ACIT, NEW DELHI vs. SH. SANDEEP BINDRA, NEW DELHI

Sandeep Bindra Vs. ACIT, ITA No. 2647 to 2651 /Del/2011 ITA No. 2782 to 2786 and 1286/Del/2011 (Assessment Year: 2002-03 to 2006-07)

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ―G‖: NEW DELHI BEFORE MS SUCHITRA KAMBLE, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA No. 2647 to 2651 /Del/2011 (Assessment Year: 2002-03 to 2006-07) Sandeep Bindra, Vs. ACIT, 50, Defence Colony Market, Central Circle-9, New Delhi New Delhi PAN:AADPB7687B (Appellant) (Respondent)

ITA No. 2782 to 2786 and 1286/Del/2011 (Assessment Year: 2002-03 to 2007-08) ACIT, Vs. Sandeep Bindra, Central Circle-9, 50, Defence Colony Market, New Delhi New Delhi PAN:AADPB7687B (Appellant) (Respondent)

Assessee by : Shri Rajiv Saxena, Adv Shri Anil Jain, Adv Shri Shyam Sunder, AR Shri Ajit Kumar Jha, Adv Revenue by: Shri SS Rana, CIT DR Date of Hearing 09/03/2018 Date of pronouncement 28/05/2018

O R D E R PER BENCH 1. These are the eleven appeals , five filed by the assessee and six by revenue against the order of the ld CIT(A)-II, New Delhi in Assessment Years 2002-03 to 2006-07 and ld CIT(A)-XXXII for AY 2007-08. As these appeals involve the common grounds, they were argued together by the parties and are disposed of by this common order.

Sandeep Bindra Vs. ACIT, ITA No. 2647 to 2651 /Del/2011 ITA No. 2782 to 2786 and 1286/Del/2011 (Assessment Year: 2002-03 to 2006-07) 2. The assessee has raised the following grounds of appeal in ITA No. 2647/Del/2011 for the Assessment Year 2002-03:- “1. The Ld. CIT (A) has erred in partly confirming the order of the assessing officer who assessed the total income of the appellant at Rs. 99,06,930 as against the declared income as per revised computation] at Rs. 24,52,693. 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 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 Rs. 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 the addition of Rs. 4,18,200/- as the assessee has failed to prove the genuineness of the creditors. 1 (c) On the facts and under the circumstances of this case the Ld. CIT (A) has erred in giving relief of Rs. 18,85,484/- because the receipts of membership and subscription receipts from M/s Moet’s Retreat Club were worked out on the basis of seized documents and assessee has failed to furnish any supporting evidence in respect of expenses claimed by him.

Sandeep Bindra Vs. ACIT, ITA No. 2647 to 2651 /Del/2011 ITA No. 2782 to 2786 and 1286/Del/2011 (Assessment Year: 2002-03 to 2006-07) 1 (d) On the facts and under the circumstances of this case the Ld. CIT (A) has erred in deleting the trading addition of Rs. 60,50,181/- as the assessing officer was justified in arriving at reasonable estimate of sales for various concerns of the assessee and worked out G.P. on the basis of seized documents after rejecting the books of accounts of the assessee. 1 (e) On the facts and under the circumstances of this case the Ld. CIT (A) has erred in directing to adjust undisclosed income declared of Rs. 17,00,828/- against the addition sustain amounting the Rs. 42,13,323. (Ground No. 4- Rs.37,65,834, Ground No. 6 Rs. 3,48,064 and Ground No.8 Rs. 99,425). Without appreciating the fact that assessee has not given any detail/evidence in this regard during the assessment proceedings. 2. The order of CIT (A) is erroneous and not tenable in law and on facts.” 4. The assessee has raised the following grounds of appeal in ITA No. 2648/Del/2011 for the Assessment Year 2003-04:- “1. The Ld. CIT (A) has erred in partly confirming the order of the assessing officer who assessed the total income of the appellant at Rs. 1,06,00,980 as against the declared income as per revised computation at Rs. 28,88,180. 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 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.”

Sandeep Bindra Vs. ACIT, ITA No. 2647 to 2651 /Del/2011 ITA No. 2782 to 2786 and 1286/Del/2011 (Assessment Year: 2002-03 to 2006-07)

Sandeep Bindra Vs. ACIT, ITA No. 2647 to 2651 /Del/2011 ITA No. 2782 to 2786 and 1286/Del/2011 (Assessment Year: 2002-03 to 2006-07) 4. The Ld. CIT(A) has erred in estimating the G.P.Rate at the rate of 15% as against 12.93% 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. 2,08,355 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 additions of Rs.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 Rs.22,25,575/- to the assessee out of addition of Rs.31,40,310/- because the receipts of membership and subscription receipts from M/s Moet’s Retreat Club were worked out on the basis of seized documents and assessee has failed to furnish any supporting evidence in respect of expenses claimed by him. 1(c) On the facts and under the circumstances of this case the Ld. CIT (A) has erred in giving relief of Rs.26,94,928/- to the assessee out of total addition of Rs.60,85,468/- without appreciating the fact that the assessing officer was justified in arriving at reasonable' estimate of sales for various concerns of the assessee and worked out G.P. on the basis of seized documents after rejecting the books of accounts of the assessee. 1(d) On the facts and under the circumstances of this case the Ld. CIT (A) has erred in giving the relief of Rs.20,247/- without appreciating the fact that the assessing officer has already allowed to third of the expenses without any evidence. 2. The order of CIT (A) is erroneous and not tenable in law and on facts.”

Sandeep Bindra Vs. ACIT, ITA No. 2647 to 2651 /Del/2011 ITA No. 2782 to 2786 and 1286/Del/2011 (Assessment Year: 2002-03 to 2006-07)

Sandeep Bindra Vs. ACIT, ITA No. 2647 to 2651 /Del/2011 ITA No. 2782 to 2786 and 1286/Del/2011 (Assessment Year: 2002-03 to 2006-07) on the basis of seized documents and assessee has failed to furnish any supporting evidence in respect of expenses claimed by him. 1(c) On the facts and under the circumstances of this case the Ld. CIT (A) has erred in giving relief of Rs.58,78,764/- to the assessee out of total addition of Rs.66,89,707/- without appreciating the fact that the assessing officer was justified in arriving at reasonable estimate of sales for various concerns of the assessee and worked out G.P. on the basis of seized documents after rejecting the books of accounts of the assessee. 1(d) On the facts and under the circumstances of this case the Ld. CIT (A) has erred in giving the relief of Rs.94,287/- out of total addition of Rs.2,39,346/- without appreciating the fact that the assessing officer has already allowed to third of the expenses without any evidence. 2. The order of CIT (A) is erroneous and not tenable in law and on facts.”

