Section 154 and section 155

1. Section 154 (1) : it may possible that when a AO passed order may commit mistake while passing the order of assessment, appeal, revision etc  and with the view of rectification of mistake following powers given to AO/CIT/ officer as given u/s 116.

BY AO

• any order of assessment 143 (3)
• refund or any other order passed by him.
• Intimation u/s 143 (1)
• Intimation u/s 200 A (1) (relating to processing of TDS return w.e..f.01/07/2012

BY CIT

• any order passed by him u/s 263 or 264 i.e. relating to revision of orders appeal
• any Order passed u/s 250

BY OTHER INCOME TAX ATHORITY AS GIVEN U/S 116

i.e.  CBDT,DGIT/CCIT/DIT/CIT/CIT(A)/ADIT/ACIT/ACIT(A)/JDIT/JCIT/DDIT/DCIT/DCIT(A)/ADIT/ACIT/

ITO/TRO/ Inspectors of Income Tax.

• they can also rectify order passed by them.

2.Section 154 (1A)

Where any matter had been considered and decided in any proceeding by way of appeal or revision, Rectification of such matter can not be done by AO u/s 154.

3.Section 154 (2)

AO can amend order either

• its own
•  on application made by the assessee
• If ITO bring to attention of CIT

1. Section 154 (3): if effect of such rectification is enhancement of liability/ reduction in refund/otherwise increase liability of Assessee, opportunity of being heard is necessary.

1. Section 154 (4): order of rectify is must in writing if refuse or accept the application of rectification.

1. Section 154 (5): where rectification assessee’s liability is reduced than AO will make refund to assessee.
2. Section 154 (6) : Where result of any such assessment is enhancing liability or reduction of refund already made, AO shall issue Notice of demand shall be serve  upon the assessee and such notice shall be deemed to issue u/s 156 and other provisions or income tax act apply.

1. Section 154 (7): time limit for making application for rectification of order already passed

Rectification can be made within 4 year from the end of the financial year in which order sought to be amended was passed.

NOTE:

• This time limit gets freshly extended if assessee wants the further rectification of rectified order passed Hind wire industries Ltd. V cit (1995) 212 ITR 639 sc.
• It is well know that if assessee file an appeal to CIT, the previous order passed by  ITO cease to exist because it merges with order of CIT THAN period of 4 year u/s 154 (7) shall be counted from end of financial year in which order passed by CIT. CIT v Tony Electronics Ltd. (2010) 320 ITR 378 (Del.)
• this time limit shall not apply to cases where amendment is made u/s 155

1. Section 154 (8): time limit for passing order if application is made u/s 154 (7)

AO has to pass an order within 6 month from the end of month in which such application is made to officers as given u/s 154 (1).

to the extant i understand section 154 and 155 is as follows

154 deals with apparent mistakes have done by Assessing Officers" and can be rectified with in 4 year from.....

but 155 deals with the mistakes which is not apparent and time limit would be upto 10 years or so .....