TMI Blog2018 (6) TMI 149X X X X Extracts X X X X X X X X Extracts X X X X ..... om them. The amount of money has already been deducted by the Agent when the sum is received in cash from member and only net amount is received by the assessee. We therefore hold that commission claimed by the assessee in each year cannot be disallowed especially when the subscription fees is included in the gross receipt chargeable to tax. Further the above sum is payable according to the agreement on receipt of the membership fees by the assessee. When the membership fees has been fully charged to tax, the enhancer has confirmed the receipt of the full commission, there is no dispute about the non-payment of any commission to that party, there is no justification for restricting the allowance of the commission paid by the assessee partially. Therefore the Ld. assessing officer is directed to allow the commission to the assessee is an expenses paid to M/s Enhancer network as the full commission income has been charged to the tax by the AO Disallowance of expenditure - CIT(A) restricted the disallowance of expenditure by giving reasons of absence of certain vouchers of the specific ledger mentioned by him. We do not find any infirmity as far as this disallowance is concerned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . It is also interesting to note that the balance sheet of the assessee assessee has borrowed from various parties therefore also it is unusual that assessee for also from other parties and also gives loan to other parties. It is also interesting to note that there is no interest element involved in these loans which is been added by the assessing officer. Therefore the decision relied upon by the revenue does not apply on the facts of the case before us. Estimation of the gross profits with respect to several restaurants business carried on by the assessee - Held that:- CIT(A) has given very detailed order and come to the conclusion by adopting 15% GP Rate in most of these years except AY 2003-04 so far as business of Moets Catering Services is concerned, but it is true that in the year AY 2002-03 the assessee was engaged in the new business of developing a club at the same premises and so GP Rate adopted @15% in that year as against 6.06% declared by the assessee is not justified, and therefore same needs to be scaled down. In the interest of the justice, AO is directed to adopt at 8%. With respect to the other years the Ld. authorized representative could not show was any re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the G.P.Rate at the rate of 15% as against 6.06% declared by the appellant and 30% estimated by the AO in the case of Moets Catering Services without any adverse material on record, thereby confirming the addition of ₹ 3,48,064 out of total addition of ₹ 9,64,261 made by the AO. 5. The Ld. CIT(A) has erred in estimating the G.P. Rate at the rate of 8.90% as against 5.35% declared by the appellant and 10% estimated by the AO in the case of Moets Retreat, Faridabad without any adverse material on record, thereby confirming the addition of ₹ 99,425 out of total addition of ₹ 1,50,241 made by the AO. 6. The order of the Ld. CIT is against law and facts of the case. 3. The revenue has raised the following grounds of appeal in ITA No. 2782/Del/2011 for the Assessment Year 2002-03:- Grounds of Appeal 1 (a) On the facts and under the circumstances of this case the Ld. CIT (A) has erred in appreciating the fact that the addition made u/s 43B at ₹ 2,85,753/- and assessee has failed to furnish evidences for the payments of the same. 1 (b) On the facts and under the circumstances of this case the Ld. CIT (A) has erred in deleting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te at the rate of 20.53% as against 17.16% declared by the appellant and 30% estimated by the AO in the case of Moets Catering Services without any adverse material on record, thereby confirming the addition of ₹ 2,51,781 out of total addition of ₹ 11,18,259 made by the AO. 5. The Ld. CIT(A) has erred in estimating the G.P.Rate at the rate of 10% as against 8.80% declared by the appellant and 10% estimated by the AO in the case of Moets Retreat, Faridabad without any adverse material on record, thereby confirming the addition of ₹ 38,250 out of total addition of ₹ 48,856 made by the AO. 6. The order of the Ld. CIT is against law and facts of the case. 5. The revenue has raised the following grounds of appeal in ITA No. 2783/Del/2011 for the Assessment Year 2003-04:- 1 (a) On the facts and under the circumstances of this case the Ld. CIT (A) has erred in deleting the addition of ₹ 1,00,000/- on account of unexplained investment in construction of property. 