Sandeep Bindra Vs. ACIT, ITA No. 2647 to 2651 /Del/2011 ITA No. 2782 to 2786 and 1286/Del/2011 (Assessment Year: 2002-03 to 2006-07) 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 deleting the addition of Rs.9,31,840/- on account of undisclosed investment in property without appreciating the fact that the additions were made on account of incriminating documents seized during search operation and assessee has failed to prove the source of investment in property. 1 (c) On the facts and under the circumstances of this case the Ld. CIT(A) has erred in deleting the addition of Rs.2,49,792/- without appreciating the fact that the receipts of membership and subscription receipts from M/s Moet's Retreat Club were worked out on the basis of seized documents and assessee has failed to furnish any supporting evidence in respect of expenses claimed by him. 1 (d) On the facts and under the circumstances of this case the Ld. CIT(A) has erred in giving the relief of Rs.83,99,193/- out of total addition of Rs.90,54,647/- without appreciating the fact that the assessing officer was justified in arriving at reasonable estimate of sales for various concerns of the assessee and worked out G.P. on the basis of seized documents after rejecting the books of accounts of the assessee. 1 (e) On the facts and under the circumstances of this case the Ld CIT (A) has erred in giving the relief of Rs.1,06,624/- out of total addition of Rs.2,70,658/- without appreciating the fact that the assessing officer has already allowed to third of the expenses without any evidence. 2 2. The order of CIT (A) is erroneous and not tenable in law and on facts.” . 3 12. The revenue has raised the following grounds of appeal in ITA No. 1286/Del/2011 for the Assessment Year 2007-08:- 1. That the Commissioner of income Tax (Appeals) erred in law and on facts of the case in allowing the relief of Rs. 17,07,932/- to the assessee by holding that the GP rate of 15% was to be adopted instead of GP rate of 30% applied by the Assessing Officer for making the addition. 2. (a) The order of the CIT(A) is erroneous and not tenable in law and on facts.” 13. The brief facts of the case are that assessee is an individual having income from house property, income from other source and agricultural income. The assessee is also carrying on business as proprietor of Page | 8

Sandeep Bindra Vs. ACIT, ITA No. 2647 to 2651 /Del/2011 ITA No. 2782 to 2786 and 1286/Del/2011 (Assessment Year: 2002-03 to 2006-07) restaurant and catering services in the name of ‗Moets Catering Services‘, Coco Palm, Earth etc. Assessee is also a partner in Moets Barbeque. Income tax department conducted a search on the Moets Group on 06.12.2005. Consequent 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 assessee of Rs. 1700803/- was pertaining to cash deposit of Rs. 450000/- on various dates and cost of construction of Rs. 607985/- and agricultural income of Rs. 429000/-. The assessment u/s 153A of the Act was made on 29.12.2008 wherein, the ld Assessing Officer made an addition of Rs. 5552698/- on account of income of ‗Moets Retreat Club‘. The further addition was made of Rs. 218000/- on account of loan, advances, and Rs. 1197670/- on account of trading additions. Consequently, the assessed income was determined at Rs. 9906930/-. 15. The assessee preferred appeal before the ld CIT (A). The assessee submitted certain additional evidences, which were admitted by the ld CIT Page | 9

Sandeep Bindra Vs. ACIT, ITA No. 2647 to 2651 /Del/2011 ITA No. 2782 to 2786 and 1286/Del/2011 (Assessment Year: 2002-03 to 2006-07) (A) after obtaining the remand report. With respect to addition of Rs. 418200/- he deleted the addition. Further, with respect to addition of Rs. 5552618/- on account of income from ‗Moets Retreat Club‘, he granted relief to the assessee of Rs. 1885485/- and confirmed the balance addition. With respect to the rejection of the books of account and estimation of profit, he upheld the rejection of the books of accounts. However, he granted relief of Rs. 616197/- with respect to the GP addition in case of ‗Moets Catering Services‘ , relief of Rs. 83168/- in ‗Moets Kabab/ and relief of Rs. 50186/- in ‗Moets Retreat Club‘. Assessee has challenged the addition of Rs. 3765834/- confirmed on account of profit of Moets Retreat Club, Faridabad and also confirmation of the gross profit in various proprietary concern of the assessee. The revenue has challenged the deletion of the addition in the profit of Moets Retreat Club, Faridabad to the extent of Rs. 1885484/- and relief granted by the ld CIT(A) in the gross profit addition deleted by the ld CIT(A). 16. Ground No 1 of the appeal of the assessee for all these years from AY 2002-03 to 2006-07 are challenging the general assessment. No specific arguments were raised before us and it was stated that it challenges the computation of total income by the ld AO making various additions. As these grounds are general and no specific arguments canvassed, same are dismissed. 17. Therefore, now the issues before us are :- i. The profits of Moets Retreat Club challenged in Ground No 2 for AY 2002-03 and 2003-04,2005-06 and Ground no 3 for AY 2006- 07 of assessee‘s appeals against the order of the 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)

Sandeep Bindra Vs. ACIT, ITA No. 2647 to 2651 /Del/2011 ITA No. 2782 to 2786 and 1286/Del/2011 (Assessment Year: 2002-03 to 2006-07) 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 into an agreement dated 15/03/2001 with M/s L. P. hospitality private limited and according to that assessee was to enroll members at the non-refundable life membership fees of Rs. 10,000 each and an annual subscription fee of Rs. 1500 annually per member. The assessee has also entered into an agreement with enhanced networks for enrolling the members for which they would be paid commission of 30% of the fees collected. As the search was conducted on 6/12/2005 the Ld. assessing officer after going through the seized material has worked out that the assessee has received membership fee for 854 members amounting to Rs. 85.40 Lacs and applying the same number of members, he computed the annual subscription fees of Rs. 12.81 Lacs. Consequently, the total addition of Rs. 98.21 lakhs was made on account of receipt of the membership fees. For assessment year 2002 – 03, this income was estimated by the Ld. AO and taken as the gross receipt earned by the assessee. However the assessee has not shown any income from this club but has admitted Page | 11

Sandeep Bindra Vs. ACIT, ITA No. 2647 to 2651 /Del/2011 ITA No. 2782 to 2786 and 1286/Del/2011 (Assessment Year: 2002-03 to 2006-07) during the course of assessment proceedings and submitted an income and expenditure account will stop in the income and expenditure account the assessee has shown subscription fees of Rs. 87.30 Lacs which comprises of Rs. 85.40 Lacs on account of enrolment of members and Rs. 1.19 Lacs in respect of annual membership fees. The assessee further claim deduction of indirect expenditure of Rs. 50.73 Lacs as expenditure. The balance of excess of income over the expenditure was not offered for the income tax by the assessee. The assessee has submitted that club has been closed in 2005 because of the insufficient infrastructure and litigation etc on account of complaints by the club members and the entire operation of the club was handed over to a 3rd party for which no consideration has been received by the assessee. He further stated that the entire money received as a subscription fee and annual membership fee are spent by the assessee for creating infrastructure for the club such as construction of swimming pool, green rooms, banquet halls, billiard room etc. Therefore, there is no profit available with the assessee and therefore the assessee cannot be taxed on this kind of income. The Ld. assessing officer did not accept the contention 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 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

