HC Says Rectification Application Was Within Time: ITAT Misapplied Limitation Under Section 254(2):

HC Says Rectification Application Was Within Time: ITAT Misapplied Limitation Under Section 254(2) Accost Media LLP approached the High Court challenging the ITAT’s order dated 13 October 2025, which had rejected its rectification application under Section 254(2) of the Income Tax Act as time-barred. The ITAT order sought to be rectified was passed on 10 December 2024, but was admittedly received by the assessee only on 24 March 2025. The LLP filed its rectification application on 16 July 2025. Although this was within six months from the date of receipt, the ITAT Registry issued a notice stating that the filing was 15 days late, counting the limitation from the month in which the order was passed. Despite the assessee’s explanation that rectification could not be filed without obtaining the order itself, the ITAT still rejected the application on limitation. Issue Raised: Whether the assessee’s rectification application under Section 254(2) was barred by limitation when filed within six months from the date of receipt of the ITAT order, but beyond six months from the date on which the order was passed. HC Ruled: The Bombay High Court held that the rectification application was not time-barred and that the ITAT had misdirected itself in treating it as such. The Court emphasised that Section 254(3) mandates communication of ITAT orders to the assessee and that Rule 34A, read with Rule 9, makes it impossible to file a rectification application without having the order in hand. Relying on the Delhi High Court’s interpretation in Golden Times Services and Pacific Projects, the Court held that the limitation period must be computed from the date of communication or knowledge. Therefore, the application filed on 16 July 2025 was well within time. The Court declined to remand the matter to the ITAT. Since the assessee had already filed an appeal against the original ITAT order dated 10 December 2024, the Court held that all grounds raised in the writ petition on the merits could be fully canvassed in that statutory appeal. The writ petition was disposed of with these clarifications and without any order as to costs. To Read Full Judgment, Download PDF Given Below