Yes, in this situation, the rejection of the rectification under Section 161 can be considered as “adversely affecting a person,” depending on the context

Let’s break it down clearly:

Relevant Legal Principle: Section 161 – Rectification of Mistakes The third proviso to Section 161 (e.g., under laws like CGST or Income Tax, depending on the Act in question) typically states: “Where such rectification adversely affects any person, the principles of natural justice shall be followed.”
In simple terms, before passing a rectification that negatively impacts someone, that person must be given a fair hearing.

Scenario
Original Order: ₹10 lakh demand. Rectification filed: The assessee (likely) believes there is a mistake and seeks a reduction or correction. Department rejects rectification u/s 161: They maintain the original demand.

Is it “adversely affecting any person”?
If the rectification had the potential to reduce the demand, and the rejection maintains a ₹10 lakh demand, then yes, the rejection does adversely affect the assessee, because:
The person sought relief and was denied.
The person remains liable for the full ₹10 lakh.
Natural justice (hearing opportunity) is required before rejecting the rectification if the rejection imposes or continues a burden.

Key Case Law Insights (where applicable):
Courts have often held that even a rejection of rectification can adversely affect a person if:
It denies relief sought.
It continues a burden (tax, penalty, etc.).
No hearing opportunity was given.

Conclusion
Yes, rejection of rectification u/s 161 can amount to adverse effect, triggering the requirement to follow principles of natural justice — especially if the assessee was not given an opportunity to be heard before the rejection.