1 (b) On the facts and under the circumstances of this case the Ld. CIT (A) has erred in appreciating the fact that the addition made u/s 43B at ₹ 1,79,962/- and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erred in estimating the G.P.Rate at the rate of 10% as against 8.90% declared by the appellant and 10% estimated by the AO in the case of Moets Retreat without any adverse material on record, thereby confirming the addition of ₹ 1,50,359 out of total addition of ₹ 3,24,457 made by the AO. 7. The Ld. CIT(A) has erred in confirming the addition of ₹ 2,99,495 out of total addition of ₹ 5,70,553 made by the AO in Coco Palm without any adverse material on record. 8. The order of the Ld. CIT is against law and facts of the case. 7. The revenue has raised the following grounds of appeal in ITA No. 2784/Del/2011 for the Assessment Year 2004-05:- 1 (a) On the facts and under the circumstances of this case the Ld. CIT (A) has erred in law and on the facts of the case in allowing the relief of ₹ 8,40,640/- to the assessee out of the additions of ₹ 27,18,989/- made on account of undisclosed income without properly appreciating the facts and circumstances of the case. 1 (b) On the facts and under the circumstances of this case the Ld. CIT (A) has erred in giving relief of ₹ 22,25,575/- to the assessee out of addition of &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO in respect of Coco Palm, EDM Mall, Kaushambi . 7. The Ld. CIT(A) has erred in confirming the disallowance of expenses claimed against total commission from booking of membership of Lagoon Club i.e ₹ 1,45,058 out of total disallowance of ₹ 2,39,345, 8. The Ld. CIT(A) has erred in not adjudication the ground in respect of setoff of ₹ 4,50,000 offered as cash income out of additional undisclosed income of ₹ 20,61,635 out of various estimated additions made by AO and sustained partly by CIT(A). 9. The order of the Ld. CIT is against law and facts of the case. 9. The revenue has raised the following grounds of appeal in ITA No. 2785/Del/2011 for the Assessment Year 2005-06:- 1 (a) On the facts and under the circumstances of this case the Ld. CIT (A) has erred in deleting the addition of ₹ 72,806/- on account of undisclosed investment in property without appreciating the fact that the assessee has failed to prove the source of investment in property. 1(b) On the facts and under the circumstances of this case the Ld. CIT (A) has erred in deleting the addition of ₹ 22,87,936/-without appreciating the fact that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clared by the appellant and 30% estimated by the AO in the case of Moets Catering Services without any adverse material on record, thereby confirming the addition of ₹ 825454 out of total addition of ₹ 25,17,974 made by the AO. 6. The Ld. CIT(A) has erred in confirming the addition of ₹ 1,11,616 out of addition of ₹ 1,76,673 made by the AO by estimating the G.P.Rate at 20.53% as against 19.72% declared by the appellant and 44% estimated by the AO in the case of M/s Moets without any adverse material on record. 11. The revenue has raised the following grounds of appeal in ITA No. 2786/Del/2011 for the Assessment Year 2006-07:- 1 (a) On the facts and under the circumstances of this case the Ld. CIT (A) has erred in law on the facts of the case in allowing the relief of ₹ 18,18,350/- to the assessee out of total addition of ₹ 24,92,324/- made on account of undisclosed income without properly appreciating the facts and circumstances of the case. 1 (b) On the facts and under the circumstances of this case the Ld. CIT (A) has erred in deleting the addition of ₹ 9,31,840/- on account of undisclosed investment in property ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 153A were issued to the assessee from Assessment Year 2002-03 to 2006-07. The assessee filed his return of income for all those years and pursuant to that, assessments were made u/s 153A of the Act. In all these cases, the assessee challenged the order of the ld AO before the ld CIT (A), who partly allowed the appeal of the assessee either deleting the addition or partly reducing it. He confirmed some of the additions. Therefore, both the parties are in appeal before us for all the AY 2002-03 to 2006-07 and only revenue for Ay 2007-08 . 14. We first note the facts for AY 2002-03 . Notice u/s 153A of the Act was issued on 08.01.2007. In response to which the assessee filed its return of income at ₹ 524674/- and agricultural income of ₹ 484000/- on 30.05.2007. During the course of assessment proceedings the assessee further filed revised computation declaring the income of ₹ 1667590/- and disclosed therein undisclosed income of ₹ 924700/-. Interest on FDR was also disclosed. Subsequently assessee also filed further revised income statement on 22.12.2007 and offered the undisclosed income further to ₹ 1700803/-. The undisclosed income of the assessee o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld CIT (A) and Ground No 3 for AY 2002-03, Grounds no 1 ,2 and 3 for AY 2003- 04 Ground no. 1 2 of Ay 2004-05, Ground No 1 2 of AY 2005- 06 , Ground No 1 