Appeal allowed as court finds rectification order unsustainable under law.

The appeal challenged the validity of an order passed by the CIT(A) rectifying the original order. The original order treated an amount received as income from other sources, but the rectified order considered it as a capital receipt chargeable under capital gains tax. The court found that there was no apparent mistake in the original order and concluded that the rectification order was unsustainable under the law. The appeal was allowed, setting aside the order passed by the CIT(A).

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Issues: Validity of order passed u/s. 154 by CIT(A) rectifying the original order dated 31.03.2010

Analysis:

1. The appeal was filed by the assessee challenging the validity of the order passed u/s. 154 by CIT(A) dated 20.07.2007, rectifying the original order dated 31.03.2010. The assessment against the assessee was completed u/s 143(3) of the Act, determining the income at a specific amount. The assessee, along with his brother, received an amount from a builder, which the Assessing Officer (AO) treated as income from other sources. The CIT(A) initially granted relief to the assessee, holding that the amount received against the sale of Transfer of Development Rights (TDR) was not chargeable to capital gains tax.

2. The AO applied for rectification of the order, stating that in the case of the assessee, the receipts should not be taxed as income from other sources but as capital receipts. However, in the case of the brother of the assessee, the same was treated as capital gain receipt.

3. The assessee objected to the rectification, arguing that there was no mistake in the original order passed by CIT(A) in the case of the assessee. The representative of the assessee highlighted that the relief claimed by the assessee and his brother was different. The CIT(A) had agreed to the relief claimed by the assessee, and it was contended that there was no apparent mistake in the case of the assessee.

4. The Learned DR for revenue supported the order passed by CIT(A).

5. The scope of Section 154 of the Act was examined, emphasizing that a mistake apparent on the record must be obvious and patent, not requiring a long process of reasoning. The judgments in various cases were cited to explain the concept of a mistake apparent on the record.

6. The CIT(A, while rectifying the order, compared the cases of the assessee and his brother, where different treatments were given to the amount received. The CIT(A) rectified the order for the assessee, treating the amount received as a capital receipt chargeable under capital gains tax.

7. The orders passed for the assessee and his brother were analyzed, highlighting the differing claims made by them regarding the amount received under the TDR agreement. The CIT(A) had considered one of the possible views, indicating that his order did not suffer from an apparent mistake.

8. It was concluded that the CIT(A) had ignored the principles and scope of rectification while exercising power u/s. 154 of the Act. Therefore, the order passed by CIT(A) on 20.07.2010 was deemed unsustainable under the law and was set aside, allowing the appeal filed by the assessee.

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