2022 (4) TMI 869 - AT - Income Tax

Addition u/s 69C - reference to DVO u/s 142A for the purpose of Section 69C - DVO estimated the value of the land less than 10% of the value adopted by the Stamp Valuation Authority, therefore, AO proceeded to treat the difference as unexplained expenditure u/s 69C - objection of the assessee regarding erroneous reference to the DVO, it was submitted that the Assessing Officer was not empowered to refer the matter to DVO, where the assessment was being made u/s 69C - HELD THAT - Revenue has not brought on record that mentioning of Section 69C was on account of any typographical error. It is also clear from the assessment order that the Assessing Officer had referred the issue of market value of the property in question u/s 142A - as per Section 142A such reference can be made to ascertain the value of any investment referred to in Section 69 or Section 69B or the value of any bullion, jewellery or any other valuable article referred to in section 69A or Section 69B of the Act. There is conspicuous exclusion of Section 69C. In the present case, reference u/s 142A was not made regarding ascertaining the correct market value of the investment in property. But, it was in fact for the purpose of ascertaining expenditure which the assessee made on the purchases. We find merit into the contention of the assessee that the reference to DVO u/s 142A for the purpose of Section 69C is not valid. Action of the CIT(Appeals) to treat the reference u/s 142 for the purpose of Section 69B - Hon ble Delhi high Court, rendered in the case of CIT Vs. Aar Pee Apartments (P) Ltd. 2009 (8) TMI 256 - DELHI HIGH COURT has held that 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, the 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. Hence, impugned addition is hereby deleted. Grounds of appeal taken by the assessee are allowed accordingly.

Summary

Issues:
1. Interpretation of provisions under Section 69C of the Income-tax Act.
2. Validity of reference to the Valuation Officer under Section 142A for Section 69C.
3. Authority of the Commissioner of Income Tax (Appeals) to change the provision of law for assessment.

Issue 1: Interpretation of provisions under Section 69C of the Income-tax Act:
The appeal raised concerns about sustaining an addition under Section 69C of the Income-tax Act, which was substituted with Section 69B by the Commissioner of Income Tax (Appeals). The appellant argued that the original assessment under Section 69C was incorrect and not supported by a proper inquiry into the fair market value of the land purchased. The appellant cited relevant case laws to support the contention that an assessment without a proper inquiry is flawed. The Tribunal agreed with the appellant, emphasizing that the Assessing Officer's reference to the Valuation Officer under Section 142A for Section 69C was not valid. The Tribunal held that the Commissioner of Income Tax (Appeals) had no authority to change the provision of law from Section 69C to Section 69B without specific notice to the assessee, as it goes against the provisions of the Act. The Tribunal referred to precedents to support its decision, ultimately setting aside the impugned order and deleting the addition made under Section 69C.

Issue 2: Validity of reference to the Valuation Officer under Section 142A for Section 69C:
The Assessing Officer's reference to the Valuation Officer under Section 142A for the purpose of Section 69C was challenged by the appellant as not being valid. The Tribunal concurred with the appellant's argument, highlighting that Section 142A excludes reference to ascertain the value under Section 69C. The Tribunal emphasized that the reference was not for determining the market value of the investment but for ascertaining the expenditure on the purchases, rendering it invalid under the Act. This analysis supported the decision to delete the addition made under Section 69C.

Issue 3: Authority of the Commissioner of Income Tax (Appeals) to change the provision of law for assessment:
The appellant contested the Commissioner of Income Tax (Appeals) changing the provision of law from Section 69C to Section 69B without proper notice or authority. The Tribunal agreed with the appellant, asserting that such a change without specific notice to the assessee is not permissible under the law. The Tribunal relied on precedents to establish that the Commissioner of Income Tax (Appeals) lacked the power to alter the provision of law for assessment purposes. The decision to set aside the impugned order and delete the addition under Section 69C was supported by this analysis, ultimately allowing the appellant's appeal.

This detailed analysis of the judgment addresses the interpretation of provisions under Section 69C, the validity of reference to the Valuation Officer, and the authority of the Commissioner of Income Tax (Appeals) to change the provision of law for assessment, providing a comprehensive understanding of the legal issues involved in the case.