What the courts have decided on section 154(7), in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.
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Hind Wire Industries Ltd v CIT
Supreme CourtHelps taxpayer
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?
No. The Supreme Court held that the word order in section 154(7) is not qualified and does not necessarily mean the original order; it can be any order, including the amended or rectified order. So where an assessment of 21 September 1979 had been rectified on 12 July 1982, an application made on 4 July 1986 was in time, being within four years of the rectified order. The Calcutta High Court, which had counted from the original assessment, was set aside and the Tribunal restored. The Court followed its own sales tax decisions in International Cotton Corporation and H.R. Sri Ramulu.
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Surajit Ghosh v ITO, Ward-29(4), Kolkata
High CourtHelps taxpayerNo later treatment found
A section 154 order was passed on me in 2022 rectifying a 2015 assessment, with no notice and no DIN. What can I do about it four years later?
The Calcutta High Court set the order aside. An order passed beyond the four years in s.154(7) suffers from a jurisdictional error, so it can be challenged in writ even after long delay, and the Court also recorded the Department's failure to comply with s.154(3) by not showing that any prior notice was served, and the absence of a Document Identification Number required by the CBDT circular dated 14 August 2019.
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G R Infraprojects Limited v ACIT
High CourtHelps taxpayer
I withdrew my education cess claim after the Finance Act 2022 inserted section 155(18). Can the officer still treat it as under-reported income and levy penalty?
The Rajasthan High Court set the penalty aside and directed that immunity under s.270AA be granted. Where the company withdrew its cess claim by letter dated 19 March 2022, before s.155(18) came into force on 1 April 2022, and accepted the proposed variation, it was entitled to immunity from penalty under s.270A, and the initiation was in any event non est because the officer never specified which limb of s.270A(9) was attracted.
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Mastek Limited v ACIT
High CourtHelps taxpayerHigh Courts differ
The officer says my section 154 notice is in time because he is rectifying the order giving effect to the appeal. Is that right where the point was never in appeal?
The Gujarat High Court said no. Following its own decision in Poonjabhai Vanmalidas, it held that where the issue was not the subject matter of the appeal the appellate order does not subsume the original order, so the time for correcting the mistake relates back to the original order and not to the appellate or appeal effect order. It also held that a notice founded on the interpretation of a Supreme Court decision cannot be a mistake apparent from the record.
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CIT v Tony Electronics Limited
High CourtHelps departmentHigh Courts differ
The mistake is in my original assessment order from years ago. Is the section 154 notice time barred if an appeal order intervened?
Not necessarily. The Delhi High Court held that once an appeal is decided the assessment order merges into the appellate order, so for s.154(7) the four years run from the appellate order, and it is no answer that the error occurred in the original assessment and was not the subject matter of the appeal. Hind Wire Industries decides that the word 'order' in s.154(7) is unqualified and means any order, including an amended or rectified one.
Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.