to 3 for Ay 2006-07 of the appeal of the revenue against the relief granted by the ld CIT (A) ii. Disclosure of ₹ 2 crore on account of loans during the search whether addition is correctly confirmed by the lower authorities as per Ground No 2 of the appeal of the assessee for AY 2006-07 iii. The estimation of Gross profit of the Moets catering services , Moets kabab and Moets Retreat Club as per ground no 3 to 5 for Ay 2002-03, Ground no 3 to 6 for AY 2003-04 , Ground no 3 to 7 for Ay 2004-05, Ground No 3 to 7 For AY 2005-06 and Ground No. 3 to 6 for Ay 2006-07 of assessee s appeals and Ground no. 4 for Ay 2002-03, Ground No 3 and 4 for AY 2004-05, Ground No. 3 4 of Ay 2005-06, Ground No 4 5 for AY 2006-07 and Ground no 1 for AY 2007-08 of revenue s appeal 18. Now we proceed to decide issue no 1 in the above appeals with respect to taxation of Moets Retreat Club Income with respect to subscription fees and expenses incurred by the assessee. The assessee was running a club in the name of Moets retreat clu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of the assessee and however proceeded to make the assessment based on seized material. The Ld. assessing officer treated the income of the club is the business income and disallowed this sum of the expenses claimed by the assessee as per the income and expenditure account. The Ld. assessing officer is also considered the claim of the assessee of commission paid to M/s enhanced network for booking of the membership fees of ₹ 26.19 Lacs and based on the enhanced network he rejected the conformation provided by that party of receipt of the company commission reached at the conclusion that the assessee has paid only the commission of Rs. 22.77 Lacs to that particular party and therefore he disallowed the remaining commission of ₹ 3.42 lakhs. With respect to the other expenditure ₹ 24.54 Lacs he disallowed one 3rd of these expenses. On appeal before the Ld. CIT (A) he dealt with the above issue vide para No. 26 of his order. 26. I have gone through the findings of the AO as well as the arguments of the appellant in support of which the documents filed in the paper book. The first contention of the appellant that the income of the club is to be taxed on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or right of expenses is the commission paid to M/s enhanced network for the booking of the membership, which was 30% of the total membership amount received. The AO has disallowed ₹ 3 42000/ on account of total commission paid by observing that same has not been correlated from the bank statements. I feel that though appellant is not having proper vouchers of payment of commission but the element of cash payment cannot be denied to the agents is a substantial amount of fees has been admittedly received the cash too. Therefore, in the interest of Justice Irish dues the disallowance from ₹ 342000/ to ₹ 171000/ i.e. 50% of the amount disallowed. As regards other disallowance, which is one 3rd of the 3 items of the expenses of ₹ 1 404312/ , I am of the view that expenses incurred by Mr. Sandeep Bindra on behalf of the club by the payees checked amounting to ₹ 1 292312/ is duly supported by his account which shows the withdrawal from his other proprietary concern. Hence, this amount is liable to be allowed. As regards other amounts of ₹ 72,000 and ₹ 40,000/-in the name of Hanuman DLF and drum respectively for which no explanation has been f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... building up of infrastructure and ₹ 6 lacs on renovation of banquet hall. Report of valuer also placed in PB 59-62. Hence the amount spent on construction was more of revenue in nature as it was not going to derive enduring benefit to the appellant. 1.5 Due to large investment , shortage of funds , failure to provide the infrastructure of club in time the membership declined year after year and resulted in series of civil and criminal cases lodged by the customers which forced the appellant to close the club in 2005 and hand over the club to third party i.e. M/s JS Hospitality Services Pvt. Ltd. vide agreement dated 25/07/2006.(PB_15-31 Vol.1) without any consideration. The entire money received as fees was utilized for construction of infrastructure. The appellant did not receive any compensation for this and the infrastructure was given back under the ownership of LP Hospitality Pvt. Ltd. Further to settle down all financial differences with LP Hospitality the appellant also paid ₹ 520,000/- (PB 31 Vol. 1). 