RECTIFY ASSESSMENT ORDER U/S 147

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This query is : Resolved

Suresh S. Tejwani (Querist)
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20 June 2023 IN THE PROCEEDING BETWEEN AO AND ASSESSEE FOR PROPERTY MATTER , ASSESSEE HAD REQUESTED AO TO CONSIDER VALUATION REPORT U/S 55A OF INCOME TAX.

HOWEVER AO ISSUED ASSESSMENT ORDER U/S 147 BEFORE 2 DAYS OF RECEIPT OF VALUATION REPORT SO, ORDER IS INCORRECT.

NOW CAN ASSESSEE RECTIFY ORDER U/S 154 OF INCOME TAX ?

Aashok Kumar Sharma

Aashok Kumar Sharma

(Expert)
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10 July 2024 Yes, the assessee can seek rectification under section 154 of the Income Tax Act, 1961 in this scenario. Here’s how you can proceed:

1. **Grounds for Rectification:** The assessee can file an application for rectification under section 154 if there is any mistake apparent from the record. In your case, the mistake apparent from the record could be that the AO issued the assessment order under section 147 before considering the valuation report submitted by the assessee under section 55A.

2. **Procedure for Rectification:**
- **Prepare Application:** Prepare a rectification application clearly stating the grounds on which rectification is sought. Mention that the assessment order was issued before the AO had the opportunity to consider the valuation report, which is crucial for determining the correct taxable value.
- **Submit to AO:** Submit the rectification application to the AO who issued the assessment order. Ensure that it is filed within the prescribed time limit (usually within four years from the end of the relevant assessment year).

3. **Consideration by AO:** The AO will examine the rectification application and the grounds provided therein. If the AO finds that there is indeed a mistake apparent from the record (in this case, issuing the order before considering the valuation report), they can rectify the order under section 154.

4. **Outcome of Rectification:**
- If rectification is allowed, the AO will issue a rectified order correcting the mistake. This could involve revising the assessment order to incorporate the valuation report’s findings or making any other necessary corrections.
- If rectification is not allowed, the AO will communicate the reasons for rejection to the assessee.

5. **Further Appeal:** If the rectification application is rejected and the assessee disagrees with the AO’s decision, they can appeal against the order to the Commissioner of Income Tax (Appeals) [CIT(A)].

In conclusion, the assessee can definitely seek rectification under section 154 to correct the mistake of issuing the assessment order before considering the valuation report. It’s crucial to file the rectification application promptly and provide clear grounds to support the request for rectification.

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