9911796707
TMI Blog2018 (6) TMI 149X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. (a) The Ld. CIT (A) has erred in holding that the income from Moets Retreat club is not taxable on Real Income Theory in view of the peculiar facts of the case but as normal business income. (b) The Ld. CIT(A) has erred in confirming the addition of Rs. 37,65,834 as against addition of Rs. 55.52,618 made by the assessing officer and NIL income declared by the appellant on account of Moets Retreat, Club, Faridabad. 3. The Ld. CIT(A) has erred in confirming the order of the assessing officer in rejecting the book results u/s 145(3). 4. The Ld. CIT(A) has erred in estimating 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 Rs. 3,48,064 out of total addition of Rs. 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 Rs. 99,425 out of total addition of Rs. 1,50,241 made by the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts of the case but as normal business income. (b)The Ld. CIT(A) has erred in confirming the addition of Rs. 43,22,184 as against addition of Rs. 66,06,116 made by the assessing officer and Rs. 22,76,069 income declared by the appellant on account of Moets Retreat Club, Faridabad 3. The Ld. CIT(A) has erred in confirming the order of the assessing officer in rejecting the book results u/s 145(3). 4. The Ld. CIT(A) has erred in estimating the G.P. Rate 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 Rs. 2,51,781 out of total addition of Rs. 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 Rs. 38,250 out of total addition of Rs. 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out any adverse material on record, thereby confirming the addition of Rs. 2,08,355 out of total addition of Rs. 46,28,419 made by the AO. 5. The Ld. CIT(A) has erred in confirming the addition of Rs. 38,635 out of total addition of Rs. 2,50,856 made by the AO in Moets Kabab without any adverse material on record. 6. The Ld. CIT(A) has 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 Rs. 1,50,359 out of total addition of Rs. 3,24,457 made by the AO. 7. The Ld. CIT(A) has erred in confirming the addition of Rs. 2,99,495 out of total addition of Rs. 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 Rs. 8,40,640/- to the assessee out of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otal addition of Rs. 5,21,661 made by the AO in Moets Kabab without any adverse material on record. 6. The Ld. CIT(A) has erred in confirming the addition of Rs. 7,745 out of total addition of Rs. 1,65,000 made by the 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 Rs. 1,45,058 out of total disallowance of Rs. 2,39,345, 8. The Ld. CIT(A) has erred in not adjudication the ground in respect of setoff of Rs. 4,50,000 offered as cash income out of additional undisclosed income of Rs. 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 Rs. 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 pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e book results u/s 145(3). 5. The Ld. CIT(A) has erred in estimating the G.P.Rate at the rate of 15% as against 14.38% 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 Rs. 825454 out of total addition of Rs. 25,17,974 made by the AO. 6. The Ld. CIT(A) has erred in confirming the addition of Rs. 1,11,616 out of addition of Rs. 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 Rs. 18,18,350/- to the assessee out of total addition of Rs. 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 deletin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsequent to search notices u/s 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 Rs. 524674/- and agricultural income of Rs. 484000/- on 30.05.2007. During the course of assessment proceedings the assessee further filed revised computation declaring the income of Rs. 1667590/- and disclosed therein undisclosed income of Rs. 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 Rs. 1700803/-. The undisclosed income of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 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 Rs. 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 club and restaurant in the similar name at Faridabad. Assessee entered in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing 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 Rs. 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 Rs. 3.42 lakhs. With respect to the other expenditure Rs. 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 the rear income Theory and not based on regular accounting standards does not appear to be maintainable. Much like other bus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount received. The AO has disallowed Rs. 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 Rs. 342000/ to - Rs. 171000/- i.e. 50% of the amount disallowed. As regards other disallowance, which is one 3rd of the 3 items of the expenses of Rs. 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 Rs. 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 Rs. 72,000 and Rs. 40,000/-in the name of Hanuman DLF and drum respectively for which no explanation has been furnished by the appellant, hence this disallowance is restricted to one 3rd of Rs. 112000/- amounting to Rs. 3 7334/-. " Based on the above findings, he computed the tot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Rs. 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 and bank statement with the submission that the appellant be taxed on the REAL INCOME THEORY i.e the actual amount taken by him from the club and not on the mercantile basis .The relevant details are placed as under: Year wise breakup of Membership ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 323 323 NIL 323 2004-05 112 351 239 112 2005-06 11 350 339 11 TOTAL 2261 2839 578 2261 The details of yearwise annual fee received and declared by the asseessee,estimated by the A.O and by CIT(A) is as under: - F.Y Total No. of Member s enrolled Annual Fee Receive d from Amounts of Annual fee Received Total No. of Memb er Annual Fee Received from Amounts of Annual fee Received Amounts of Annual fee Received CIT(A) 2001-02 854 127 1,90,000 854 854 12,81,000 190,000 2002-03 1815 890 13,35,000 1815 1815 27,22,500 13,35,000 2003-04 2138 1490 22,18,000 2138 2138 32,07,000 22,18,000 2004-05 2250 1310 19,60,200 2489 2489 37,33,500 19,60,200 2005-06 2261 386 5,82,000 2839 2839 43,63,500 582000 Details of Expenses