Sandeep Bindra Vs. ACIT, ITA No. 2647 to 2651 /Del/2011 ITA No. 2782 to 2786 and 1286/Del/2011 (Assessment Year: 2002-03 to 2006-07) 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 businesses the club operation is also a business for the appellant for which regular accounting policies and procedures are applicable as a result the AO was justified in treating the income from the club as business income. When this income is to be taken as business income the AO is supposed to allow the depreciation on the assets and infrastructure created which is allowable as per the provisions of the income tax act. As regards membership fee there appears to be no dispute stop as regards annual fee there are 2 opinions:-as per the AO same is been doubt at Rs. 12.81 Lacs whereas as per the appellant he has received only Rs. 1.19 Lacs resulting into a difference of Rs. 10.91 Lacs. The contention of the appellant appears to be acceptable on this issue that unless infrastructure is created the members are not inclined to pay the annual fees. The nature of annual fee is mainly to cover the cost for the maintenance of infrastructure created for the use of the members. In the present case it is an admitted an undisputed fact that infrastructure was not fully developed in the club and the club has also more into controversies and litigation thereby earning a bad reputation. In such circumstances it cannot be expected that the annual fee has been received from all the members of the club is estimated by the AO. As per the data filed the fact that the number of members enrolled in the year under consideration because 854 which is gone up to 961 in financial Page | 13

Sandeep Bindra Vs. ACIT, ITA No. 2647 to 2651 /Del/2011 ITA No. 2782 to 2786 and 1286/Del/2011 (Assessment Year: 2002-03 to 2006-07) year 2002 – 03 that come down drastically 2323 in the financial year 2003 – 04 which further reduced to one 12 in financial year 2004 – 05 and only 11 in the financial year 2006 7 is itself an indicator of the fact that club venture was not having proper infrastructure as a result of which bad reputation has resulted in bad market for the club. Further there is no material pointed out in this tease material collected by the AO to indicate that all the members have paid the annual fee in the year under consideration. Neither the AO has brought any material to justify the estimation of annual membership fee in respect of annual fee over and above what has been declared by the appellant. Hence, the annual fee received is held to be taken at Rs. 1.19 Lacs only. 27. The major 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 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 Page | 14

Sandeep Bindra Vs. ACIT, ITA No. 2647 to 2651 /Del/2011 ITA No. 2782 to 2786 and 1286/Del/2011 (Assessment Year: 2002-03 to 2006-07) 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 total membership fees of Rs. 87.30 Lacs, allowed, and expenses there from of Rs. 48.65 Lacs resulting into the net income before depreciation of Rs. 38.64 Lacs resulting into the net fit after depreciation of Rs. 37.65 Lacs granting relief to the assessee of Rs. 18.85 Lacs. Therefore, the assessee and revenue both are challenging the above finding of the Ld. CIT (A). The facts of the issues are similar in other assessment years also.

Sandeep Bindra Vs. ACIT, ITA No. 2647 to 2651 /Del/2011 ITA No. 2782 to 2786 and 1286/Del/2011 (Assessment Year: 2002-03 to 2006-07) 1.4 The above agreement was primarily formed to raise funds for the creation of infrastructure for the club such as swimming pool , halls, gym, billard etc. The appellant has spent Rs. 25 lacs on the building up of infrastructure and Rs. 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 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 PB-40 Vol. 1 Reconciliation of Receipts towards Membership PB-41 Vol. 1 Analysis of Balance sheet PB 42-43 Vol. 1 Year wise details of receipts and payments PB-44 Vol-1 Seized material of Register of Members PB 176-183 Vol-1, PB 337-346 Vol-2,

1.7 The CIT(A) send the submissions of the appellant for the comments of the AO but after number of reminders also no remand report is received and the order is passed by CIT(A) . ( Para 25 Page 14 of CIT(A) for 2002-03) . 1.8 NO material on record to substantiate the fact that 100% annual fees has been paid by the enrolled members. Page | 16

Sandeep Bindra Vs. ACIT, ITA No. 2647 to 2651 /Del/2011 ITA No. 2782 to 2786 and 1286/Del/2011 (Assessment Year: 2002-03 to 2006-07) 1.9 The AO has treated the income from the club as Business income . 1.10 The CIT (A) has not agreed to taxation on basis of Real Income Theory as proposed by appellant and treated the income from Retreat club is to be assessed as business income. He has not discussed the arguments of the appellant on account of applicability of Real Income Theory in this case. The CIT(A) additionally directed the AO to allow depreciation on assets created as infrastructure and also set off the income offered by the appellant in various years as per the revised computation. 1.11 There is no finding by the AO or the CIT(A) that the appellant has drawn more than Rs. 26,08,112/- in all the years from the club for his personal benefits which has already been offered to tax by the appellant. Income declared in the income tax returns on the basis of Real Income theory from Moets retreat club , assessed by the AO and the Relief by the CIT(A).

Assessee By AO Relief by CIT(A) A.Y. 2002-03 Rs. NIL 55,52,618 18,87,484 A.Y.2003-04 22,76,069 62,06,116 45,60,001 ( after set off of declared income) A.Y.2004-05 Rs.2,89,915 31,40,310 22,25,575 ( after set off of declared income) A.Y.2005-06 Rs. 41,727 22,87,936 22,87,936 ( after set off of declared income) A.Y.2006-07 Rs. 2,49,792 2,49,792

SUMMARY OF NUMBER OF MEMBERSHIP , ANNUAL/RENEWAL FEE AND EXPENSES:

Number of Members: F.Y. No. of No. of Members Difference No. of Members enrolled as per members enrolled as Department (AO) enrolled as per per CIT(A). Page | 17

Sandeep Bindra Vs. ACIT, ITA No. 2647 to 2651 /Del/2011 ITA No. 2782 to 2786 and 1286/Del/2011 (Assessment Year: 2002-03 to 2006-07) Assessee 2001-02 854 854 NIL 854 2002-03 961 961 NIL 961 2003-04 323 323 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: - As per Assessee As Per Department F.Y Total Annual Amounts of Total Annual Amounts of Amounts of Fee Annual fee No. of Fee Annual fee Annual fee No. of Receive Received Memb Received Received Received Member d from er from s CIT(A) enrolled 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 As per CIT(A) Department (AO) 2001- Indirect Expenses Total Expenses Disallowance of 02 50,73,804 minus 468,104/- reduced Of Rs. 50,73,804/- commission of to 37,334/- 26,19,000) = 24,54,804 . Only 1/3rd of disallowed for part expenses out of Page | 18

