287 of the Income Tax Bill, 2025 Vs. Section 154 of the Income-tax Act, 1961
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.... in tax administration. The transition from Section 154 to Clause 287 is not merely a matter of legislative re-numbering but reflects a considered attempt to modernize, clarify, and potentially streamline the rectification process in light of evolving tax administration needs. This commentary provides a detailed, issue-wise analysis of Clause 287, examining its objectives, key provisions, interpretative nuances, and practical implications. It then undertakes a comparative analysis with Section 154 of the Income-tax Act, 1961, highlighting similarities, differences, and the implications of any legislative changes. Objective and Purpose The rectification mechanism is fundamentally intended to address mistakes that are apparent from the record, thereby preventing the perpetuation of obvious errors that could adversely affect the interests of taxpayers or the revenue. The legislative intent behind such a provision is multifaceted: * To provide a summary and expeditious remedy for correcting patent mistakes without resorting to protracted appellate or revisionary proceedings. * To enhance administrative efficiency by enabling authorities to correct their own mistakes, thereby fost....
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....y itself or brought to its notice by affected parties or subordinate officers. The explicit mention of the Assessing Officer as an applicant, where the rectifying authority is an appellate authority, underscores the hierarchical checks and balances in the tax administration. 4. Safeguards for Assessee/Deductor/Collector - Sub-section (4) Clause 287(4) mandates that no amendment enhancing an assessment, reducing a refund, or otherwise increasing liability shall be made without: * (a) Notice of intention to make such amendment; and * (b) A reasonable opportunity of being heard. This procedural safeguard is a manifestation of the principles of natural justice, ensuring that no adverse rectification is made ex parte or without due process. 5. Requirement of Written Order - Sub-section (5) Clause 287(5) requires that any amendment under this section must be made by a written order. This is essential for transparency, accountability, and for providing a record that can be reviewed in subsequent proceedings. 6. Refunds on Rectification - Sub-section (6) Where an amendment reduces the assessment or otherwise reduces liability, the Assessing Officer is mandated to make the requis....
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....mparison reveals that Clause 287 is, in essence, a successor to Section 154, but with certain modifications and clarifications. The following is an item-wise comparative analysis: 1. Authorities Empowered Section 154 refers to "income-tax authority referred to in section 116," whereas Clause 287 refers to authorities u/s 236 (presumably the corresponding section in the new Bill). The structure and designation of authorities may differ under the new legislation, but the principle remains the same. 2. Orders and Intimations Covered Section 154(1) covers: * Orders passed under the Act; * Intimations or deemed intimations u/s 143(1); * Intimations u/s 200A(1) and 206CB(1) (relating to TDS/TCS processing). Clause 287(1) covers: * Orders passed under the Act; * Intimation or deemed intimation u/s 271(1); * Intimation u/s 399. The sections referenced for intimations have changed, reflecting the reorganisation and renumbering of provisions in the new Bill. The underlying principle-covering both orders and certain types of intimations-remains consistent. 3. Exclusion of Matters Decided in Appeal/Revision Both Section 154(1A) and Clause 287(2) contain similar language exc....
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....s, possibly with updated cross-references and streamlined language. However, the core structure and safeguards remain substantially similar to Section 154. Ambiguities and Issues in Interpretation The phrase "mistake apparent from the record" has been the subject of extensive judicial interpretation. Courts have consistently held that: * The mistake must be patent, obvious, and not require elaborate arguments or investigation. * Rectification cannot be used to revisit debatable or controversial issues or to review the merits of an order. * Matters decided in appeal or revision are excluded from the scope of rectification, except for issues not so considered. These principles, though not explicitly codified, are likely to continue to guide the application of Clause 287. Any ambiguity in the new provision will need to be resolved in light of these established doctrines. Practical and Procedural Impact The practical impact of Clause 287 will be determined by its administration: * Taxpayers must be vigilant in identifying and seeking rectification of mistakes within the prescribed time limits. * Authorities must ensure strict adherence to procedural safeguards, including....