The assessee sold a business and related assets and claimed a short-term capital loss for AY 2004–05. The AO completed assessment under s. 143(3) after calling for and receiving explanations and documents, and made minor additions. The Commissioner invoked s. 263 and held the assessment order erroneous and prejudicial on several grounds, including disallowance of s. 54EC investments as allegedly made before the date of transfer. The Tribunal allowed the assessee’s appeal in part. On Department’s appeal to the High Court: Held-there was no error warranting intervention under s. 263. The assessee had been asked for and had provided necessary documents; the schedule of payments and the agreement showed advances contemporaneous with the sale agreement (2-01-2003), and investments in bonds were made thereafter from those proceeds (initially routed through mutual funds). The nexus between advances and investments was clear; the assessee was entitled to the s. 54EC exemption. The Circular issued in context of s. 54E was also held applicable to s. 54EC. (AY.2004–05)