2023 (6) TMI 719 - AT - Income Tax

Addition u/s 69 - CIT confirmed the additions by Changing the section to section 69C - undisclosed investments - conversion of addition as made by AO under any wrong section - HELD THAT - As identical controversy was adjudicated by the Tribunal in the case of M/s Toffee Agricultural Farms P. Ltd. 2022 (4) TMI 869 - ITAT DELHI 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. From the reading of sub-section (1) of Sec. 142A of the Act, it is clear that the legislature referred to the provisions of Sec. 69, 69A and 69B of the Act but specifically excluded the provisions of Sec. 69C of the Act. In such a situation the well known principle of casus omissus becomes applicable. In my humble understanding what is not included by the legislature in its wisdom and rather specifically excluded as per legislative intention, the only remedy is to amend the provision. Addition made by the AO u/s 69 of the Act cannot be converted into Sec. 69C of the Act by the Ld.CIT(A) while upholding the addition. Action of the Ld.CIT(A) in this regard cannot be held as valid and sustainable being bad in law.

Summary

Issues Involved:
The issues involved in this judgment are the conversion of addition made by the Assessing Officer (AO) under section 69 to section 69C, the justification of the Commissioner of Income Tax (Appeals) for such conversion, and the disposal of various grounds raised by the assessee challenging the actions of the AO and the CIT(A).

Conversion of Addition from Section 69 to Section 69C:
The appeal was filed by the assessee against the order of the Commissioner of Income Tax (Appeals) confirming the addition made by the AO under section 69 by changing it to section 69C. The assessee contended that they never raised any grounds of appeal for such conversion. The Tribunal referred to a previous judgment and held that the CIT(A) did not have the power to treat the addition made under section 69 as if it was made under section 69C. The Tribunal emphasized that the legislative exclusion of section 69C in certain provisions indicated a casus omissus, and it was not within the jurisdiction of the CIT(A) to change the provision of law regarding the addition. Consequently, the Tribunal allowed the grounds of the assessee and directed the deletion of the addition made under section 69C.

Disposal of Assessee's Grounds:
The assessee raised multiple grounds challenging the actions of the AO, including the disallowance of legitimate business losses, the delay in converting the case to complete scrutiny, and the framing of the assessment order against the contents of the questionnaire. The Tribunal carefully considered these grounds and noted that since the conversion of the addition from section 69 to section 69C was not valid, the other grounds challenging the actions of the AO became academic. Therefore, the Tribunal did not adjudicate on these grounds on their merits. The appeal of the assessee was partly allowed based on the issue of conversion of the addition under section 69 to section 69C.

Conclusion:
The Tribunal's judgment focused on the incorrect conversion of the addition made by the AO under section 69 to section 69C, highlighting the legislative intent and the limitations on the power of the CIT(A) in changing the provision of law. The Tribunal allowed the grounds of the assessee related to this issue and directed the deletion of the addition made under section 69C. Other grounds challenging the actions of the AO were not adjudicated upon due to the primary issue being resolved in favor of the assessee.