Sandeep Bindra Vs. ACIT, ITA No. 2647 to 2651 /Del/2011 ITA No. 2782 to 2786 and 1286/Del/2011 (Assessment Year: 2002-03 to 2006-07) 2454804 amounting to Rs. 14,43,312/- Disallowance of Rs. 468104/- Disallowance reduced to Rs. Commission expense Commission expenses 171,000/- of Rs. 26,19,000(30% of Rs. 22,77,000/- as of Also allowed per bank statement , 85,40,000+190,000) Depreciation of Rs. Therefore disallowance 98700 @ 10% on remaining amount of Rs. 987000 Rs. 342,000/-out of total of Rs. 26,19,000. 2002- Indirect Expenses Total expenses Disallowance of 03 67,73,384 minus 150,000 due to Of Rs. 67,73,384/- commission 3283500) absence of =3489884 because vouchers. appellant has Note: This addition surrendered of Rs. 150,000/- undisclosed income of amounts to Rs. 22,76,069/-. enhancement by CIT(A) without notice.

Disallowance reduced to Rs. 305,500/- Also allowed Commission expense Commission expenses Depreciation of Rs. of Rs. 32,83,500(30% of Rs.3283500 out of 340932 @ 10% on of this Rs. 26,72,500/- as Rs. 96,10,000+13,35,000) per bank statement, so 3409326.Calculation disallowance of Rs. mistake in order. 611,000/-

Sandeep Bindra Vs. ACIT, ITA No. 2647 to 2651 /Del/2011 ITA No. 2782 to 2786 and 1286/Del/2011 (Assessment Year: 2002-03 to 2006-07) 2003- Indirect Expenses Total expenses Disallowance of 04 47,60,802 minus 150,000 due to Of Rs. 47,60,801/- commission16,34,400 absence of =3126402 ). Only 1/3 vouchers. rd of 22,09,734/-is Disallowance for Rs. 729,212/-

Disallowance Commission expense reduced to Rs. of Rs. 16,34,400(30% Out of Commission 367,450/- of expenses of 32,30,000+22,18,000) Also allowed Rs.1634400 Rs. Depreciation 899,500/- is as per bank statement , so remaining amount of Rs.734,900 is disallowed/- 2004- Indirect Expenses Total expenses NO Disallowance as 05 28,28,010 minus payment for Of Rs. 28,28,010/- commission expenses has 924,050=1903960. supporting Only 1/3rd disallowed documents . of 551,200/- for Rs. Commission expense Disallowance 181,896/- of Rs. 924,060(30% of reduced to Rs. 11,20,000+19,60,200) Commission expenses 219,525/- of 924050 out of which Also allowed Rs. 485,500/- is as per Depreciation of Rs. bank statement 448305 @ 10% on ,therefore disallowance Rs. 4683055 of Rs.439,050/- 2005- Indirect Expenses Total expenses Disallowance limited 06 1844173 minus to 40% of 1629973 Of Rs. 18,44,173/- commission . 214200=1629973. disallowed Rs. Commission expense 10,55,965/- Disallowance of Rs. 2,14,200(30% reduced to Rs. Total Commission of 714000) 107100/- expenses of 214200 disallowance being not Also allowed correlated with bank Depreciation of Rs. Page | 20

Sandeep Bindra Vs. ACIT, ITA No. 2647 to 2651 /Del/2011 ITA No. 2782 to 2786 and 1286/Del/2011 (Assessment Year: 2002-03 to 2006-07) statement. 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 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 hypothetical income had accrued to assessee and section 28(iv) would not be applicable to the facts and circumstances of the case. Essentially, AO is required to be pragmatic and not pedantic. As the benefits under advance receivable and DEPB would be charged in the year of import of raw-material.  H.M. Kashi Parekh & Co. Ltd. vs. CIT (1960) 39 ITR 706 (Bom)  State Bank of Tranvacore vs. CIT (1986) 158 ITR 102 (SC)”

Sandeep Bindra Vs. ACIT, ITA No. 2647 to 2651 /Del/2011 ITA No. 2782 to 2786 and 1286/Del/2011 (Assessment Year: 2002-03 to 2006-07) is leviable on him despite this assessee has declared additional income, which is much more than the income actually earned by him. The Ld. AR insisted that either the membership fee received after paying commission was spent on the infrastructure or development of the club or for running the club as is evident from the details of expenditure filed above. It was further argued that the period allotted was only 5 years which was not sufficient to fetch income and the owners were not spending any amount on the renovation and facilities required to be offered to the club members. These members were enrolled after lots of efforts but due to lack of facilities in the club new members were reduced year after year because of lack of facilities and dispute between the owners of the land and building due to which money on account of annual fees was not received by him. 21. The ld DR submitted that according to the provision of section 69C unexplained expenditure cannot be allowed to the assessee. He further submitted that the assessee has not produced any voucher of expenditure incurred and there are seized materials. With respect to the claim of the assessee for deduction of payment of commission, he submitted that assessee has not disclosed original return of income and also did not produce the party. In view of this no documentary evidences were produce before the assessee. 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 Page | 22

Sandeep Bindra Vs. ACIT, ITA No. 2647 to 2651 /Del/2011 ITA No. 2782 to 2786 and 1286/Del/2011 (Assessment Year: 2002-03 to 2006-07) 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(4A) of the Act to state that validity of statement recorded during the course of search is very high. He referred to the various decisions of the court. 22. The ld AR vehemently contested the argument of the ld DR and submitted that only the real profit can be charged to tax. He submitted that ld CIT (A) has correctly analyzed the Annexure A-8 and A-9 seized during the year for the purpose of membership income. He submitted that number of members enrolled is not doubted and therefore, the liability to pay the commission to M/s. Enhancer Network has arisen. Therefore, merely the amount of commission paid by cheque was allowed irrespective of the fact that the assessee collected the cash and also paid commission to the party out of the cash available. With respect to the expenditure incurred by the assessee he submitted that when the search took place there was a swimming pool on which the assessee has incurred expenditure. It is not the case of the revenue that swimming pool was not there. He further submitted that amount of expenditure incurred is further supported by the valuation report of the authorized valuer. With respect to the applicability of provisions of section 69C of the Act he submitted that the issue in the appeal is with respect to determination nof the correct profit Page | 23

Sandeep Bindra Vs. ACIT, ITA No. 2647 to 2651 /Del/2011 ITA No. 2782 to 2786 and 1286/Del/2011 (Assessment Year: 2002-03 to 2006-07) and not allowability of any expenditure. He submitted that when the gross receipt is not accounted for the same couldn‘t be the income without granting deduction for the expenditure. The Ld. CIT DR has relied upon the orders of the assessing officer and argued that the annexure A-8 and A-9 clearly shows that members were made by the assessee and the amount might have been received by him from all the members for annual maintenance also but CIT(Appeals) did not appreciate these facts and granted the relief. 23. We have carefully considered the rival contentions and perused the orders of the lower authorities. We have also called for respective annexure containing documents 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 mentioned either Rs. 10,000/- or Rs. 11,500/-. The members who were initially made only paid Rs. 10,000/- up to 31-03-2002 in both the list but members made during the subsequent financial year i.e. AY Page | 24

