Section 378 of the Income-tax Act, 2025 allows the Competent Authority to revise an order in the assessee's favour, on his own motion or on an application made within one year with a ₹500 fee, and requires the order to be passed within one year from the end of the financial year of the application.
What section 378 does
Section 378 is the assessee-friendly revision — the successor to section 264 of the Income-tax Act, 1961. It is the mirror image of section 377: where that section allows revision against the taxpayer, this one allows relief for the taxpayer.
The defining limit is in sub-section (1)(c): the Competent Authority may pass such order as he thinks fit, not being an order prejudicial to the assessee. The worst outcome of a section 378 application is that nothing changes.
The timelines are tight and symmetrical. The Authority cannot revise on his own motion an order made more than one year previously. An assessee's application must be made within one year of communication or knowledge of the order. And the order on the application must be passed within one year from the end of the financial year in which the application is made.
The Income-tax Act, 2025 takes effect from 1 April 2026 and applies from tax year 2026-27. The Income-tax Act, 1961 continues to govern every year up to 31 March 2026, including assessments, appeals and penalties for those years, because of the repeal and savings provision in section 536. Figures quoted here are the amounts written into the Act as enacted (with the Gazette corrigenda of 3 September 2025); the annual Finance Act can change rates and thresholds.
Old Act and new Act, side by side
The table below shows what the Income-tax Act, 1961 did and where the same ground is covered in the Income-tax Act, 2025.
| Income-tax Act, 1961 | What it did | Income-tax Act, 2025 |
|---|---|---|
| 264(1) | Revision on own motion or on application | 378(1) |
| 264(2) | One-year limit for suo motu revision | 378(2) |
| 264(3) | One-year limit for the application | 378(3) |
| 264(3), proviso | Condonation for sufficient cause | 378(4) |
| 264(4) | Cases where revision is barred | 378(5) |
| 264(5) | ₹500 fee | 378(6) |
| 264(6) | Order within one year from the end of the financial year | 378(7) |
| 263 | Revision prejudicial to revenue | 377 |
Section 378 sub-section by sub-section
Read this alongside the bare text — each heading below is a sub-section of the section as enacted.
Sub-section (1) — the power and its outer limit
For any order other than one to which section 377 applies, passed by an authority subordinate to him, the Competent Authority may — of his own motion or on an application by the assessee — (a) call for the record; (b) make or cause inquiry; and (c) pass such order thereon, not being an order prejudicial to the assessee, as he thinks fit.
Sub-sections (2) and (3) — the one-year clocks
The Authority shall not of his own motion revise any order made more than one year previously. An application by the assessee must be made within one year from the date the order was communicated to him or the date he otherwise came to know of it, whichever is earlier.
Sub-section (4) — condonation
The Competent Authority may admit an application made after the one-year period if satisfied that the assessee was prevented by sufficient cause from making it in time.
Sub-section (5) — when revision is barred
No revision is available where: (a) an appeal lies to the Joint Commissioner (Appeals), Commissioner (Appeals) or the Tribunal but has not been made and the time for it has not expired; (b) the appeal lies and the assessee has not waived his right of appeal; or (c) the order has been made the subject of an appeal to any of those authorities. Section 378 is therefore an alternative to appeal, not a supplement to it.
Sub-sections (6) and (7) — fee and the time to decide
Every application by an assessee must be accompanied by a fee of ₹500. And an order shall be passed within one year from the end of the financial year in which the application is made — a discipline on the Authority that the old section carried in similar terms.
When to prefer section 378 over an appeal
Because the outcome cannot be prejudicial, section 378 suits cases where the taxpayer has a clear point but little appetite for litigation risk — a missed claim, an obvious error not amounting to a mistake apparent from the record under section 287, or a matter where the appeal window has closed. The trade-off is that the right of appeal must be waived or exhausted first, under sub-section (5).
Worked example
An assessment order for tax year 2026-27 is communicated on 10 January 2029. The assessee did not claim a deduction it was entitled to, and the point is not a mistake apparent from the record.
| Option | Position | Outcome |
|---|---|---|
| Appeal under section 357 | Thirty days from the notice of demand — expired | Condonation would have to be sought under section 358(5) |
| Rectification under section 287 | Not a mistake apparent from the record | Not available |
| Revision under section 378 | Application by 10 January 2030, with a ₹500 fee | Available, provided the right of appeal is waived or the appeal time has expired — sub-section (5) |
| Time for the Authority to decide | Application made in financial year 2029-30 | Order by 31 March 2031 — sub-section (7) |
| Risk | Sub-section (1)(c) | The order cannot be prejudicial to the assessee |
That last row is why section 378 is undervalued. The application cannot make the position worse. The constraint is sub-section (5): if an appeal still lies and the time has not expired, the assessee must first waive the right of appeal.
Compliance checklist and due dates
- Apply within one year of communication or knowledge of the order, whichever is earlier.
- Pay the ₹500 fee with the application, as sub-section (6) requires.
- Confirm the position under sub-section (5): the appeal must have been decided, not lie, or the right of appeal must be waived.
- Where late, seek condonation under sub-section (4) with documented sufficient cause.
- Remember the Authority must decide within one year from the end of the financial year of the application.
- Consider section 378 where the point is not a mistake apparent from the record under section 287 and the appeal window has closed.
Common mistakes
- Applying while an appeal is still available and within time, without waiving the right of appeal.
- Applying after an appeal has already been filed on the same order — sub-section (5)(c) bars it.
- Missing the one-year window from communication or knowledge of the order.
- Expecting section 378 to be used against the taxpayer; that is section 377.
- Omitting the ₹500 fee, which is a statutory requirement for the application.
This is an explanatory guide, not tax advice, and it does not reproduce the section in full. Read the bare text of the section before you rely on it, and check for later amendments, the Income-tax Rules made under the new Act, and CBDT circulars and notifications.