1.6 The year wise account of the membership fee received and amount spent for the infrastructure etc has been prepared on the basis of seized record a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A.Y.2003-04 22,76,069 62,06,116 45,60,001 ) ( after set off of declared income A.Y.2004-05 ₹ 2,89,915 31,40,310 22,25,575 ( after set off of declared income) A.Y.2005-06 ₹ 41,727 22,87,936 22,87,936 ( after set off of declared income) A.Y.2006-07 ₹ 2,49,792 2,49,792 SUMMARY OF NUMBER OF MEMBERSHIP , ANNUAL/RENEWAL FEE AND EXPENSES: Number of Members: F.Y. No. of Members enrolled as per No. of Members enrolled as per Department (AO) Difference No. of members enrolled as per CIT(A). Assessee 2001-02 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... As per Department (AO) As per CIT(A) 2001- 02 Indirect Expenses Of ₹ 50,73,804/- Total Expenses 50,73,804 minus commission of 26,19,000) = 24,54,804 . Only 1/3rd of disallowed for part expenses out of Disallowance of 468,104/- reduced to 37,334/- Commission expense of ₹ 26,19,000(30% of 85,40,000+190,000) 2454804 amounting to ₹ 14,43,312/- Disallowance of ₹ 468104/- Commission expenses of ₹ 22,77,000/- as per bank statement , Therefore disallowance remaining amount of ₹ 342,000/-out of total of ₹ 26,19,000. Disallowance reduced to ₹ 171,000/- Also allowed Depreciation of ₹ 98700 @ 10% on ₹ 987000 2002- 03 Indirect Expenses Of ₹ 67,73,384/- Commission expense of ₹ 32,83,500(30% of 96,10,000+13,35,000) Total expenses 67,73,384 minus commission 3283500) =3489884 because appellant has surrendered undisclosed income of ₹ 22,76,069/-. Commission expenses of ₹ 328 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me tax is a levy on income . No doubt, Income Tax Act takes in to account two points of time at which the liability to tax is attracted viz. the accrual of income or its receipt or the substance of the matter is the income. If the income does not result at all there cannot be a tax, even though in book keeping , an entry is made about a hypothetical income which does not materialise . * Godhra Electricity Co. Ltd vs. CIT (1997) 225 ITR 746 (SC) Held that the question whether there was real accrual of income to the assessee company in respect of enhanced charges for the supply of electricity has to be considered by taking the probability or improbability of realisation in a realistic manner. The High Court held that in the mercantile system of accounting it is real income , as distinguished from a hypothetical income, which can be brought to tax and that income cannot be said to have accrued to an assessee- company if it is based on mere claim not backed by any legal or contractual right to receive the amount at a subsequent date. * CIT vs. M/s Excel Industries (2013) 358 ITR 295 (SC) Held that it is quite clear that, in fact, no real income but only hypothe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly computed the business income of the assessee. He further submitted that AO has computed the number of new members on the basis of annexure A-8 and A-9 seized during the course of search, which has been ignored by the ld CIT (A). He further submitted that the bank account in which the assessee has deposited membership receipt was not submitted by the assessee, which was called by the ld Assessing Officer u/s 133(6) of the Act. He further submitted that the assessee produced no receipts issued to the members and most of the payments have been received in cash that was not recorded in the books of accounts. With regard to the commission paid to M/s. Enhancer Network he submitted that assessee has furnished incomplete information and failed to produce any of the parties representative and therefore, the AO is justified in allowing expenses only to the extent of amount debited in bank account of the assessee. With respect to the gross profit of the various units he submitted that statement of the various employees were recorded during the course of search wherein, it clearly emerged that assessee is making sales out of the books. He further referred to the provisions of section 132( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oming members. List of members clearly depicts against membership no., name of members, date of membership, their dependant members, address, and telephone number, date of membership and the amount paid by each member. The list in annexure A-8 starts from S. No. 2 giving membership number 2‖. However at S. No. 1 no names are mentioned against that but at S. No. 4 membership no. 3A is mentioned which makes up for Membership No. 1 because thereafter S. No. of membership continue up to 823. Likewise, Annexure A-9 is the list of members, which starts from S. No. 824 and membership no. also from 824 giving names, address, telephone nos., dependants name, date of membership and the amount. This list continues till membership No. 1969. Against each member the amount is clearly mentioned either ₹ 10,000/- or ₹ 11,500/-. The members who were initially made only paid ₹ 10,000/- up to 31-03-2002 in both the list but members made during the subsequent financial year i.e. AY 2003-04 have either paid R. 10,000/- or ₹ 11,500/- also. Since, names, addresses, telephone numbers, date of membership and amount is clearly mentioned in the seized document, We therefore