Notice of demand being part of assessment order is rectifiable u/s 154 of the Act for any apparent errors – ITAT
In a recent judgment, the Patna ITAT has held that notice of demand is very much part of the assessment order and in case an error comes to notice then the same is rectifiable u/s 154 of the Act.
ABCAUS Case Law Citation:
4597 (2025) (06) abcaus.in ITAT
In the instant case, the assessee had challenged the order passed by the CIT(A) in upholding the rectification under section 154 of the Income Tax Act, 1961 (the Act) of the notice of demand.
The Assessing Officer (AO) had passed a rectification order u/s 154 of the Act whereby he apparently rectified an error arising from writing “Nil” in the notice of demand issued along with the assessment order, even when in the body of the order taxable income was there. Through the rectification order, the AO in the notice of demand mentioned the correct figure of demand as the tax payable.
The assessee challenged this action of the AO before the CIT(A) where it was claimed that a rectification could only be done of the assessment order and not of the demand notice.
It was also claimed before the CIT(A) that the action of AO was bad in law since no opportunity was given prior to the impugned action.
The CIT(A) stated that the notice of demand is an integral part of the assessment order and therefore, it can be rectified u/s 154 of the Act. The CIT(A) relied on the judgment of the Hon’ble Supreme Court in support of his finding that the notice of demand is very much part of the assessment order.
Before the Tribunal the assessee argued that the action of AO in rectifying the notice of demand was illegal in as much as it was different from the assessment order and only the assessment order could be rectified. The assessee also stated that since the demand was “Nil” therefore, the assessee did not file any appeal before the Ld. CIT(A) and by time the rectification was done and a tax demand was communicated to the assessee, then it was too late to file the appeal.
The Tribunal observed that it is a settled position of law that the notice of demand is very much part of the assessment order and in case an error comes to notice then the same is rectifiable u/s 154 of the Act.
The Tribunal observed that the Hon’ble Supreme Court has dealt with this issue and held that there is no reason why the notice of demand, which is also in writing and which has received the imprimatur of the ITO, should not be treated as part of the assessment order in the wider sense in which the expression has to be understood in the context of section 143(3).
The Tribunal held that the AO did not commit any error in terms of rectifying the notice of demand. In result, appeal of the assessee was dismissed.
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