Procedure for rectification of mistake in Income Tax

Date: 1-7-2015

A rectification request under section 154(1) is allowed by the Income Tax Department for correcting mistakes when there is an apparent mistake in your Income Tax Return.The Income Tax Act has set procedure for Rectification of mistakes under section 154 of the Act for disposal of errors in the income tax return filed by an assessee.

On a rectification application filed by an assessee rectification is done under section 154, when there is a mistake apparent on record and the assessee wants to get it rectified after filing of his return.

 Things that you must know about filing a rectification under section 154(1) –

1. 1. Errors that can be rectified under section 154(1) – An error of fact, an arithmetic mistake, or a small clerical error or error due to overlooking compulsory provisions of law. Some examples are – A mismatch in tax credit, Advance Tax mismatch, gender mentioned incorrectly, or additional details not submitted for capital gains at the time of filing return.
2. 2. A rectification can be filed by a Tax Payer or an Income Tax Authority can on its own rectify a mistake which is apparent.
3. 3. If upon rectifying a ‘mistake’ there is a change in Income – a rectification should not be filed. In this case one must file a Revise Income Tax Return. In the rectification request no new deductions or exemptions are allowed to be claimed.

4. A rectification request can be filed for Returns which are already processed in CPC, Bangalore.
5. When the Income Tax Return was filed online – only Online Rectification is allowed.
6. Do not use this rectification request for changing bank account or address details of your Income Tax Return.

How to file a rectification request under section 154(1) online –

Below listed are the steps to file Rectification:

Step 1 - LOGIN to e-Filing application https://incometaxindiaefiling.gov.in/ and GO TO -> My Account -> Rectification request.

Step 2 - Select the Assessment Year for which Rectification is to be e-Filed, enter Latest Communication Reference Number (as mentioned in the CPC Order). In case you have received more than 2 orders use the latest order number.

Step 3 - Click 'Submit'.

Step 4 - Select the 'Rectification Request type'

Taxpayer Correcting Data for Tax Credit mismatch only' ? On selecting this option, three check boxes, TCS, TDS, IT, are displayed. You may select the check-box for which data needs to be corrected. You can add a maximum of 10 entries for each of the selections. No upload of an Income Tax Return (XML) is required.

'Taxpayer is correcting the Data in Rectification' ? Select the reason for seeking rectification, Schedules being changed, Donation and Capital gain details (if applicable), upload XML and Digital Signature Certificate (DSC), if available and applicable. You can select a maximum of 4 reasons.

'No further Data Correction required. Reprocess the case' ? On selecting this option, three check-boxes, Tax Credit mismatch, Gender mismatch, Tax/ Interest mismatch are displayed. You may select the check-box for which re-processing is required. No upload of an Income Tax Return is required.

Step 5 - Click the 'Submit' button.

Step 6 - On successful submission, an Acknowledgment number is generated and sent for processing to CPC, Bangalore.

Maintenance of “online Register of Rectifications ?:

To facilitate the disposal of applications filed under section 154 in an expedient and transparent way, the Assessing Officers should record the rectification applications in an “online Rectification Register”.

Rectification applications should be uploaded in “Online Rectification Register” by the Assessing Officer when such applications are received by him. The acknowledgement number given to the assessee during the time of receiving application has to be entered in “Online Rectification Register” in the column provided for that purpose.
The applications filed under section 154 should be received, recorded and acknowledgment number has to be given to the tax payer by the receiving Assessing Officer having jurisdiction at the time of filing the same.

Disposal of rectification applications:

According to the provisions of Section 154 of the Income Tax Act, 196l, every application has to be disposed of by means of appropriate order within six months of receiving of the application but the service delivery standard for deciding rectification application has been framed as two months. The concerned authorities have to abide by this standard and have to decide the applications within two months from the end of the month in which the application was received.

The decision under section 154 of Income Tax Act has to fulfill all the legal essentials and has to be should be an order which will be invariably communicated to the assessee immediately after the disposal.
In case of e-filed returns, the rectification applications should be filed online. Immediately action has to be taken by CPC or it the same should be transferred to the Assessing Officer for proper action. Action should be taken within the time-framed.  Whereas, if the Assessing Officer while disposing the application requires entering it in the online rectification register, process and make necessary entries after it is disposed off. The prescribed time limit has to be followed strictly.

The above procedure should always be strictly followed with immediate effect and the proper maintenance of online rectification register should be supervised by the concerned supervisory officers.