Rectification of mistake.
287(1)
An income-tax authority referred to in section 236, for rectifying any mistake apparent from the record, may amend any—
- (a) order passed by it under the provisions of this Act;
- (b) intimation or deemed intimation under section 271(1);
- (c) intimation under section 399.
287(2)
Irrespective of anything contained in any law in force, the authority concerned may, amend any order under sub-section (1) in relation to any matter, other than the matter considered and decided in any proceeding by way of appeal or revision, relating to such order.
287(3)
Subject to the other provisions of this section, the authority concerned,––
- (a) may make an amendment under sub-section (1) of its own motion; and
- (b) shall make such amendment for rectifying any such mistake which has been brought to its notice by— (i) the assessee or the deductor or the collector; or (ii) the Assessing Officer, if the authority concerned is the Joint Commissioner (Appeals) or the Commissioner (Appeals).
287(4)
No amendment that enhances an assessment, reduces a refund or otherwise increases the liability of the assessee or the deductor or the collector, shall be made under this section by the authority concerned without giving––
- (a) a notice of its intention of making such amendment; and
- (b) a reasonable opportunity of being heard.
287(5)
The income-tax authority concerned shall pass an order in writing, if an amendment is made under this section.
287(6)
The Assessing Officer shall make refund which may be due to the assessee or the deductor or the collector, where an amendment reduces the assessment or otherwise reduces the liability of such assessee or the deductor or the collector.
287(7)
The Assessing Officer shall serve on the assessee or the deductor or the collector, a notice of demand in such form as prescribed specifying the sum payable,—
- (a) where an amendment enhances the assessment or reduces a refund already made or otherwise increases the liability of such assessee or the deductor or the collector; and
- (b) such notice shall be deemed to be issued under section 289 and the provisions of this Act shall apply accordingly.
287(8)
No amendment under this section, except as provided in section 288, shall be made after four years from the end of the financial year in which the order sought to be amended was passed.
287(9)
Subject to sub-section (8), an income-tax authority referred to in sub-section (1), shall pass an order for making the amendment or refusing to allow the claim within six months from the end of the month in which the application for amendment under this section is received by it from the assessee or the deductor or the collector.
Section Summary:
Section 287 of the Income Tax Act, 1961, deals with the rectification of mistakes apparent from the record by income-tax authorities. It allows tax authorities to correct errors in orders, intimations, or deemed intimations issued under the Act. The section ensures that mistakes, whether clerical, computational, or factual, can be rectified to ensure accurate tax assessments and compliance.
Key Changes:
- Expanded Scope of Rectification: The section now explicitly includes rectification of mistakes in intimations under Section 271(1) and Section 399, in addition to orders passed under the Act.
- Time Limit for Rectification: A new time limit of four years from the end of the financial year in which the order was passed has been introduced for rectification (Section 287(8)).
- Mandatory Amendment for Noticed Mistakes: If a mistake is brought to the authority's notice by the assessee, deductor, collector, or Assessing Officer, the authority must rectify it (Section 287(3)(b)).
- Procedural Safeguards: Before making any amendment that increases tax liability or reduces a refund, the authority must issue a notice and provide a reasonable opportunity of being heard (Section 287(4)).
Practical Implications:
- For Taxpayers:
- Taxpayers can request rectification of errors in their tax orders or intimations, ensuring accurate assessments.
- If a rectification increases their tax liability, they will be notified and given a chance to respond.
- Refunds due to rectification must be issued by the Assessing Officer.
- For Tax Authorities:
- Authorities can rectify mistakes on their own or upon request, but must act within the prescribed time limits.
- They must follow due process, especially when rectifications adversely affect taxpayers.
- For Businesses:
- Businesses can ensure compliance by identifying and rectifying errors in their tax filings or assessments promptly.
Critical Concepts:
- Mistake Apparent from the Record: This refers to errors that are obvious, such as arithmetic mistakes, incorrect application of tax rates, or factual errors. It does not include debatable issues or matters requiring further investigation.
- Intimation: An intimation is a communication from the tax department, such as a notice of tax demand or refund, generated after processing a taxpayer's return.
- Deemed Intimation: This refers to situations where an intimation is considered to have been issued even if not explicitly communicated (e.g., under Section 271(1)).
- Interaction with Other Laws: Section 287 operates independently of other laws but aligns with procedural safeguards under the Income Tax Act, such as Section 289 for demand notices.
Compliance Steps:
- Identify Errors: Taxpayers should review their tax orders, intimations, or deemed intimations for any apparent mistakes.
- Submit Rectification Request: If a mistake is identified, taxpayers can file an application for rectification with the relevant tax authority.
- Respond to Notices: If the rectification increases tax liability, taxpayers must respond to the notice and provide necessary clarifications or objections.
- Monitor Time Limits: Ensure rectification requests are made within four years from the end of the financial year in which the order was passed.
Examples:
- Scenario 1: A taxpayer notices that the tax authority has applied the wrong tax slab while processing their return, resulting in a higher tax liability. They can file a rectification request under Section 287 to correct the error.
- Scenario 2: The Assessing Officer identifies a computational error in a taxpayer's refund calculation. They can rectify the mistake on their own and issue the corrected refund.
- Scenario 3: A business receives an intimation under Section 271(1) with an incorrect penalty amount. They can request rectification, and the authority must correct the mistake within six months of receiving the application.
By understanding and utilizing Section 287, taxpayers and authorities can ensure accurate and fair tax assessments while adhering to procedural safeguards.