hol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at assessee has to make payment of ₹ 5,20,000/- to LP Hospitality Pvt. Ltd. on account of settlement of outstanding dues. The building and land was owned by LP Hospitality and the infrastructure built thereon by the assessee out of the receipts of the club membership was ultimately taken over by LP Hospitality Pvt. Ltd. Even the running of the club was ultimately handed over to JS Hospitality Pvt. Ltd. The receipts of the members were spent for the expenditure incurred on the infrastructure and to run the club. Enhancers Network introduced the members of the club with whom a separate agreement was made for commission and they were entitled for a fixed amount of ₹ 3,000/- per member introduced by them. The partner of Enhancers Network has confirmed the receipt of the amount from the assessee. Thus, the amount paid for introducing member cannot be doubted. The ld AO has not brought any contrary material on record to show that assessee has not paid the above sum to the agent. Further ld CIT(A) has restricted the disallowance of commission to 50% out of cash payments made by the assessee because the assessee did not produce vouchers of payment of commission. Revenue has fai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h cheques. The ledger accounts are placed in the paper book. The ld AO partially allowed the 2/3rd of expenditure and disallowed one-third of the expenses in AY 2002-03. We do not find any sound reasoning for disallowing part of the expenditure. If the expenditures are incurred wholly and exclusively for the purposes of the business and they are paid by the cheques and no contrary material is found showing that expenditures has not been incurred by the assessee, we do not find any justification for restricting the allowances of the expenditure to only 2/3rd thereof. The CIT(A) restricted the disallowance of expenditure to ₹ 37,334/- by giving reasons of absence of certain vouchers of the specific ledger mentioned by him. We do not find any infirmity as far as this disallowance is concerned in this year as he disallowed one-third of expenses of ₹ 1,12,000/- for which no vouchers were produced. As regards disallowance in other years, the ld CIT(A) has not given any specific reasons but confirmed disallowance on adhoc basis to ₹ 1,50,000/- in AY 2003-04 and 2004-05 on the reasoning that in absence of all the vouchers the above disallowance is reasonable , while in AY ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , another company JS Hospitality is presently running the club who has taken over the liabilities assigned on the assessee. The expenditure incurred by the assessee relates to kitchen equipments, swimming pool, scooter, sports and gym equipments and banquet hall. The banquet hall was already built by the owners and only renovations by way of tiles, painting etc. were made which amounted to ₹ 6,00,000/- only in AY 2004-05 because club members were not satisfied about the conditions of the building of the banquet hall. This expenditure is only in the nature of renovation of the building and therefore is required to be allowed totally. The kitchen and sports equipments are also not in the nature of enduring benefits as all the aforesaid equipments are required to be replaced from time to time. However, expenditure incurred on swimming pool and scooter cannot be allowed as revenue expenditure. The depreciation on these two assets is rightly allowed by the ld. CIT(A). The other expenditure incurred by the assessee cannot be said to of capital expenditure in nature because they are of the routine nature such as utensils and sports equipments etc and no enduring benefit can be said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n with respective name or the terms and condition of such loans but the above amount has been disclosed by the assessee to make the total figure of ₹ 4 crore is without any basis as pressurized by the search party. He further submitted that there is no specific material to support the advancing of the loan to the specified person and the amount of loan. He further stated that about disclosure of ₹ 2 crores cannot be related with the amount of suppression of the sales, which can be taxed, separately on estimate basis. The Ld. assessing officer takes the above amount of ₹ 2 crores on account of loan by the assessee holding that that the seized paper is specific with respect to the nature of transaction, the amount and the period of transaction. He further stated that that the above paper was confronted to the assessee at the time of search and the assessee has made disclosure voluntarily in his statement. In short he rejected the contention of the assessee that the assessee has retracted the above statement timely. The Ld. AO further stated that the revenue is not required to corroborate the about decrement. The assessee challenged the