Sandeep Bindra Vs. ACIT, ITA No. 2647 to 2651 /Del/2011 ITA No. 2782 to 2786 and 1286/Del/2011 (Assessment Year: 2002-03 to 2006-07) 2003—04 have either paid R. 10,000/- or Rs. 11,500/- also. Since, names, addresses, telephone numbers, date of membership and amount is clearly mentioned in the seized document, We therefore hold that the ld CIT(Appeal) has rightly accepted the list of membership. The revenue has not pointed out that which amount of fees received for members as mentioned in seized material have not been considered by the ld CIT (A). ld AO also accepted the number of members enrolled for financial years 2001-02 to 2003-04. The list of members also shows that there were few names appeared in the list but the amount has not been mentioned and in some of the cases members were made much earlier but the amount was paid by them much after becoming the member such as at S.No.137 membership no. 136 of annex.A-8, Sh. Rajan Sharma became a member much earlier but the amount was paid in subsequent year. Likewise, member at S.no.998 Mr.S.Jain of Annex. A-9, has paid the amount on 20-08-2003 while at S.No.997, member Mr. Vikram Bhatia and at S.No.999 Mr. R.Taneja has not paid membership subscription. further while Mr. S. Sethi mentioned at S. No. 1000 paid the membership on 17-10-2001 i.e. much earlier than Mr. Jain. The above findings are apparent from the seized papers placed at pages 180 to 182 of the paper book. The ld AO has calculated figures of all the members whose names are appearing in the seized annexure and the annual charges of all the members. The list, which is a seized document, has to be relied upon totally and not partially, unless there is some other corroborating evidence supporting the view of the assessing officer are also found. The documents has to be read as a whole and not in part and it cannot be said that one part of the document to be correct and another as incorrect. The ld CIT (Appeal) has rightly accepted the list of members and the amount shown from seized annexure as the amount is clearly depicted against each member and rightly rejected the amount calculated/estimated by the AO. As the ld OA has not made any reference to any other evidences which shows the receipt of the Page | 25

Sandeep Bindra Vs. ACIT, ITA No. 2647 to 2651 /Del/2011 ITA No. 2782 to 2786 and 1286/Del/2011 (Assessment Year: 2002-03 to 2006-07) membership fees higher than what is computed by the ld CIT (A) , we donot find any infirmity 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. 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 failed to appreciate the modus operandi of the Enhancer Network Limited. It used to receive the amount of subscription from members in cash and the commission of Rs 3000/- was deducted wherefrom. Therefore, the assessee was paid only the net subscription after deducting their commission. It is not the case of the revenue that Enhancer network has not received the commission, which it was entitled to receive. The members have been shown to have paid Rs. 10,000/- and Page | 26

Sandeep Bindra Vs. ACIT, ITA No. 2647 to 2651 /Del/2011 ITA No. 2782 to 2786 and 1286/Del/2011 (Assessment Year: 2002-03 to 2006-07) out of which Rs. 3,000/- was required to be paid by the assessee to Enhancers Network. The recipient confirmed the receipt of the amount. The commission was mainly paid through cheques, which is admitted by the ld AO. Further, 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 Ld. assessing officer. 26. With respect to other expenditure incurred by the assessee and claimed by the assessee, a chart is placed at PB pg 43 , which shows the head of various expenditure incurred as well as the amount of such expenditures incurred by the assessee for AY 2002-03 to 2006-07. A separate income and expenditure statement of each year along with the ledger accounts 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 Page | 27

Sandeep Bindra Vs. ACIT, ITA No. 2647 to 2651 /Del/2011 ITA No. 2782 to 2786 and 1286/Del/2011 (Assessment Year: 2002-03 to 2006-07) 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 disallowed one-third of expenses of Rs. 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 Rs. 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 2005-06 whole of the expenditure was allowed by him. But in AY 2006-07 the CIT(A) stated that AO has not pointed out any vouchers of expenses which were not produced but still disallowance has been upheld to the extent of 40% on adhoc basis. We restrict the disallowance in all these years to Rs. 50000/-for each of the assessment year i.e. AY 2003-04, 2004-05 and 2006-07. Since no discrepancy was found in AY 2005-06 the disallowance made by the AO and allowed by the CIT(A) is upheld. Accordingly the Ld. assessing officer is directed to restrict the disallowance for all these years. 27. Now we come to the expenditure, which are held to be of capital in nature by the revenue. The ld. CIT DR has submitted that the AO has rightly disallowed the expenditure incurred on fixed assets and ld CIT(A) has wrongly allowed depreciation @10% on the fixed assets as no depreciation was claimed by the assessee on this expenditure. On the contrary, Ld. AR argued that these assets were erected by the assessee in each year as per details placed on record in the balance sheets filed and the AO did not find any infirmity on the assets built by him. These Page | 28

Sandeep Bindra Vs. ACIT, ITA No. 2647 to 2651 /Del/2011 ITA No. 2782 to 2786 and 1286/Del/2011 (Assessment Year: 2002-03 to 2006-07) assets were built on the property owned by LP Hospitality Pvt. Ltd. and after the tenure of five years the same were handed over to them thus, no enduring benefit was received by the assessee. The assets built in the first year were kitchen equipments of Rs. 50,000/- and construction of swimming pool to the tune of Rs. 9,37,000/- totaling Rs.9,87,000/- in AY 2002-03 and additions were also made in swimming pool, scooter, sports and gym equipments in AY 2003-04 of Rs.25,21,026/-, in AY 2004-05 also sports and gym equipments were purchased apart from renovation of the banquet hall provided to the club by the owners totaling to Rs. 21,35,000/-. Thus total expenditure amounting to Rs. 56,43,026/- is revenue expenditure being incurred on the property not owned by the assessee but during the period of operations of the club hence, whole of the expenditure is required to be allowed. 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 allowed as revenue expenditure. The depreciation on these two assets is rightly allowed by the ld. CIT(A). Page | 29

