Circular No. 71

901. Board’s authorisation for taking action under section 154 beyond time limit specified under section 154(7) in cases of protective assessments requiring to be cancelled - Order under section 119(2)(b)

What this is

Circular No. 71 was issued by the Central Board of Direct Taxes on 20 December 1971. Its subject is 901. Board’s authorisation for taking action under section 154 beyond time limit specified under section 154(7) in cases of protective assessments requiring to be cancelled - Order under section 119(2)(b).

This is a clarification. The Board is stating how it reads a provision. That reading binds the department; it does not bind a court, and where the section says otherwise the section wins.

What it does

Lifts the section 154(7) time limit for cancelling redundant protective assessments. Where the same income was assessed protectively in the hands of more than one assessee, or as income of more than one assessment year, and one or more of those protective assessments has to be cancelled because the relevant assessment has become final and conclusive, the department's practice has been to cancel the redundant assessment under section 154 as a mistake apparent from the record, either suo motu or on the assessee's application. The Board, exercising its power under section 119(2)(b), authorises the Income-tax Officer to take such action, and to admit and dispose of on merits applications under section 154 by assessees seeking that relief, waiving the section 154(7) time limit where necessary. Every case where the time limit is relaxed on this authority must be reported by the Income-tax Officer to the Inspecting Assistant Commissioner in whose jurisdiction he functions within one month of passing the order.

Why it was issued

The section 154(7) time limit was sometimes making it impossible to cancel the redundant protective assessment, and that caused genuine hardship to the affected assessees.

Who it reaches

Assessees carrying a protective assessment of income already finally assessed in another's hands
Assessees protectively assessed on the same income in more than one year
Income-tax Officers rectifying under section 154 out of time
Inspecting Assistant Commissioners receiving the monthly report

The provisions it speaks to

Left, the provision of the Income-tax Act, 1961 as the instrument itself names it. Right, the section of the Income-tax Act, 2025 that the department’s own concordance maps it to — which is where the same ground is now covered.

Under the 1961 Act	Now
s.119	s.239
s.154	s.287

The instrument, as the Board published it

The words below are the department’s own, reproduced from its published text. Where the department’s copy carried a publisher’s notes after the instrument, those are not reproduced.

901. Board’s authorisation for taking action under section 154 beyond time limit specified under section 154(7) in cases of protective assessments requiring to be cancelled - Order under section 119(2)(b)
A copy of the order dated 20-12-1971 passed by the Board on the subject is enclosed for information and guidance.
Circular : No. 71 [F.No. 246/25/71-A & PAC], dated 20-12-1971.
ANNEX - ORDER REFERRED TO IN CLARIFICATION
1. Where the same income was assessed, as a protective measure, in the hands or more than one assessee or as the income of more than one assessment year, and one or more of these protective assessments needs to be cancelled as a result of some of the relevant assessments having become final and conclusive, it has been the practice of the Income-tax Department to cancel the redundant assessments under section 154, treating these as involving mistakes apparent from the records. This is being done by the Income-tax Officers either suo motu or on applications made by assessees. Sometimes, it is not possible to take action under section 154 in such cases because of the operation of the time limit laid down in sub-section (7) of section 154. Since the operation of this time limit causes genuine hardship to the affected assessees, the Central Board of Direct Taxes, in exercise of the powers vested in them under clause (b) of sub-section (2) of section 119, hereby authorises the Income-tax Officer to take action under section 154, or to admit or dispose of on merits applications under section 154 filed by assessees seeking relief, for cancelling such protective assessments as have become redundant by waiving, if necessary, the time limit fixed under sub-section (7) of section 154.
2. Every case of the relaxation of the time limit on the authority of this order shall be reported by the Income-tax Officer to the Inspecting Assistant Commissioner, in whose jurisdiction he is functioning within one month of the passing of such order.

What to watch

The waiver is confined to cancelling protective assessments that have become redundant; it is no general relaxation of the section 154(7) limit for other rectifications.
It bites only once the corresponding substantive assessment has become final and conclusive — while the other assessment is alive, the protective one is not redundant.
The route is section 154, so the redundancy must be apparent from the record; a contested question of who the income belongs to is not reached this way.
Each relaxation must be reported to the Inspecting Assistant Commissioner within a month, so the officer's order should record that the Board's order is being invoked.
This is an order under section 119(2)(b) of the period, and the section 154 time limit it waives is the one then in the statute.

Where you meet it

When applying to have a stale protective assessment cancelled after the substantive assessment in another hand or another year has attained finality.

On the same provision

Other instruments in this library that name the same provision of the 1961 Act. They are not necessarily still operative, and a later one may have replaced an earlier one without saying so.

Circular No. 6/2026 — Condonation of delay in filing Form No. 10AB electronically for approval under clause(ii) of the first proviso to sectio 2 July 2026
Circular No. 2/2026 — Order under section 119 of the Income-tax Act, 1961 for extension of timeline for issuance of tax deducted at source (TD 25 March 2026
Circular No.15/2025 — Extension of timelines for filing of various reports of audit and income tax returns ITRS for the assessment year 2025 2 29 October 2025
Circular No. 10/2025 — Relaxation of time limit for processing of returns of income filed electronically which were incorrectly invalidated by 28 July 2025
Circular No. 7/2025 — Relaxation of time limit for processing of valid returns of income filed electronically pursuant to order u/s 119(2)(b) 25 June 2025
Circular No. 6/2025 — Extension of due date for furnishing return of income for the Assessment Year 2025-26 27 May 2025

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A circular binds the department, not you and not a court. The Board issues a circular to its own officers. An assessee may hold the department to a circular that helps him; the department cannot hold an assessee to one that hurts him, and the Tribunal and the courts decide the law for themselves.

Source: the Income Tax Department’s own published text — its page for this instrument.