Understanding Section 155 of the Income Tax Act: Rectification of Mistakes in Tax Returns and Orders

March 9, 2023

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Section 155 of the Income Tax Act, 1961 deals with rectification of mistakes. It provides an opportunity to taxpayers to rectify mistakes in their tax returns or other documents submitted to the income tax department. In this blog, we will discuss the provisions of section 155 in detail.

Table of Contents

What is rectification under Section 155?

Rectification under Section 155 is a process of correcting errors or mistakes in an order or intimation issued by the assessing officer or any other authority. The rectification can be initiated by the taxpayer or by the assessing officer.

Types of Mistakes Covered under Section 155

The following mistakes can be rectified under Section 155:

Mistakes apparent from records: A mistake that is apparent from the records can be rectified under this section. These mistakes may include an error in calculation, incorrect application of tax rate, or incorrect treatment of a particular income.
Clerical or arithmetical mistakes: Any clerical or arithmetical mistake that is apparent on the face of the record can be rectified under this section.
Omission or wrong statement: An omission or wrong statement in any return or document furnished under the Income Tax Act can also be rectified under this section.
Incorrect allowance or disallowance of deduction: Any incorrect allowance or disallowance of a deduction can also be rectified under this section.

Who can initiate rectification under Section 155?

Both the taxpayer and the assessing officer can initiate rectification under Section 155.

Rectification by taxpayer: If a taxpayer discovers any mistake in his return or any other document submitted to the income tax department, he can file an application for rectification of such mistake. The application should be made in Form No. 26 and should be filed within four years from the end of the relevant assessment year.
Rectification by assessing officer: If the assessing officer discovers any mistake in the order or intimation issued by him, he can rectify such mistake within four years from the end of the relevant assessment year. However, before making any rectification, he must give the taxpayer an opportunity of being heard.

What is the procedure for rectification under Section 155?

The procedure for rectification under Section 155 is as follows:

Application for rectification: The taxpayer should file an application for rectification in Form No. 26, along with necessary documents.
Acknowledgment of application: On receipt of the application, the income tax department will issue an acknowledgment in Form No. 27.
Processing of application: The assessing officer will process the application and may accept or reject the application.
Issuance of rectification order: If the assessing officer accepts the application, he will issue a rectification order. If he rejects the application, he will pass an order explaining the reasons for rejection.
Appeal against order: If the taxpayer is not satisfied with the rectification order or the order rejecting the application, he can file an appeal before the Commissioner of Income Tax (Appeals).

Rectification under Section 155 is an important provision for taxpayers as it provides them with an opportunity to rectify mistakes in their tax returns or other documents submitted to the income tax department. The provision is also useful for the assessing officer as it allows them to rectify mistakes in the order or intimation issued by them.

The rectification process under Section 155 is initiated by filing an application in Form No. 26. The application should be filed within four years from the end of the relevant assessment year. The taxpayer should provide necessary documents along with the application. The income tax department will issue an acknowledgment in Form No. 27 on receipt of the application.

The assessing officer will process the application and may accept or reject the application. If the assessing officer accepts the application, he will issue a rectification order. If he rejects the application, he will pass an order explaining the reasons for rejection. The taxpayer can file an appeal before the Commissioner of Income Tax (Appeals) if he is not satisfied with the rectification order or the order rejecting the application.

It is important to note that rectification under Section 155 can only be done for mistakes that are apparent from the records. The mistakes should be clerical, arithmetical or factual in nature. The provision does not provide for rectification of mistakes that require an inquiry or investigation.

In conclusion

Section 155 of the Income Tax Act is a useful provision for taxpayers as it provides them with an opportunity to rectify mistakes in their tax returns or other documents submitted to the income tax department. The provision also helps the assessing officer to rectify mistakes in the order or intimation issued by them. However, it is important to ensure that the rectification is done within the prescribed time limit and for mistakes that are apparent from the records.

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Frequently Asked Questions (FAQs)

Q1. What is Section 155 of the Income Tax Act?

A1. Section 155 of the Income Tax Act provides for rectification of mistakes in an order or intimation issued by the assessing officer or any other authority. It allows taxpayers to rectify mistakes in their tax returns or other documents submitted to the income tax department.

Q2. Who can initiate rectification under Section 155?

A2. Both the taxpayer and the assessing officer can initiate rectification under Section 155. The taxpayer can file an application for rectification in Form No. 26, while the assessing officer can rectify the mistake on his own.

Q3. What types of mistakes can be rectified under Section 155?

A3. Mistakes that are apparent from the records, clerical or arithmetical mistakes, omission or wrong statement in any return or document furnished under the Income Tax Act, and incorrect allowance or disallowance of a deduction can be rectified under Section 155.

Q4. Is there a time limit for rectification under Section 155?

A4. Yes, rectification under Section 155 should be done within four years from the end of the relevant assessment year.

Q5. What is the procedure for rectification under Section 155?

A5. The procedure for rectification under Section 155 involves filing an application for rectification in Form No. 26, processing of the application by the assessing officer, issuance of rectification order, and appeal against the order.

Q6. Can rectification under Section 155 be done for mistakes that require an inquiry or investigation?

A6. No, rectification under Section 155 can only be done for mistakes that are apparent from the records and are clerical, arithmetical or factual in nature. It does not provide for rectification of mistakes that require an inquiry or investigation.

Q7. Is rectification under Section 155 mandatory?

A7. No, rectification under Section 155 is not mandatory. It is an option available to the taxpayer or the assessing officer to rectify mistakes in the tax return or other documents submitted to the income tax department.

Q8. Can rectification under Section 155 be done for mistakes in the previous year’s tax return?

A8. Yes, rectification under Section 155 can be done for mistakes in the previous year’s tax return, provided it is within four years from the end of the relevant assessment year.

Q9. What happens if rectification under Section 155 is not done within the prescribed time limit?

A9. If rectification under Section 155 is not done within the prescribed time limit, the taxpayer or the assessing officer may have to go through the process of filing a revised return or appeal against the assessment order.

Q10. Can a rectification order be challenged in a court of law?

A10. Yes, a rectification order can be challenged in a court of law if it is believed to be incorrect or not in compliance with the provisions of the Income Tax Act.