Sandeep Bindra Vs. ACIT, ITA No. 2647 to 2651 /Del/2011 ITA No. 2782 to 2786 and 1286/Del/2011 (Assessment Year: 2002-03 to 2006-07) 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 to have been acquired by the assessee as these are the normal running expenditure in case of the nature of the business week by the assessee. The Ld. assessing officer also could not show that this expenditure has resulted into naming any enduring benefit to the assessee and to have any material useful life in the nature of the business being run by the assessee . Therefore the Ld. assessing officer is directed to grant deduction of the expenditure as directed above and to consider the balance expenditure as capital expenditure and be upheld of those assets allowability of depreciation by the Ld. CIT (A). Accordingly the Ld. assessing officer is directed to recompute the income of the club for all the years. Therefore the issue No. 1 in the above appeals has been decided accordingly and all the grounds of the appeal of the revenue and the assessee respectively are disposed of with above direction. 28. The next issue is with respect to Ground No 2 of AY 2006-07 is with respect to disclosure of Rs 2 Crores made by the ld AO confirmed by the revenue. The Ld. AO has dealt with this issue at para No. 5 of his order. The brief facts are that during the course of search 6/12/2005 in reply to question No. 12, question No. 13 and question No. 14 of the assessee has made disclosure under section 132 (4) of the act to stop the assessee disclosed Rs. 4 crores during the course of the statement. Out of the above of the question No. 10 the assessee was shown a loose paper found from his bedroom are as Annexure A –4/1 on which it was written that given in gurugaon during the year April 2005 30/11/2005 of approximately 200 lakhs, the assessee was asked to explain the above paper wherein he replied that the paper contains the details of loans he has given to different persons during the period April 2000 05/02/1930 of November 2005 in gurgaon. The assessee did not disclose the above amount in his return of income. Therefore 26/9/2007 the assessee was Page | 30

Sandeep Bindra Vs. ACIT, ITA No. 2647 to 2651 /Del/2011 ITA No. 2782 to 2786 and 1286/Del/2011 (Assessment Year: 2002-03 to 2006-07) asked as to why the above what should not be included in the total income of the assessee. To this the assessee 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 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. CIT (A) who upheld the above addition. Therefore assessee is in appeal before us. 29. The grievance of the assessee/appellant was that the CIT(A) did not appreciate that the search party put extensive pressure on the appellant to surrender Rs. 10 crores which was later on reduced to 4 crores and forced the assessee to write on piece of paper provided by them shown as recovered from the bedroom as annexure A-4(1) placed before us at page 797 stating therein as under:

Sandeep Bindra Vs. ACIT, ITA No. 2647 to 2651 /Del/2011 ITA No. 2782 to 2786 and 1286/Del/2011 (Assessment Year: 2002-03 to 2006-07) “loans given in Gurgoan during the year april 2005 to 30 Nov 2005 APP 200 lac rupees” -sd-

 During the search , the search party put extensive pressure on the appellant to surrender 10 crore of rupees which was later on reduced to 4 crores under the following heads a. On account of loan given in Gurgaon Rs. 2 crores b. On account of suppression in sales Rs. 1 crore c. On account of undisclosed income/ assets Rs. 1 crore.  In order to cover up the surrender of 2 crores appellant was asked to write a piece of paper supplied by the search party and same has been shown as recovered from his bedroom as Annexure A4/1.  The appellant filed an objection to the DI, Investigation vide petition dated 03/03/2006 which has been referred in his submission before AO at page 90 of Vol.1 . In view of the said petition the DI, Investigation relaxed the payment of tax on account of surrendered income.

Sandeep Bindra Vs. ACIT, ITA No. 2647 to 2651 /Del/2011 ITA No. 2782 to 2786 and 1286/Del/2011 (Assessment Year: 2002-03 to 2006-07)  An affidavit has been filed by the 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 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. ACIT 83 TTJ (Rajkot) 239 Retraction of statement u/s 132(4)-in the absence of any material evidence collected by the revenue during the search in support of the disclosure statement , additions made solely on the basis of such disclosure statement cannot be sustained , assesee having retracted from such statement.

c) DCIT Vs. Pramukh Builders 112 ITD (AHD) (TM ) 179

Sandeep Bindra Vs. ACIT, ITA No. 2647 to 2651 /Del/2011 ITA No. 2782 to 2786 and 1286/Del/2011 (Assessment Year: 2002-03 to 2006-07) Firm engaged in the construction –search-one partner admitted that on money of Rs. 10 lakhs received-but not disclosed in the return-no other evidence –statement of partner was retracted-no addition can be made.

d) M/S Pushpa Vihar ,Bombay (ITA NO. 1822/B/90 dated 12- 7-93)

Held that mere admission cannot be a bed rock or foundation of an assessment. It is always open to the assessee who made the admisson to show that what he admitted was not correct. Therefore the admission made by a person is relevant in deciding the matter but is not always conclusive. The judgment of the Supreme court in the case of shri Krishna Vs. Kurukshetra University reported at AIR 1986 SC 593 was relied upon.In that case , the Supreme court held that in the case of retracted confession by an accused not supported by independent corroboration, benefit of doubt can be extended to the accused.

e) Common Cause and Ors Vs. UOI (2017)245 Taxman 214(SC) Loose papers are not books of accounts and have no evidentiary value in view of Section 34 of the Indian Evidence Act without any corroborative material . Referred CBI Vs. V.C.Shukla & ors. 1998(3)SCC 410 f) ACIT Vs. Johari Lal Sodhani ITA No. 145/JP/2013 dated 7-9- 2015 The impugned addition was made by the AO based on the sworn statement of the appellant with reference to seized material found as a result of search and seizure operations. Thus, it is not addition made merely based on admission of the appellant. The admission was made with reference to seized material. There is no allegation that admission was made out of coercion or pressure exercised by the department. The Page | 34

Sandeep Bindra Vs. ACIT, ITA No. 2647 to 2651 /Del/2011 ITA No. 2782 to 2786 and 1286/Del/2011 (Assessment Year: 2002-03 to 2006-07) appellant never protested during the course of assessment proceedings. In this background, it was contended that in the absence of any corroborative evidence found 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.”

Sandeep Bindra Vs. ACIT, ITA No. 2647 to 2651 /Del/2011 ITA No. 2782 to 2786 and 1286/Del/2011 (Assessment Year: 2002-03 to 2006-07) B Kishore Kumar Vs CIT (52 taxmann.com 449) Madras High Court confirmed (Copy Enclose)

Where Hon’ble Delhi High Court held that where inferences drawn in respect of undeclared income of asssessee were premised on materials found as well as statements recorded by assessee’s son in course of search operations and asessee had not been able to show as to how estimation made by Assessing Officer was arbitrary or unreasonable, additions so made by Assessing Officer by rejecting books of account was justified.

Sandeep Bindra Vs. ACIT, ITA No. 2647 to 2651 /Del/2011 ITA No. 2782 to 2786 and 1286/Del/2011 (Assessment Year: 2002-03 to 2006-07) amount mentioned pertaining to any of the party or address of any person mentioned in the paper. The paper was prepared and the assessee had no option but to sign because the statement started at 8 am in the morning and whole night continued, the assessee appellant had no option to run around at late night but to sign on such paper by taking reasonable precautions to avoid any further argument. No tax 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.

