Rectification of mistake u/s 154-Time barring?
This query is : Resolved
03 October 2025
Dear Experts,
The assessee who was a partner in a firm and having his own business filed his return 0n 30/08/2028 for AY 2018-19 declaring business loss and the same was processed by the department on 30.09.2018.
The assessee has filed his return for AY 2023-24 and claimed setoff of business loss against his income for that year. The return was processed u/s. 143(1) and later on CPC issued notice to rectify the order stating the setoff allowed during the year was erroneous as return for AY 2019-20 was filed beyond due date. ( Due to technical glitch in software utility of the Department, loss was shown against AY 2019-20 instead AY 2018-19 in the prefilled data). The assessee responded to the said notice but department has issued order u/s. 154 disallowing setoff of loss without mentioning whether the response was considered or not.
I have following questions:
1. Can the officer deny benefit of setting of business loss which was assessed u/s 143 (1) for AY 2018-19 in the AY 2023-24 without rectifying the intimation u/s. 143 (1) of the original order for AY 2018-19 irrespective of whether return was filed beyond time limit u/s. 139?
2. As AY 2018-19 is time barred for rectification u/s. 154, isn't the Officer erred in denying setoff in AY 2023-24, even if the original return was filed beyond time limit but assessed as one filed in time and loss allowed to carry forward?
3. Is it mandatory to file returns for subsequent years in time u/s 139 to claim set off of assessed loss in earlier year?
How to approach the department against the order passed u/s. 154 for AY 2023-24? can we simply move application u/s. 154 stating that the assessed loss can not be denied to be setoff even if the return for AY 2018-19 was not filed in time but processed as filed u/s. 139 and the same is time barred now for rectification?
Please guide.
The assessee who was a partner in a firm and having his own business filed his return 0n 30/08/2028 for AY 2018-19 declaring business loss and the same was processed by the department on 30.09.2018.
The assessee has filed his return for AY 2023-24 and claimed setoff of business loss against his income for that year. The return was processed u/s. 143(1) and later on CPC issued notice to rectify the order stating the setoff allowed during the year was erroneous as return for AY 2019-20 was filed beyond due date. ( Due to technical glitch in software utility of the Department, loss was shown against AY 2019-20 instead AY 2018-19 in the prefilled data). The assessee responded to the said notice but department has issued order u/s. 154 disallowing setoff of loss without mentioning whether the response was considered or not.
I have following questions:
1. Can the officer deny benefit of setting of business loss which was assessed u/s 143 (1) for AY 2018-19 in the AY 2023-24 without rectifying the intimation u/s. 143 (1) of the original order for AY 2018-19 irrespective of whether return was filed beyond time limit u/s. 139?
2. As AY 2018-19 is time barred for rectification u/s. 154, isn't the Officer erred in denying setoff in AY 2023-24, even if the original return was filed beyond time limit but assessed as one filed in time and loss allowed to carry forward?
3. Is it mandatory to file returns for subsequent years in time u/s 139 to claim set off of assessed loss in earlier year?
How to approach the department against the order passed u/s. 154 for AY 2023-24? can we simply move application u/s. 154 stating that the assessed loss can not be denied to be setoff even if the return for AY 2018-19 was not filed in time but processed as filed u/s. 139 and the same is time barred now for rectification?
Please guide.
03 October 2025
As AY 2018-19 is now time-barred for rectification under Section 154 (4 years from the end of the financial year in which the order was passed), the department cannot deny setoff by revising the position in AY 2023-24.
The right to carry forward and set off the loss is crystallized once intimation is final and not rectified within the statutory period.
The right to carry forward and set off the loss is crystallized once intimation is final and not rectified within the statutory period.
03 October 2025
For claiming setoff of carried forward losses, returns for subsequent years must be filed within the due date prescribed under Section 139(1) (except in special circumstances, e.g., Section 139(3)).
Late filing in subsequent years (in which setoff is claimed) may result in denial of setoff, regardless of earlier assessment of losses.
Late filing in subsequent years (in which setoff is claimed) may result in denial of setoff, regardless of earlier assessment of losses.
03 October 2025
File a rectification application under Section 154 for AY 2023-24, pointing out that the loss was allowed in intimation for AY 2018-19, which is now final and cannot be rectified as it is time-barred.
If rectification is denied, file an appeal before the CIT(A), raising the same ground, and include the fact that the department’s action violates principles of finality and natural justice by not considering the response.
Cite relevant case law (e.g., PCIT v. Wipro Ltd (SC)—once loss is assessed under Section 143(1), it cannot be subsequently denied in later years unless rectification is allowed within statutory period).
If rectification is denied, file an appeal before the CIT(A), raising the same ground, and include the fact that the department’s action violates principles of finality and natural justice by not considering the response.
Cite relevant case law (e.g., PCIT v. Wipro Ltd (SC)—once loss is assessed under Section 143(1), it cannot be subsequently denied in later years unless rectification is allowed within statutory period).
03 October 2025
Good Luck.....
04 October 2025
You are welcome.
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