2022 (4) TMI 869 - AT - Income Tax

Tax Tribunal Rules Against Commissioner's Unauthorized Law Change with No Notice to Assessee

M/s Toffee Agricultural Farms Pvt. Ltd. Versus Income-tax Officer, Ward 25 (3), New Delhi

M/s Toffee Agricultural Farms Pvt. Ltd. Versus Income-tax Officer, Ward 25 (3), New Delhi - TMI 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.