2022 (4) TMI 967 - AT - Income Tax

Addition u/s 69C - DVO estimated the value of the land less than the stamp valuation less than 10% of the value adopted by the Stamp Valuation Authority - Assessing Officer, proceeded to treat the difference as unexplained expenditure u/s 69C - HELD THAT - As decided in case of M/s Toffee Agricultural Farms Pvt. Ltd 2022 (4) TMI 869 - ITAT DELHI from the reading of sub-section (1) of Section 142A, it is clear that legislature referred to the provisions of Section 69, 69A and 69B but specifically excluded 69C. The principle of casus omissus becomes applicable in a situation like this. What is not included by legislature and rather specifically excluded, cannot be interpreted by the Court through the process of interpretation. The only remedy is to amend the provision. It is not the function of the Court to legislate or to plug the loopholes in the law. In the light of the above binding precedent the action of the learned CIT(Appeals) in treating the addition made by the Assessing Officer u/s 69C as have been made u/s 69B is contrary to the law laid down by the Hon ble Jurisdictional High Court - therefore, respectfully following the decision of the Hon ble Jurisdictional High Court in the case of CIT Vs. Aar Pee Apartments (P) Ltd. 2009 (8) TMI 256 - DELHI HIGH COURT he impugned order is therefore set aside. The addition made u/s 69C on the basis of the report of the DVO by the Assessing Officer deserves to be deleted.- Decided in favour of assessee.

Summary

Issues:
- Addition of ?21,00,000 under section 69B of the Act
- Substitution of section 69B for section 69C by CIT(A)
- Opportunity of being heard not provided to the assessee
- Referral of matter to DVO by AO and its validity

Analysis:
1. Addition under Section 69B:
- The assessee purchased land below circle rate, leading to an addition of ?21,00,000 as unexplained expenditure under section 69C by the Assessing Officer.
- The CIT(A) upheld the addition, but the ITAT Delhi found the reference to DVO under section 142A for section 69C invalid. The ITAT emphasized that the reference was not for ascertaining the correct market value of the investment but for expenditure on purchases, hence deleting the addition.

2. Substitution of Sections by CIT(A):
- The CIT(A) substituted section 69B for section 69C without providing sufficient opportunity to the assessee.
- The ITAT held that the CIT(A) lacked the power to change the provision of law without specific notice to the assessee. Referring to Section 250 and 251 of the Act, the ITAT emphasized that the CIT(A) cannot treat an addition made under one section as another without proper authority.

3. Opportunity of Being Heard:
- The assessee argued that the CIT(A) did not provide sufficient opportunity to be heard in re-characterizing the additions made by the Assessing Officer.
- The ITAT did not find merit in this argument but focused on the incorrect reference to DVO by the AO under section 142A for section 69C, leading to the deletion of the addition.

4. Referral to DVO by AO:
- The AO referred the valuation issue to the DVO under section 142A, which was deemed invalid for section 69C matters.
- The ITAT emphasized that the reference to DVO for section 69C purposes was not valid and set aside the orders of the authorities below, directing the AO to delete the addition in question.

In conclusion, the ITAT Delhi allowed the assessee's appeal, setting aside the addition of ?21,00,000 under section 69C and emphasizing the importance of adhering to the correct provisions of the law and providing proper opportunities for the assessee to be heard.