claimed : FY As per Assessee As per Department (AO) As per CIT(A) 2001- 02 Indirect Expenses Of Rs. 50,73,804/- Total Expenses 50,73,804 minus commission of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowance being not correlated with bank statement Disallowance limited to 40% of 1629973 . Disallowance reduced to Rs. 107100/- Also allowed Depreciation of Rs. 70579 @ 10% on Rs. 4234750 for 2 months Judgements relied upon: * CIT vs. Birla Gwalior Pvt. Ltd. (1973) 89 ITR 266 (SC) Held that the commission foregone cannot be taken as income on mercantile basis. * CIT vs. Shoorji Vallabhdas & Co. (1962) 46 ITR 144 (SC) Held that "income 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 s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Even otherwise he submitted that assessee has not deducted tax at source and therefore, even if it is an allowable expenditure because of the failure to deduct tax it should be disallowed. He further referred to page No. 15 of the order of the ld Assessing Officer and submitted that 1/3rd of the expenditure has been disallowed by the ld Assessing Officer and therefore, according to him the assessee has very reasonably 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' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uments found and seized during the course of search. Ld AR filed the set of such annexure. Now we proceed to decide the each of the issues before us. 24. We first decide the profitability chargeable to tax for the each year in case of Moets Retreat Club. We have gone through the annexure A-8 and A-9 and found that in the initial year the members were enrolled and they have paid fees of Rs. 10,000/- for becoming 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 me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmity in the orders of the ld CIT (A) in computing the membership fees which is showing the numbers of the members as well as the fees received from them. 25. We have further examined the agreements made by the assessee with LP Hospitality Pvt. Ltd., Supplementary agreement and tripartite agreement with JS Hospitality Services Pvt. Ltd. who has finally taken over the liability. We find that assessee has to make payment of Rs. 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 Rs. 3,000/- per member introduced by them. The partner of Enhancers Network has confirmed the receipt of the amount from the assessee. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounts of the parties to whom payment was made is also placed before us. The major expense incurred by the assessee is in 'Moets Retreat‖ apart from other minor expenditure of Bank Charges, Courier Charger, License Fee, Auditor Fees etc. It is the claim of the assessee that expenses incurred as shown under various heads of ledger in Moets Retreat were paid through 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 Rs. 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 disallow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We have examined the facts and circumstances of the present case. We find that Moets Retreat Club was made as per supplementary agreement with LP Hospitality who were the owners of the land and building. The infrastructure and the assets built thereon by the assessee have already become the property of the owners now. In fact, 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 Rs. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee submitted reply on 15/12/2007 stating that the assessee has been forced to give the above statement about the loan of Rs. 2 cross without pointing out any evidences. He submitted that assessee has not given any such loan to anybody. He submitted that there is no name the persons the loans have been given 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 Rs. 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 Rs. 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 Rs. 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 disclosu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellant before the AO dated 19/08/2008 confirming the above facts but the same has not been considered and controverted by the AO which is in contravention to the judgment of the Apex Court in the case of Mehta Parekh & Co. Vs. CIT 30 ITR 181 (SC). * There is no corroborative evidence to support the surrender of Rs. 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 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during the course of search or otherwise, supporting the statement made, the statement cannot be relied upon for the purpose of making addition. In support of this reliance was 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax was deposited which was required to be paid in the normal circumstances when surrender is made. The cheques taken over by the search 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 Rs. 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 invo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ooked into with the statement recorded of the assessee. It is dealt with at question No. 10 of his statement. The 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 be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Officer was of the view that the assessment could be completed based on 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 Rs. 52,73,920/- and on the basis of the documents and statements, he came to the conclusion that further addition of Rs. 30,00,000/- should be made. Therefore, the total extent of undisclosed income was determined at Rs. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of interest is 18% (i.e. Rs. 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 Rs. 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 Rs. 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 Rs. 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. The document can be of some relevance, if the undisclosed in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee 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 Rs. 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. The brief facts of the case show that assessee individual earning income from busi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 maintained. After perusing the facts and circumstances of the case we find that the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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