2023 (6) TMI 719 - AT - Income Tax

Tribunal rules against unauthorized conversion of tax addition, favoring taxpayer appeal

Smt. Nirmla Jain, W/o Late Sh. Pawan Kr. Jain Versus ITO Ward 2 (1), CGO complex-2, Kamla Nehru Nagar, Ghaziabad, Uttar Pradesh.

Smt. Nirmla Jain, W/o Late Sh. Pawan Kr. Jain Versus ITO Ward 2 (1), CGO complex-2, Kamla Nehru Nagar, Ghaziabad, Uttar Pradesh. - TMI 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.