Amendments in Assessment Order
Introduction
Assessment orders may require modifications due to subsequent events, such as appellate orders, rectifications, or reassessment proceedings. These amendments ensure the correct computation of taxable income for the assessee or other connected taxpayers.
Key provisions of Section 155 are as follows:
- Rectification in assessment of partner (Section 155(1A))
o If the partner’s remuneration is later disallowed in the firm’s assessment, the partner’s income is adjusted.
o Time limit: Within 4 years from the end of the financial year in which the firm’s final order was passed.
- Rectification in assessment of members of AOP/BOI (Section 155(2))
o If a member’s share of AOP/BOI income is incorrectly assessed, the AO must correct it.
o Time limit: Within 4 years from the AOP/BOI’s final order.
- Rectification on re-computation of loss or depreciation (Section 155(4))
o If loss or depreciation is recomputed in reassessment, its impact on future years is corrected.
o Time limit: Within 4 years from the reassessment order.
- Rectification on conversion of capital asset into stock (Section 155(7B))
o If a parent-subsidiary transfer is eligible for a capital gains exemption but later fails to meet the conditions, the exemption is revoked.
o Time limit: Within 4 years from the financial year in which the conditions were breached.
- Rectification if investment made in extended period (Section 155(11))
o If a taxpayer invests capital gains in new assets within the extended period, the earlier tax liability is reversed.
o Time limit: Within 4 years from the financial year of receiving compensation.
- Rectification if exports proceeds received in foreign exchange (Section 155(11A))
o If export proceeds are later received in convertible foreign exchange, exemptions (10A, 10AA, 10B, 10BA) are granted retrospectively.
o Time limit: Within 4 years from the year of receipt.
- Rectification based on settlement of overseas tax dispute (Section 155(14A))
o If disputed foreign tax is later settled, the AO allows the credit upon submission of proof.
o Time limit: Within 6 months from document submission.
- Rectification where full value of consideration is changed (Section 155(15))
o If stamp valuation is reduced in appeal, the capital gains are recomputed accordingly.
o Time limit: Within 4 years from the revision order.
- Rectification where amount of compensation is changed (Section 155(16))
o In case of compulsory acquisition, enhanced compensation is taxed as capital gains on receipt basis. If compensation is later reduced by judicial authorities, the Assessing Officer shall amend the assessment by taking the reduced amount as full value of consideration.
o Time limit: Within 4 years from the reduction order.
- Rectification where amount of deduction is withdrawn (Section 155(17))
o If patent rights are revoked, deductions for royalty under Section 80RRB are reversed.
o Time limit: Within 4 years from the revocation order.
- Rectification due to disallowance of surcharge/cess (Section 155(18))
o Deduction for surcharge/cess is disallowed retrospectively from 01-04-2005.
o Time limit: Within 4 years from the financial year starting 01-04-2021.
- Rectification to allow a deduction for differential sugarcane price paid in subsequent years by the co-operative sugar factories (Section 155(19))
o Co-operative sugar factories can claim deductions for excess sugarcane purchase price disallowed in earlier years.
o Time limit: Within 4 years from 01-04-2022 (i.e., till 31-03-2027).
- Rectification of TDS credit in respect of the income disclosed in the return of income filed in earlier years (Section 155(20))
o If TDS is deposited late, credit is allowed in the correct year upon application in Form 71.
o Time limit: Within 4 years from the financial year of deduction.
- Recomputation of total income of 2 subsequent years in conformity with the ALP determined by TPO [Section 155(21)]
o The Assessing Officer shall proceed to recompute the total income of the assessee for the said two consecutive previous years, by amending the order of assessment or any intimation or deemed intimation under sub-section (1) of section 143.
Time limit:
o If assessment, intimation or deemed intimation of Year 2 and Year 3 is done: The Assessing Officer is required to make an amendment within 3 months from the end of the month in which Year 1’s assessment is completed.
o If assessment, intimation or deemed intimation of Year 2 and Year 3 is not done within the 3-month period: The Assessing Officer is required to make an amendment within 3 months from the end of the month in which assessment, intimation or deemed intimation for Year 2/3 is done.
Faceless Proceedings for Amendments (Section 157A)
- All rectifications are conducted electronically under a faceless system.
- Ensures automation, efficiency, and minimal taxpayer interaction.