Sandeep Bindra Vs. ACIT, ITA No. 2647 to 2651 /Del/2011 ITA No. 2782 to 2786 and 1286/Del/2011 (Assessment Year: 2002-03 to 2006-07) for the purpose of disclosure by the search party and overall there are no evidences available with respect to the amount of loan given to various parties. It was also not known to the loans have been given, then the loan amount was given, when the amount was required to be them and the rate of interest. It was further the claim of the assessee that when the assessee has retracted the statement it is for the revenue to show corroborative evidence with respect to the above disclosure made by the assessee. The Ld. CIT (A) has confirmed the addition only on the basis that the search was conducted in the presence of the witness and therefore now it cannot be challenged. Here the issue is not challenged to the search, here the issues involved days whether the addition can be made on the basis of the seized paper found during the course of search from the bedroom of the assessee where there is a mention of the single line that the assessee has given loan to various parties in Gurgaon amounting to Rs. 2 crores. It is apparent that the search was conducted on 12/2005 and the assessee submitted a petition on 3/3/2006 before the director of income tax (investigation). Even the cheque taken by the search party of Rs. 1.2 crore from the bank account of the wife of the assessee has not been deposited by the Ld. AO. During the course of the search the single paper stating the above assertion was found. There is no other material found during the course of the search that assessee has given loan to various parties. There is no diary or the dates of payment of the loan or any cheques from the borrowers or demand promissory note of the borrower were found. If the paper seized in the course of the search is look into which is placed at page No. 797 of the paper book it is apparent that paper is bald and does not disclose anything. It shows that it is merely for making the disclosure of Rs. 2 crores. This paper is also required to be looked 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 Page | 38

Sandeep Bindra Vs. ACIT, ITA No. 2647 to 2651 /Del/2011 ITA No. 2782 to 2786 and 1286/Del/2011 (Assessment Year: 2002-03 to 2006-07) ―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 loan was given as Appr. Rs.200 lakhs is a very vague term when name of the party is not mentioned. The CBDT in their instructions time and again asked the investigation officers to bring supporting evidence on record at the time of recording the statement when income is surrendered. The addition made by AO without corroborative evidence brought on record specifically when the assessee appellant has retracted by way of an affidavit in which he has alleged The cheque issued of Rs.1.2 crores was also from the chequebook of assessee‘s wife Smt. Tanuja Bindra. The revenues relied upon very heavily on the decision of the Kishore Kumar Vs CIT (62 taxmann.com 215, 234 Taxman 771). The facts in that particular decision reported in B. Kishore Kumar v. Dy. CIT [2014] 52 taxmann.com 449/[2015] 229 Taxman 614 (Mad.) Were as under:- “2.1. The brief facts of the case are as under: On 29.8.2006, a search was conducted at the premises of the appellant's father, wherein loose sheets and notings on telephone diaries pertaining to the assessee were found by the department.

Sandeep Bindra Vs. ACIT, ITA No. 2647 to 2651 /Del/2011 ITA No. 2782 to 2786 and 1286/Del/2011 (Assessment Year: 2002-03 to 2006-07) 2.2. On 27.8.2008, notice under Section 153A read with Section 153C of the Income Tax Act, 1961 (for brevity, "the Act") was issued to the appellant for the assessment years 2001-2002 to 2007-2008, namely, for seven years. In response to these notices, on 14.10.2008, the appellant requested the department to treat the original returns filed by him as his returns in response to the notices issued under Section 153A read with Section 153 of the Act. Thereafter, on 12.11.2008, the assessee filed revised returns for the assessment year 2001-2002 and for the assessment years 2002-2003 to 2007-2008, the assessee filed revised returns on 16.12.2008. 2.3. Pursuant to the same, the assessment under Section 143(3) read with Section 153A and 153C of the Act was completed by the Assessing Officer based on admission made by the assessee during the time of search and the records seized. The request of the assessee to consider his objections was overturned by the Assessing Officer saying that the materials submitted at the fag end of the assessment could not be scrutinized, as the notings in telephone diaries and loose sheets are unstructured and spread over without reference to time-frame. The Assessing 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 of these appeals. 4. The main grievance of the assessee is that the Tribunal has not considered his plea that the Assessing Officer has not scrutinized the materials submitted before him and made additions based on a priori considerations. 5. We have perused the orders passed by the Tribunal and the authorities below. Though the assessee was at pains to make out an issue that he has made certain submissions and those submissions were not considered by the Assessing Officer and therefore, the Assessing Officer has misdirected himself in determining the tax liability, on going through the order of the Tribunal, we find that the case of the assessee was decided on the basis of Page | 40

Sandeep Bindra Vs. ACIT, ITA No. 2647 to 2651 /Del/2011 ITA No. 2782 to 2786 and 1286/Del/2011 (Assessment Year: 2002-03 to 2006-07) his own sworn statements dated 29.8.2006 and 10.10.2006 and admitted documents. We extract that portion of the order as has been recorded by the Assessing Officer in paragraph (11), which clinches the whole issue: "11. Therefore, reliance is placed on the admission of the assessee at the time of search, which is reproduced as under: Sworn statement of Shri Kishore Kumar dt. 29.8.2006: 'Qn.11: I am showing you the three print-out of amounts totaling to Rs.52,73,920 (Rs.3,31,336 + Rs.15,05,158 + Rs.34,37,427). Please explain this? Ans: These are the details of loans given by me to various parties as mentioned in the printouts. This is a separate business carried out by me which was not included in the income-tax returns filed by me. Qn.12: Please explain the source for the total outstanding amounts which are given by you? Ans: The loans totaling to Rs.52,73,920 given to various parties as per the list were from my undisclosed income. I agree to pay the relevant income- tax dues for the above declared undisclosed income.' Sworn statement of Shri Kishore Kumar dt. 10.10.2006 (in Tamil): 'Qn.1: I am showing you Ann/BL/B&D/S-3 and sl.No.5, which are telephone index books wherein amounts given in cash to various persons were found recorded. Whom do they belong to? In whose handwriting it is write? What do these amounts represent? Ans: They belong to me. Signature is mine and the notings relate to loans given by me on various dates. This constitutes my separate finance business. There are no regular books for this. According to the documents shown, as on date outstanding loans to be recovered is in the range of Rs.25 Lakhs to 30 Lakhs. The rate 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 Page | 41

