NEMKUMAR H ,MUMBAI vs. CIRCLE 42(2)(1), MUMBAI

Per Omkareshwar Chidara (AM) :-

The issue to be decided in this case is, whether the appellant is eligible for the exemption under section 54F of the Income Tax Act, in the facts and circumstances of the case. The appellant’s claim is that his shares were sold and the sale proceeds were invested in the house property. The Ld.
AO accepted the claim of appellant and passed the order under section 143(3) of the Income Act. The Ld. AR of the appellant submits that in the body of assessment order, the Ld. AO accepted the claim of appellant, but in the computation sheet, the benefit under section 54F was not given. Hence, the appellant filed a rectification petition under section 154 of the Act requesting the Ld. AO to rectify this mistake which is apparent from record and give benefit under section 54F of the Act. But the Ld. AO denied the benefit while passing the order under section 154 of the Act by stating that appellant is not entitled to the benefit under section 54F of the Act.
Aggrieved by the denial of benefit under section 54F of the Act, the appellant

Nemkumar H

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filed an appeal before Ld. CIT(A) on this order under section 154 of the Act which s pending.
2. At this juncture, the Ld. AR has submitted that Ld. PCIT issued a notice under section 263 of the Act to the appellant that the Ld. AO committed a mistake in allowing the deduction to him while passing the order under section 143(3) of the Act. The Ld. PCIT says in this notice under section 263 of the Act that the amount of sale proceeds of shares should be invested before the time allowed under section 139(1) of the Act and the appellant has not invested the same within the due date mentioned under section 139(1) of the Act. Moreover, the amount was not invested in capital gains scheme as per the procedure. Since the Ld. AO has not applied his mind to the aspects of filing of Return of Income under section 139(1) and depositing the unutilised amount within the time allowed under section 139(1), the Ld. PCIT concluded in his order under section 263 of the Act that the order passed by Ld. AO under section 143(3) dated 23.9.2022 is incorrect as both the conditions of “erroneous order” and “prejudicial to the interest of Revenue” are fulfilled.

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Ld. AR of appellant is that once the mistake was rectified by Ld. AO (which was appealed against and pending), then the original order loses its identify to that effect and the original assessment order cannot be revised under section 263 of the Act. The mistake was already rectified under section 154
of the Act by the Ld. AO and the Ld. PCIT cannot again revise the order for the purpose of rectifying the same mistake. Once the mistake committed under section 143(3) was rectified by Ld. AO, it cannot be said that there is a mistake in the assessment order. In other words, for the same mistake, the Revenue cannot issue two orders, once by AO and by PCIT, even though under different sections. Even though, on merits very detailed submissions were filed by both Ld. AR and Ld. DR, what is to be adjudicated in this appeal is whether the order under section 263 of the Act passed by PCIT is valid in view of the above facts and circumstances which were not disputed.

Nemkumar H

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rectified.'" To the same effect is the decision of the Hon'ble Tribunal in the case of Suman Bansal v. ITO (2014) 66 SOT 182. 5. It is a settled law that, unless there is “error”, the order of Ld. AO cannot be taken up for Revision under section 263 of ITAT by PCIT. As there is no mistake in the order under section 143(3) which was rectified under section 154 of the Act, the initiation of juri iction under section 263 is incorrect. In view of the same, the order of Ld. PCIT under section 263 is held as invalid.

Copy of the Order forwarded to :

BY ORDER,

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