154 notice

1. Notice under Section 147/148 — Reassessment Notice

• Section 147 allows the Income Tax Department to reassess income if they believe there is income escaping assessment.

• Section 148 is the notice to initiate reassessment (issued before the reassessment order).

• This is a fresh assessment process for AY 2019-20 (in your case), based on new evidence or information.

• Usually issued within the prescribed time limits (normally 3 or 6 years depending on cases).

2. Notice under Section 154 — Rectification Notice

• Section 154 deals with rectification of mistakes apparent from record in an order or intimation already passed.

• It is not a fresh assessment but a correction of clerical or arithmetical errors, or to correct mistakes of fact or law evident on record.

• Common uses: correcting tax calculation errors, wrong TDS credits, incorrect PAN, etc.

• Issued after or during the reassessment process if the department finds an apparent mistake in the order/intimation.

Why Both Notices in Your Client’s Case?

• Your client received 148 notice (reassessment initiation) on 31 March for AY 2019-20.

• The department started reassessment proceedings.

• Now, they have issued a Section 154 notice — possibly to correct an error in the earlier order/intimation related to the same AY or to update the records.

This is normal and allowed:

• Reassessment (147/148) is a substantive inquiry.

• Rectification (154) is a corrective action.

• The department can issue a 154 notice even during or after reassessment if an apparent mistake is noticed.

What Should Your Client Do?

• Carefully examine the Section 154 notice: It will specify what error is proposed to be rectified.

• Respond within the time limit mentioned in the notice.

• If the rectification request is reasonable and correct, your client should cooperate.

• If your client disagrees with the rectification, they can file a reply or objections within the stipulated period.

• Keep track of all communication and maintain records.

Important:

• These notices serve different legal purposes.

• They can co-exist for the same AY without conflict.

• Your client should consult their CA or tax advisor to draft responses and avoid any adverse consequences.