Section 371: amendment of assessment on appeal

Introduction

Section 371 coordinates an appeal outcome for an association of persons or body of individuals with the tax assessments of its individual members. An appellate change to the collective assessment can lead to an order authorising the Assessing Officer to amend or freshly assess a member.

Key takeaways

The rule

If, as a result of an appeal under section 356, 357 or 362, any change is made in the assessment of a body of individuals or an association of persons, or a new assessment of such a body or association is directed, the Joint Commissioner (Appeals), Commissioner (Appeals) or Appellate Tribunal must pass an order authorising the Assessing Officer either to amend the assessment made on any member of that body or association, or to make a fresh assessment on such a member.

Practical scope

Match the collective assessee and the member: the provision concerns a body of individuals or association of persons and a member of that body or association. It is not a general rule applying to every company, partnership or other entity simply because another assessment changes.

The trigger is a change in the collective assessment or a direction for a new assessment resulting from an appeal under Section 356, 357 or 362. The text is not limited to an outcome described as a taxpayer’s victory; examine what the appellate order actually changes.

Limits and separate requirements

The appellate authority’s authorising order and the Assessing Officer’s consequential member assessment are distinct steps. A changed collective assessment should not simply be treated as an already issued revised member order.

Section 371 does not itself prescribe a fixed tax rate, member allocation formula or refund amount. Those questions require the applicable substantive provisions and the facts of the member’s assessment.

Step-by-step review

1. Identify the BOI or AOP appellate order under one of the three specified provisions.

2. Record the assessment change or new-assessment direction and the affected member and year.

3. Identify the order authorising amendment or fresh assessment of the member.

4. Compare the consequential member order with the authorisation and applicable substantive computation.

Hypothetical example

Hypothetical illustration: an appeal changes an AOP’s assessed income and the appellate authority authorises amendment of a member’s assessment. The member should reconcile the consequential order with that authorisation. The member should not simply copy the AOP’s revised income into their return as though Section 371 supplied the allocation and tax rules.

Records to prepare

Collective assessment, appellate order and authorising direction.

Records identifying the affected member, share and relevant year.

Member’s original and consequential assessments and a reconciliation of the changes.

Official amended Act source

• Income-tax Act, 2025 as amended by Finance Act, 2026: Section 371 and related provisions

Step-by-step flow for amending member assessments under Section 371

1. 1

   Is the appeal under section 356, 357 or 362?

   Section 371 covers appeals to the Joint Commissioner (Appeals), the Commissioner (Appeals) and the Appellate Tribunal.

   • No: Section 371 does not apply.
   • Yes: Go to the next step.
2. 2

   Is the assessee a body of individuals or an association of persons?

   • No: Section 371 does not apply.
   • Yes: Go to the next step.
3. 3

   Did the appeal change the assessment or direct a new assessment?

   • No: No order under Section 371 is needed.
   • Yes: Go to the next step.
4. 4

   Order authorising the Assessing Officer

   The appellate authority or the Tribunal passes an order authorising the Assessing Officer either to amend the assessment made on any member of the body or association, or to make a fresh assessment on that member.

5. 5

   Assessing Officer acts on the order

   The Assessing Officer amends the member's assessment or makes a fresh one so that it reflects the appellate outcome. How a member's share is computed is governed by other provisions of the Act.

Practical checklist

Glossary

Association of persons

A collective assessee category whose changed assessment can affect members under section 371.

Authorising order

The appellate authority’s direction allowing the Assessing Officer to amend or make a fresh member assessment.

Consequential assessment

The member’s amended or fresh assessment following the authorisation contemplated by Section 371.

Frequently asked questions