Sandeep Bindra Vs. ACIT, ITA No. 2647 to 2651 /Del/2011 ITA No. 2782 to 2786 and 1286/Del/2011 (Assessment Year: 2002-03 to 2006-07) 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 income is determined higher than what is now determined by the department. Moreover, it is not the case of the assessee that the admission made by him was incorrect or there is mistake. In fact, when there is a clear admission, voluntarily made, by the assessee, that would constitute a good piece of evidence for the Revenue. 7. The learned counsel for the assessee relied upon a decision of the Delhi High Court in CIT v. Girish Chaudhary, [2008] 296 ITR 619/163 Taxman 608 to plead that loose sheets of papers should not be taken as a basis for determining undisclosed income. However, in the case on hand, loose sheets found during the search are not the sole basis for determining the tax liability. It is a piece of evidence to prove undisclosed income. The printout statements of undisclosed income is not disputed by the assessee and in his sworn statements it is accepted. In fact, he admitted that outstanding loans to be recovered are in the range of Rs.25 Lakhs to 30 Lakhs. We find no error in the procedure followed by the Assessing Officer on admitted facts. The entire exercise by the department to bring to tax undisclosed income, we find has been generous and simple. There appears to be no confusion in the quantification of the tax liability and we uphold the order of the Tribunal. 36. We have carefully produced the facts of that case with the case of the assessee. In the case relied upon by the revenue there were two statements of the assessee in which the facts of disclosure on account of the loan was confirmed. Furthermore, the assessee did not challenge his admission made by him during the course of the search. Has also disclosed that he is carrying on the finance business and he is also earning interest thereon at the rate of 18% on the amount financed. Therefore on this basis the Hon‘ble high court confirmed the addition based on the statement. In fact in that particular case the assessee wanted an adjustment of the total disclosure only and not retraction the wall amount disclosed. In the present case as the facts already discussed above the assessee retracted the statement of filing letter before the director of investigation (investigation) and also filing an affidavit before the Ld. assessing officer. During the course of search there were no evidences found except the release 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

Sandeep Bindra Vs. ACIT, ITA No. 2647 to 2651 /Del/2011 ITA No. 2782 to 2786 and 1286/Del/2011 (Assessment Year: 2002-03 to 2006-07) 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. 2nd decision relied upon by the revenue is Hon‘ble Delhi High Court in 37. 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. We now come to the 3rd issue of the estimation of the gross profits with 39. respect to several restaurants business carried on by the assessee. The brief facts of the case show that assessee individual earning income from business being proprietor different entities, which are carrying on restaurant business. The Ld. assessing officer due to incomplete supporting evidences in absence of justification of the GP rate declared by the appellant at the rate of 13.26% applied the GP rate of 30% considering the sales of Rs. 1139 8723/–. Therefore, it the addition was made to the total income of the assessee for assessment year 2007 – 08. With respect to the assessment year 2002 – 03 to 2006 – 07 the Ld. assessing officer rejected the books of accounts of the assessee holding that the sales are not fully recorded and no books of accounts are found at the premises of the assessee at the time of the search. The Ld. assessing officer was further impressed by the fact that the statement given by the employees showing the improper maintenance of records by the appellant stop he rejected the books of accounts and declared the net profit and gross profit shown by the assessee as there are unrecorded sales as per the seized paper. Therefore, the Ld. assessing officer and Page | 43

Sandeep Bindra Vs. ACIT, ITA No. 2647 to 2651 /Del/2011 ITA No. 2782 to 2786 and 1286/Del/2011 (Assessment Year: 2002-03 to 2006-07) adopting the GP rate in the case of the assessee at the rate of 30% Moets catering and Moets Kabab. The 10% of the gross profit ratio was estimated in case of retreat. The assessee declared gross profit of 6.06 percentages in Moets Catering, 27.82% in Moets Kabab and 5.35% in retreat. The Ld. CIT appeal estimated 15%, 27.82% and 8.9% following the order of the coordinate bench in case of concerns . Therefore both the parties are in appeal before us on this issue. The grievance of the assessee appellant is that CIT(A) has estimated the GP arbitrarily without examining the facts of the case in each year. The grievance of the revenue was that GP Rate was rightly adopted by the AO and the ld CIT (A) has reduced the same without any basis. The parties argued on the similar line are before the Ld. CIT appeal and in the order of the Ld. assessing officer. 40. During the course of hearing summary of GP Rate was separately filed and it was argued that in AY 2002-03 the assessee was mostly engaged in settling the club due to which GP Rate of Moets Catering Services has come down while CIT(A) has adopted 15% GP Rate in all the years except AY 2003-04 against GP Rate declared by the assessee @11% to 17% in AYs 2003-04 to 2006-07. In AY 2003-04 the assessee 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 Page | 44

Sandeep Bindra Vs. ACIT, ITA No. 2647 to 2651 /Del/2011 ITA No. 2782 to 2786 and 1286/Del/2011 (Assessment Year: 2002-03 to 2006-07) 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 has filed return u/s 153A and thereafter revised the same twice in most of the years declaring undisclosed income. This shows that the books of account are not fully correct. The CIT(A) is therefore correct in upholding the action of the assessing officer in rejecting the books of accounts. Further with respect to the estimation of the gross profit, We have examined this issue and find 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, the Ld. assessing officer is directed to adopt at 8%. With respect to the other years the Ld. authorized representative could not show was any reason to deviate from the finding of the Ld. CIT (A). The Ld. departmental representative also could not show that how the decision of the Ld. CIT (A) is not justify where he has followed the order of the coordinate bench in case of a group concern. Therefore In AY 2003-04 assessee himself declared GP Rate of 17.16% which was more than 15% adopted in other years, thus the adoption of 20.53% in this year is also not justified the GP Rate in this year is rightly declared and the same be adopted. However, in other years the GP Rate of 15% adopted by the CIT(A) seems to be justified and is therefore upheld. In other businesses, also, the GP Rate adopted by the CIT (A) seems to be justified and no interference is called for. In Page | 45

Sandeep Bindra Vs. ACIT, ITA No. 2647 to 2651 /Del/2011 ITA No. 2782 to 2786 and 1286/Del/2011 (Assessment Year: 2002-03 to 2006-07) the result, the grounds of appeal of the revenue as well as of the assessee on the third issue are decided accordingly. 43. With respect to the other additions and deleted by the revenue contested by the revenue in other appeals such as the disallowance under section 43B of Rs. 1 79962 for assessment year 2003 – 04, disallowance of expenses deleted of Rs. 2 0247/– for assessment year 2004 – 05 and disallowance deleted by the Ld. CIT (A) of Rs. 1 06624/– for assessment year 2006- 2007. Ld. departmental representative relied upon the orders of the Ld. AO and the Ld. authorized representative relied upon the orders of the Ld. CIT (A). 44. You carefully considered the rival contentions on this issue and do not find any infirmity in the order of the Ld. CIT (A) in giving relief to the assessee by deleting these additions. In the result these grounds of appeal of the revenue are dismissed. 45. In the result all the 11 appeals are partly allowed. Order pronounced in the open court on 28/05/2018. -Sd/- -Sd/- (SUCHITRA KAMBLE) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 28/05/2018 A K Keot Copy forwarded to 1. Applicant 2. Respondent 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, New Delhi