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TMI Blog2016 (8) TMI 1407X X X X Extracts X X X X X X X X Extracts X X X X ..... he issue in dispute. Thus, ground No. 1 and 2 of the appeal are dismissed. Adjudication of appeal without filing of the statement of fact as mandated by the statutory form No. 35. - Held that:- CIT(A) has not treated the forms filed before him as defective. He admitted the appeal and adjudicated the matter on merits. The order of the CIT(A) is the impugned order appealed against before us. The ld. DR wants us to hold that the order of the ld. CIT(A) is illegal and against the law as there is a defect in Form No. 35 In our view the arguments raised by the ld. DR are devoid on merit. Defects in the return of income filed, defects on Form No. 35 which is the form of appeal etc. are to be considered by the respective authorities before whom these are filed and the maintainability of the appeal before us cannot be challenged. The right of appeal is a substantive right. Procedural issues can not take away substantial rights of a person. This cannot be a ground for the revenue to challenge the order of the ld. CIT(A) which is in this case in favour of the Revenue. The arguments to say the least are farfetched. Hence we dismiss the same.- decided against revenue - ITA No. 541/Del/2013 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of account of those firms and, therefore, the assessee during the statement recorded under section 132(4) of the Act, offered ₹ 30 lakh as unexplained investment against discrepancy in the stock, if any. He further submitted that during the verification process in assessment proceeding, no discrepancy in the stock was found and, hence, no addition could have been made on the basis of the offer of ₹ 30 lakhs made against any possible discrepancy in stock, in statement under section 132(4) of the Act. He also relied on the decision of the Delhi Bench of Tribunal in the case of M/s. Best Infrastructure (India) Private Limited Vs. ACIT in ITA No. 1698/Del/2014 pronounced on 31st of may 2016 wherein it is held that statement recorded during the course of search cannot on a standalone basis give power to the Assessing Officer to make the addition. 2.3 We have heard the rival submissions and perused the material on record including the decision of the Tribunal in the case of M/s. Best Infrastructure (India) Private Limited (supra) cited by the learned Authorized Representative of the assessee. The Tribunal in para 23 of the order has held as under: 23. We have discu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 132(4) of the Act. However, such statements on a standalone basis without reference to any other material discovered during search and seizure operations would not empower the AO to make a block assessment merely because any admission was made by the assessee during search operation. 24. If the Revenue s contention that the block assessment can be framed only on the basis of a statement recorded under Section 132(4) is accepted, it would result in ignoring an important check on the power of the AO and would expose assessees to arbitrary assessments based only on the statements, which we are conscious are sometimes extracted by exerting undue influence or by coercion. Sometimes statements are recorded by officers in circumstances which can most charitably be described as oppressive and in most such cases, are subsequently retracted. Therefore, it is necessary to ensure that such statements, which are retracted subsequently, do not form the sole basis for computing undisclosed income of an assessee. 12. Thus, Hon'ble Jurisdictional High Court has held The words evidence found as a result of search would not take within its sweep statements recorded during search and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the stock appearing in books of accounts of the different business concerns. This fact has been recorded by the Assessing Officer in para 5.3 of the assessment order, which is reproduced as under: 5.3 A copy of bifurcated stock inventory of different firms alongwith trading account upto 21.08.2007 was filed by the assessee, the summary of which is as under:- Stock inventory taken on the date of search at Kurukshetra ₹ 1,66,74,282/- The above stock relates to the following firms:- i) M/s. Subhash Co. KKR. = ₹ 9,39,788/- ii) M/s. Sahil Fertilizers, KKR. = ₹ 1,57,35,594/- (Including stock of C F Agency) iii) M/s. Sudha Traders, Ladwa Value of stock inventory taken on the date of search ₹ 5,39,932/- Value of inventory as per books = ₹ 5,39,932/- iv) M/s. Subhash Co. Ladhva Value of stock inventory taken on the date of search ₹ 2,03,584/- Value of inventory as per books = ₹ 2,03,584/- 2.6 The Assessing Officer has placed reliance on the statement of the assessee under section 132(4) of the Act, irrespective of the fact that there was no discrepancy in the stock. The learned Commissioner of Income-ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the remand report that there is no specific findings as to which of the seized documents was found unexplained so as to be treated as either undisclosed income or expenditure. It is apparent that the addition has been made solely on the surrender of additional income u/s 132 (4). What is germane to the issue is that the surrender was to cover discrepancy if any found in the seized documents marked A-l and A-2. Consequently, as no discrepancy has been pointed out by the AO, the surrender of additional income has no basis. There is no dispute that statement recorded on oath is to be regarded with sanctity and having great evidentiary value but as the same is not conclusive as held by the courts, the addition based totally on such statement without any corroboration does not hold strength. Therefore, I am constraint to delete the addition and allow the appeal of the assessee. As for the letter referred by the assessee, the same being an internal confidential correspondence between AO and Investigation Wing, which has also not been commented in the remand report, I have no reason to take it into cognizance. Assessee succeeds on this ground. 2.8 These factual findings have not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s cannot in any manner disabled the learned Commissioner of Income-tax (Appeals) in deciding the issue before him. In support of the contention, he relied on the decision of the coordinate bench in the case of Computer Engineering Services India Private Limited Vs. ACIT in ITA No. 5874 to 5878/Del/2013. 3.3 We have heard the rival submissions and perused the material on record. We find that filing of appeal is a substantive right, which cannot be taken away by a procedural irregularity. We also find that the coordinate bench of the Tribunal in the case of Computer Engineering Services India Private Limited (supra) has adjudicated this issue and held as under: 8. The revenue has however also raised another Additional Ground of Appeal as under: The ld. CIT(A) has erred in law in adjudicating the appeal filed by the assessee in as much as statutory requirement of filing statement of facts with Form No. 35 was not complied with. 9. The ld CIT DR submitted passionately that the assessee as per the statutory Form No. 35 was under a statutory obligation to file statement of fact and this was not complied with. In the absence of this compliance of statutory requirement the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has not treated the forms filed before him as defective. He admitted the appeal and adjudicated the matter on merits. The order of the ld. CIT(A) is the impugned order appealed against before us. The ld. DR wants us to hold that the order of the ld. CIT(A) is illegal and against the law as there is a defect in Form No. 35 In our view the arguments raised by the ld. DR are devoid on merit. Defects in the return of income filed, defects on Form No. 35 which is the form of appeal etc. are to be considered by the respective authorities before whom these are filed and the maintainability of the appeal before us cannot be challenged. The right of appeal is a substantive right. Procedural issues can not take away substantial rights of a person. This cannot be a ground for the revenue to challenge the order of the ld. CIT(A) which is in this case in favour of the Revenue. The arguments to say the least are farfetched. Hence we dismiss the same. 11 In view of the Coordinate Bench decision, we concur with the view expressed by the Coordinate Bench of the Tribunal and we dismiss the additional ground raised by the revenue in this regard. 3.4 Thus, respectfully following the decision of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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