An instruction issued by the Central Board of Direct Taxes, as Instruction No. 1/2016 (F. No. 225/305/2015-ITA.II), dated 15 February 2016.
This is an instruction of the Central Board of Direct Taxes to its own officers on sub-section (8) of section 154 of the Income-tax Act, 1961. That sub-section requires the income-tax authority to pass an order on an application to rectify a mistake apparent from the record within six months from the end of the month in which the application is received, either making the amendment or refusing the claim. The Board records that the limit was not being observed in some cases, and that field officers were treating their own inaction as the end of the matter.
This is an instruction to the department's own officers. It tells them how to do something — which cases to take up, what to check, how to record it. It is an internal direction, and its whole force runs downwards inside the department.
The Board directs that the six-month limit is to be strictly followed by the Assessing Officer while disposing of applications filed by the assessee, deductor or collector under section 154. It sets its face against the view taken in the field that, because no action was taken within the prescribed time-frame, the taxpayer's application is deemed to have lapsed and needs no action; the instruction proceeds on the footing that the application still has to be decided. Supervisory officers are told to monitor adherence to the prescribed time-limit, and suitable administrative action may be initiated where a failure to keep it is noticed. The contents are to be brought to the notice of all for necessary compliance.
Section 154(8) exists to give the taxpayer a fixed answer date on a rectification application. It had become a dead letter in parts of the field. Worse, officers were reading their own delay as a disposal - treating the application as lapsed once six months had gone, so that the applicant got neither an amendment nor a refusal he could carry further. The Board issued this instruction to stop that reading and to place the burden of compliance squarely on the Assessing Officer and on his supervisors.
It is addressed to Assessing Officers and their supervisory officers and binds the department. It does not bind the assessee, and it does not bind a court or the Tribunal. An assessee whose section 154 application has gone unanswered may press the department with it, and may put it before a court, but the court will take its own view of what section 154(8) requires.
Dated 15 February 2016 and operative at once. The period it enforces is the statutory one - six months from the end of the month in which the rectification application is received.
This is an administrative direction, not the source of the right; the limit is in section 154(8) itself. The instruction gives the taxpayer no deemed relief - it nowhere says the claim stands allowed if the officer misses the date, only that the application must still be decided and that the officer may face administrative action. Keep proof of the date of receipt of the application, since the six months runs from the end of that month.
The supervisory officers should monitor the adherence of prescribed time limit and suitable administrative action may be initiated in cases where failure to adhere to the prescribed time frame is noticed.
— the Central Board of Direct Taxes, instruction Instruction No. 1/2016 (F. No. 225/305/2015-ITA.II), 15 February 2016. Read it in the department’s own PDF.
| Under the Income-tax Act, 1961 | Now, in the Income-tax Act, 2025 |
|---|---|
| section 154 | section 287 |
A binding decision that covers my point was never considered when my order was passed. Is that a mistake apparent from the record?
My settlement application was admitted years before the Commission passed its final order — can it charge me section 234B interest for that whole period, and reopen the settled order later to add interest it forgot?
An amendment adds a new levy. Does it reach back to earlier years?
My assessment was rectified once already. I want a second rectification, and four years have gone since the original assessment but not since the rectified one. Am I out of time?
The Tribunal decided against me without dealing with a coordinate bench decision I had actually filed in the paper book. Can it recall that order under section 254(2), or is that a review it cannot do?
The Tribunal decided against me without dealing with a coordinate bench decision I had cited. Can it put that right under section 254(2), or is that a review?
What here is the Board’s and what is ours. The document is the Central Board of Direct Taxes’ own. Its number, its date and the words quoted above are reproduced from the Board’s own PDF, which is here. Everything else on this page is ours: the plain-English account of what the document is and what it does, the reading of which provision it turns on, the note on what to watch, and the choice of cases. Where our account and the document part, the document governs.
An order of the Board binds the department, not you and not a court. The Board writes to its own officers. An assessee may hold the department to an order or an instruction 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. This is the most common mistake made with this material, and it is worth making twice: a direction of the Board is not a section of the Act.
What we could not settle. The instruction number is garbled in the scan as 'Instruction No. ©l./2016'; it is read as 1 of 2016 from the department's own file name for this document. The F. No. prints as '225/305/2015-ITA.1!' and is read as ITA.II. The instruction states no provision under which it is itself issued, so no authority is entered.