above addition before the Ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 181 (SC). * There is no corroborative evidence to support the surrender of ₹ 2 crores neither found at the time of search nor brought on record by the department during the course of assessment. * Before the CIT(A) detailed submission and also the admissibility and the credibility of the seized documents has been filed which are placed at pg 811-814 in Vol.4 but the same has not been appreciated by the CIT(A) . /* Addition only on the basis of statement recorded other facts and circumstances ignored. * No corroborative evidence has been investigated by AO after retraction and appellant has given on oath that the surrender document was not genuine and fabricated by department. * It is legal proposition that statement recorded u/s 132(4) has evidentiary value but is rebuttable presumption . * Supporting case laws mentioned in submission in favour of appellant. a) DCIT VS. Sadhuvam Wadhwani 81 TTJ (Nag.) 839 Statement u/s 132(4) retraction-successfully shown corroborative evidence that statement was recorded under coercion and the admission was incorrect , addition by AO is not sustainable. b) Smt. Ranjanaben MansukhLal Shah Vs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... placed on the following decisions: i. CIT vs. Sri Ramdas Motor Transport (MANU/AP/0950/1998 : 238 ITR 177) (AP) ii. Kailashben Manharlal Chokshi vs. CIT (MANU/GJ/0744/2008 : 328 ITR 411) (Guj) and iii. Saveetha Institute of Medical Technical Sciences vs. ACIT 12 ITR (Trib.) 376. g) Kailashben Manharlal Chokshi v. CIT MANU/GJ/0744/2008 : [2010] 328 ITR 411 (guj) h) Hon'ble Apex Court in the case of Pullangode Rubber Produce Co. Ltd. vs. State of Kerala Anothers MANU/SC/0386/1971 : (1973) 91 ITR 18 (SC) has held that admission is an extremely important piece of evidence but it can't be said that it is conclusive. It is upon to the assessee to show that it is incorrect. 33. The Ld. CIT DR filed written statement, in which various decisions were relied upon by him which are as under: 1. Kishore Kumar Vs CIT (62 taxmann.com 215, 234 Taxman 771) (Copy Enclosed) Where Hon ble Supreme Court dismissed SLP against High Court s order where it was held that since assessee himself stated in sworn statement during search and seizure about the undisclosed income, tax was to be levied on basis of admission without scrutinizing documents. B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... team by them were never encashed. The assessee immediately retracted and contacted the DI Investigation due to which no pressure was subsequently made by the investigation wing. Neither the investigating officer nor the assessing officer could find any evidence in support of such loan. The assessee has already taken huge loans shown in the balance sheet; there is no reason of giving loans to anybody specifically to the extent of ₹ 2 crores mentioned by the searched team in the piece of paper, which was signed after pressure. The Ld. AR relied upon the following decisions in which additions made on account of income surrendered in the statement recorded at mid night which was retracted after two months held to be not justified [Kailashben Manharlal Chokshi vs. CIT 328 ITR 411 (guj)] . The Ld. AR also relied upon CBDT instructions No. 286/02/2003-IT(Inv.) dated 10-03-2003 and 286/98/2013- IT(Inv.II) dated 18-12-2014. 35. We have considered the rival contentions and also perused the orders of the lower authorities . The brief facts of the issue involved are that during the course of search on 6/12/2005 the assessee disclosed the sum of ₹ 2 crores in the statement unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessing officer asked the assessee a question that during the search they have formed a piece of paper from his bedroom Almeida on which it is written that loans given in Gurgaon during the year upgrade 2005 30/11/2005 approx 200 lakhs rupees‖. The assessee was asked to explain this paper and he replied that this paper contains the details of loans he has given different persons during the period mentioned therein. After that revenue did not raise any question that who are those parties to whom the loans have been given and on which date those loans are given, what are the terms and conditions on which the loans have been given, whether the loans are based on any security provided by the borrower, whether the loans are backed by a cheque issued by the borrower and are they also supported by a demand promissory note. The revenue did not bring on record in his statement all these facts with respect to the loans. We have examined the document placed in the paper book at page 797, an affidavit at page 798-805, the statement at PB 790-796 and the submissions made before the CIT (A) also. The document does not state any specific amount relating to any specific person to whom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the admission of the assessee in the sworn statements made on 29.8.2006 and 10.10.2006. The Assessing Officer came to the conclusion that there is admission of undisclosed income to the tune of ₹ 52,73,920/- and on the basis of the documents and statements, he came to the conclusion that further addition of ₹ 30,00,000/- should be made. Therefore, the total extent of undisclosed income was determined at ₹ 87,08,136/- and penalty proceedings were also initiated separately. 