[Opinion] Reckoning the Time Limit for Rectification of Order by ITAT

V K Subramani – [2025] 181 taxmann.com 853 (Article)

Income Tax appellate tribunal was formed even before getting independence of our nation and its origin could be traced to the year 1941 under the then prevailing Income-tax Act, 1922. The Income-tax appellate tribunal (in short ‘ITAT’) is known as ‘Mother Tribunal’ since many other tribunals were formed/created based on the success of ITAT.

The ITAT is the final fact-finding authority and as regards question of fact, the matter would not go to the higher appellate forum viz. the High Court. It would stop or end with the tribunal.

There are so many excellent decisions rendered by ITAT over the years which was affirmed by the higher appellate authorities and it is a testimony to the fact that the income-tax appellate tribunal has acted exceedingly well by providing treatise on the law and many of the members who authored the decisions brought glory and reputation to it which functions under the aegis of Ministry of Law and Justice.

This write-up discusses a legal decision where the tribunal as an exception decided differently with regard to its own time limit for rectification of mistake apparent from the record and the Bombay High Court had to intervene to provide relief to the taxpayer in the case of Accost Media LLP v. Dy. CIT [2025] 181 taxmann.com 298 (Bom).

1. Facts of Accost Media LLP

In this case, the assessee after the tribunal had passed the order filed a Miscellaneous Application seeking rectification of the order. Factually, the ITAT had passed the order on 10.12.2024 and the order was received by the assessee on 24.03.2025. The assessee filed rectification application i.e. Miscellaneous Application on 16.07.2025. The tribunal held that the application was filed beyond 6 months and it is belated by 15 days. The assessee hence filed a writ before the court.

2. Legal Provision

Section 254(2) says that the appellate tribunal may at any time within 6 months from the end of the month in which the order was passed may rectify any mistake apparent from the record, amend any order passed by it under sub-section (1), and shall make such amendment if the mistake is brought to its notice either by the assessee or by the Assessing Officer.

The proviso to the section says that an amendment which has the effect of enhancing an assessment or reducing a refund or increasing the liability shall not be made without giving the assessee a notice of its intention to do so and has allowed the assessee a reasonable opportunity of being heard. The application seeking such rectification must be accompanied by the payment of prescribed fee i.e., Rs. 50. Section 254(3) says that the appellate tribunal shall send a copy of any order passed under this section to the assessee and to the Principal Commissioner or Commissioner.

Rule 34A of the Income-tax (Appellate Tribunal) Rules, 1963 says that application under section 254(2) shall clearly and concisely state the mistake apparent from record in respect of which the rectification is sought. The application shall be made in triplicate. The application shall state whether any Miscellaneous Application under section 254(2) was filed earlier before the tribunal against the same order and if so, the fate of such application. Copies of the order passed by the tribunal on such applications shall also be filed before the tribunal along with the miscellaneous application.

The Bench which heard the matter giving rise to the application shall dispose it of after giving both the parties to the application a reasonable opportunity of being heard and an order disposing of such application shall be made in writing giving reasons in support of its decision.