Section 371 of the Income-tax Act, 2025

Section 371 — Amendment of assessment on appeal. Successor to s.267 of the 1961 Act.

Where this section sits

Section 371 is in Chapter XVIII — Appeals Revisions and Alternate Dispute Resolutions, which runs from section 356 to section 389.

← Section 370 · Section 372 →

What this section does

A single provision addressed to the appellate authorities. If, as a result of an appeal under section 356, 357 or 362, any change is made in the assessment of a body of individuals or an association of persons, or a new assessment is directed in such a case, the Joint Commissioner (Appeals), the Commissioner (Appeals) or the Appellate Tribunal, as the case may be, shall pass an order authorising the Assessing Officer either to amend the assessment made on any member of the body or association, or to make a fresh assessment on such member.

Why it is there

A member's assessment depends on the assessment of the body or association, so a change at that level leaves the members' assessments inconsistent with it. The section supplies the authority to correct them, and places it in the appellate order rather than leaving the Assessing Officer to reopen the members' cases on his own.

Who it applies to

A body of individuals or an association of persons whose assessment is changed on appeal
A member of such a body or association
The Joint Commissioner (Appeals), the Commissioner (Appeals) or the Appellate Tribunal deciding the appeal
The Assessing Officer acting on the authorisation

What this means in practice

The consequence of the body's appeal reaches its members through the appellate order: the authority "shall pass an order authorising" the Assessing Officer, so the authorisation is a mandatory part of the decision, not a discretion exercised later. The officer then has a choice of two routes on that authority — amend the member's existing assessment, or make a fresh assessment on him.

An example

Illustrative only, and invented for this page. The figures are chosen to show the rule biting, not taken from any real matter.

An association of persons succeeds in part before the Commissioner (Appeals) and its assessed income is reduced. That authority must pass an order authorising the Assessing Officer either to amend the assessments already made on the members or to make fresh assessments on them, and the officer proceeds on that authority.

Where you meet this section

A member of an association or body meets it when his own assessment is amended or redone following an appellate order in the association's case — the authorisation in that appellate order is what the Assessing Officer relies on.

The words themselves

shall pass an order authorising the Assessing Officer either to amend the assessment made on any member of the body or association or to make a fresh assessment on such member

Section 371, Income-tax Act, 2025.

What people get wrong

Treating the authorisation as optional. The section says the appellate authority shall pass such an order.
Assuming the member's assessment can only be amended. The authorisation extends to making a fresh assessment on the member.
Applying it to any appellate change. It operates where a change is made in the assessment of a body of individuals or an association of persons, or a new assessment is directed in such a case, in an appeal under section 356, 357 or 362.

What this replaced

The correspondence is the Income Tax Department’s own, from its comparison utility for the 1961 and 2025 Acts. A renumbering is the easy half; whether the words changed is the half that decides cases.

267 - Amendment of assessment on appeal

See the full 1961 to 2025 concordance.

Read with

Section 356
Section 357
Section 362

What this page does not tell you. It does not reproduce the section. Everything above was written from the section’s own text as the Income Tax Department publishes it — the text is here, and nothing here is advice on your facts. Where a figure matters, read the sub-section it comes from.