2.4. Aggrieved by the assessment orders, the assessee preferred appeals before the Commissioner of Income Tax (Appeals), who dismissed the appeals. 2.5. Assailing the said orders, the assessee went on appeal before the Tribunal, which dismissed the appeals upholding the orders passed by the authorities below. 2.6. Calling into question the said order, the present appeals are filed by the assessee on the questions of law, referred supra. 3. Heard Mr. B. Ramana Kumar, learned counsel for the assessee and Mr. T.R. Senthil Kumar, learned Standing Counsel appearing for the department and perused the documents filed in support of these appeals. 4. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 377; 25 Lakhs to 30 Lakhs. The rate of interest is 18% (i.e. ₹ 1.50 per 100 per month). The interest income is also not shown in the accounts. The borrowers have committed defaults in repaying the loans and more than 50% of the outstandings are to be treated as bad debts. All the advances were not disclosed in the returns filed.' This has been relied upon by the Tribunal in full force. 6. With regard to the undisclosed income of ₹ 52,73,920/- supported by printouts, in the sworn statement dated 29.8.2006, the assessee says that he had separate business income which was not included in his income tax returns. Therefore, admission of undisclosed income of ₹ 52,73,920/- is categoric and undisputed. The assessee in the sworn statement made on 10.10.2006, stated that outstanding loans to the tune of ₹ 25 Lakhs to 30 Lakhs are to be recovered with interest at the rate of 18%. This is a clear admission. This amount has also been calculated and added as undisclosed income. When there is a clear and categoric admission of the undisclosed income by the assessee himself, in our considered opinion, there is no necessity to scrutinize the documents. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lease of the paper where there are no details of the loans given by the assessee as well as the amount of interest are. It is also interesting to note that the balance sheet of the assessee assessee has borrowed from various parties therefore also it is unusual that assessee for also from other parties and also gives loan to other parties. It is also interesting to note that there is no interest element involved in these loans which is been added by the assessing officer. Therefore the decision relied upon by the revenue does not apply on the facts of the case before us. 37. 2nd decision relied upon by the revenue is Hon ble Delhi High Court in case of Shri Bhagirath Agarwal (supra) however in that particular case it was not an issue of the retraction. Therefore that decision to does not apply on the facts of the case. 38. In view of the aforesaid facts and circumstances, we hold that addition of ₹ 2 crores is not based on any evidence and therefore is deleted. In view of this issue No. 2 is decided in favour of the assessee. 39. We now come to the 3rd issue of the estimation of the gross profits with respect to several restaurants business carried on by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee already disclosed GP rate of 17.16% and CIT(A) even then enhanced to 20.53%. The LD. AR insisted that GP Rate exorbitantly enhanced in AY 2002-03 and 2003-04 be reduced and GP Rate declared by the assessee in all other years be also adopted as rightly declared by the assessee. 41. The Ld. departmental representative vehemently stated that the Ld. assessing officer has given a reason how the gross profit ratio of each of the business has been determined and therefore the Ld. CIT (A) has not given the justifiable reasons for reducing the gross profit rate. 42. We have carefully considered the rival contention and also the orders of the lower authorities. The estimation of the profit is arising because of the rejection of the books of accounts. The grievance of the assessee is that books of accounts were rejected merely on the basis of statement of employees in which one of the employees was accountant while other was not involved with the accounts. The ld AO did not appreciate that the accountant never said that books of account were not maintained but only stated that small pieces of paper were torn after recording the same in the computer in which books of accounts were ..... X X X X Extracts X X X X X X X X Extracts X X X X
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