Sections 12-14 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
After an assessment order, three things can follow: a correction of an obvious mistake (section 12), a notice telling the assessee what must be paid (section 13), and, where income or an asset is held through someone else, assessment and recovery from the person who really benefits (section 14). This article reads all three from the Act as enacted and published in the Gazette of India on 27 May 2015.
A tax authority may correct a mistake apparent from the record within four years from the end of the financial year in which the order was passed, as enacted. An amendment that raises the liability needs a hearing first. Any sum payable under an order is demanded by a notice of demand in the prescribed form and manner. Section 14 keeps open the direct assessment and recovery from the person on whose behalf or for whose benefit the income or asset is held.
Section 12: rectification of mistake
Sub-section (1) and (2): the power and the four-year limit
Section 12(1) says a tax authority may amend any order passed by it under this Act so as to rectify any mistake apparent from the record. Section 12(2) says no amendment shall be made after a period of four years from the end of the financial year in which the order sought to be amended was passed. The period is as enacted.
Sub-section (3): a hearing before an increase
Section 12(3) says the tax authority shall not make any amendment which has the effect of enhancing the undisclosed foreign income and asset, or reducing a refund, or otherwise increasing the liability of the assessee, unless the authority concerned has given the assessee an opportunity of being heard.
Sub-section (4) and (5): who can start it, and how fast it is decided
Section 12(4) says the tax authority may amend:
- (a) on its own motion; or
- (b) on an application made to it by the assessee or, as the case may be, by the Assessing Officer.
Section 12(5) says any application for amendment shall be decided within a period of six months from the end of the month in which the application is received.
Sub-section (6): matters already decided in appeal or revision
Section 12(6) says that where the order has been made in an appeal or revision, the tax authority's power to amend is restricted to matters other than those decided in the appeal or revision.
| Sub-section | Rule |
|---|---|
| (1) | Mistake apparent from the record may be rectified |
| (2) | Not after four years from the end of the financial year in which the order was passed |
| (3) | No increase in liability without a hearing |
| (4) | On own motion or on application by the assessee or the Assessing Officer |
| (5) | Application to be decided within six months from the end of the month of receipt |
| (6) | For orders made in appeal or revision, only matters not decided there |
The section does not define a "mistake apparent from the record", and this article does not supply a definition. If you think an order contains such a mistake, the application is the route. An adviser can help you frame it; see our legal dispute resolution service. The income-tax procedure that this section parallels is described in our guide on the parallel rectification procedure under income-tax law. A refusal to rectify, or a rectification that enhances the assessment or reduces the refund, can be taken in appeal under section 15.
Section 13: notice of demand
Section 13 is short. It says that any sum payable in consequence of any order made under this Act "shall be demanded by a tax authority by serving upon the assessee a notice of demand in such form and manner as may be prescribed".
The Act itself says nothing about the form. The Rules of 2015, as notified on 2 July 2015, say in rule 5 that where any tax, interest or penalty is payable in consequence of any order passed under the Act, the Assessing Officer shall serve upon the assessee a notice of demand in Form 1, specifying the sum so payable. Our article on rules 4 to 8 and Forms 1 to 5 takes that further.
The notice of demand matters for what follows. The time to pay runs from its service under section 30: any amount specified as payable in a notice of demand must be paid within thirty days of service (see sections 30 and 31). The time to appeal also runs from service of the notice of demand relating to the assessment or penalty, under section 15(3).
Section 14: direct assessment or recovery is not barred
Section 14 says nothing in "this Chapter" shall prevent either the direct assessment of the person on whose behalf or for whose benefit the undisclosed income from a source located outside India is receivable, or the undisclosed asset located outside India is held, or the recovery from such person of the tax or any other sum of money payable in respect of such income and asset.
In plain terms, the Act does not require the officer to stop at the person who holds the income or asset on paper. The person who is the real beneficiary can be assessed directly, and tax or any sum payable can be recovered from that person. This links with the definition of an undisclosed asset, which speaks of an asset "held by the assessee in his name or in respect of which he is a beneficial owner", in section 2(11). The section is silent on the procedure for a direct assessment, and this article adds none.
An example
Farah Khan, a resident other than not ordinarily resident, is assessed, and the assessment order contains a clear arithmetical error in adding up two foreign receipts. She applies under section 12(4)(b) within four years from the end of the financial year in which the order was passed. The authority must decide her application within six months from the end of the month in which it is received. Had the authority wanted to increase her liability by the amendment, it would first have had to give her an opportunity of being heard. Separately, once the order is final, a notice of demand in Form 1 is served, and a further inquiry shows that an overseas deposit stands in the name of her brother but is held for her benefit; under section 14, the direct assessment of the person for whose benefit the asset is held is not barred.
Need help with a demand or a correction?
If an order contains a mistake, or a notice of demand has been served on you, the dates and the form of your response matter. Our legal dispute resolution team can help you check the order, prepare the application or reply, and plan any appeal.
Key takeaways
- A tax authority may rectify a mistake apparent from the record within four years from the end of the financial year in which the order was passed, as enacted.
- No amendment that increases the liability or reduces a refund can be made without giving the assessee a hearing.
- An application for amendment must be decided within six months from the end of the month of receipt.
- Any sum payable under an order is demanded by a notice of demand in the prescribed form; the Rules of 2015 prescribe Form 1.
- Section 14 keeps direct assessment and recovery from the person for whose benefit the income or asset is held open.
- Later Finance Act amendments to sections 12 to 14 must be checked before acting, and so must any later amendment rules. These sections cite no section of the Income-tax Act, 1961; where this article mentions income-tax law, it means that Act as printed in 2015, and the corresponding provision of the current income-tax law should be checked.
Read next
- Section 11: time limit for assessment and reassessment
- Sections 15-17: appeal to the Commissioner (Appeals), procedure and powers
- Rules 4 to 8 and Forms 1 to 5 of the Black Money Rules, 2015
- Rectification of an income-tax order: the parallel income-tax procedure
Disclaimer: Based on the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 as enacted and published in the Gazette of India on 27 May 2015, and on the Rules of 2015 as notified on 2 July 2015, as consulted on 2 October 2026. Later Finance Act amendments, amendment rules and the current income-tax law should be checked. This article is general information, not legal advice; check the official text before acting.