Section 153D and Section 154 of Income Tax Act 1961: Prior Approval and Rectification of Mistake

Section 153D dealt with mandatory prior approval for specified assessments and reassessments under the former Section 153A search-assessment regime. Section 154 provided the general mechanism for rectifying a mistake apparent from the record. Although the Income-tax Act, 1961 was repealed from 1 April 2026, these provisions remain relevant to proceedings preserved by the transition and savings provisions.

Section 153D: Prior Approval Necessary for Assessment in Search or Requisition Cases

Under Section 153D of the Income-tax Act, 1961, an Assessing Officer below the rank of Joint Commissioner could not pass an assessment or reassessment order for the assessment years covered by the specified provisions of Section 153A or Section 153B without the prior approval of the Joint Commissioner.

The provision created a supervisory approval requirement within the former search-assessment framework. Its purpose and operation must be examined together with Sections 153A, 153B and 153C and with the statutory version applicable to the relevant search or requisition.

When Section 153D applied

Section 153D was linked to assessments and reassessments under the former Section 153A search regime. The section did not itself create the assessment power; it imposed a prior-approval condition where the assessment was to be passed by an Assessing Officer below the prescribed rank.

The proviso stated that Section 153D would not apply where the assessment or reassessment order was required to be passed with the prior approval of the Principal Commissioner or Commissioner under Section 144BA(12), concerning the specified GAAR procedure.

Legacy status of Section 153D

Sections 153A to 153D ceased to govern new searches under the post-1 April 2021 search and reassessment framework. The block-assessment provisions in Chapter XIV-B were later reintroduced for qualifying searches initiated or requisitions made on or after 1 September 2024 under the 1961 Act. From 1 April 2026, the Income-tax Act, 2025 governs current tax years and proceedings subject to its transition rules. Section 153D therefore remains principally relevant to legacy proceedings in which the former Section 153A regime continues to apply.

Section 154: Rectification of Mistake

Section 154 of the Income-tax Act, 1961 authorised an income-tax authority referred to in Section 116 to rectify a mistake apparent from the record. Subject to the section, the authority could amend an order passed by it, an intimation or deemed intimation under Section 143(1), an intimation under Section 200A(1), and an intimation under Section 206CB(1).

Orders and intimations that could be rectified

What is a mistake apparent from the record?

Section 154 is confined to a mistake that is apparent from the record. It is a rectification provision and not a substitute for an appeal, revision or reassessment. A point that requires a substantial investigation, fresh fact-finding or resolution of a debatable legal controversy ordinarily falls outside the narrow rectification jurisdiction. Whether a particular error is apparent must be determined from the record and the governing law applicable to that order or intimation.

Effect of appeal or revision

Where a matter in an order has already been considered and decided in an appeal or revision, Section 154 does not permit the authority to use rectification to amend that decided matter. The authority may rectify another matter in the order that was not so considered and decided, subject to the other requirements of Section 154.

Who may initiate rectification?

The concerned authority may rectify an apparent mistake on its own motion. It is also required, subject to the section, to act on an apparent mistake brought to its notice by the assessee, deductor or collector. Where the concerned authority is the Joint Commissioner (Appeals) or Commissioner (Appeals), the Assessing Officer may also bring the mistake to its notice.

Opportunity of hearing where liability increases

If the proposed rectification would enhance an assessment, reduce a refund or otherwise increase the liability of the assessee, deductor or collector, the authority must give notice of its intention and provide a reasonable opportunity of being heard before making the amendment.

Written order, refund and demand

An amendment under Section 154 must be made by a written order. If rectification reduces the assessment or otherwise reduces liability, any resulting refund is to be given in accordance with the Act. If it enhances the assessment, reduces a refund already made or otherwise increases liability, the Assessing Officer serves a notice of demand, which is treated as a notice under Section 156.

Time Limits under Section 154

Subject to the exceptions expressly provided by the 1961 Act, Section 154(7) barred an amendment after four years from the end of the financial year in which the order sought to be amended was passed.

Separately, where an assessee, deductor or collector made an application for amendment, Section 154(8) required the authority to pass an order allowing or refusing the claim within six months from the end of the month in which the application was received. The four-year limitation and the six-month disposal requirement operate in their respective statutory fields and should be checked against the facts and any applicable special provision.

Rectification under Section 287 of the Income-tax Act, 2025

For matters governed by the Income-tax Act, 2025, the corresponding rectification provision is Section 287. It authorises an income-tax authority referred to in Section 236 to rectify a mistake apparent from the record by amending an order passed under the 2025 Act, an intimation or deemed intimation under Section 270(1), or an intimation under Section 399, subject to the conditions and procedure in Section 287.

The new provision preserves the core concept that rectification concerns a mistake apparent from the record and also restricts rectification of a matter already considered and decided in appeal or revision. For proceedings relating to assessment years governed by the repealed 1961 Act, the official transition guidance confirms that rectification under Section 154 may still be initiated and concluded under the old Act where the savings provisions apply.

Practical Checklist for Rectification

• Identify whether the underlying matter is governed by the Income-tax Act, 1961 or the Income-tax Act, 2025.
• Specify the exact order or intimation containing the alleged mistake.
• Show from the existing record why the mistake is apparent and does not require a fresh investigation.
• Check whether the disputed matter has already been considered and decided in appeal or revision.
• Verify the applicable limitation period and the date of the order sought to be rectified.
• If the proposed amendment increases liability or reduces a refund, ensure that the statutory opportunity of hearing is provided.

Official Income-tax Resources

For the statutory text and transition material, refer to the official Income Tax Department tax laws portal, the official Income-tax Act, 2025, and the Income Tax e-Filing portal.

Updated: 29 September 2026. The applicable provision depends on the tax or assessment year, date and nature of the proceeding, statutory savings and subsequent amendments.