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TMI Blog2015 (5) TMI 847X X X X Extracts X X X X X X X X Extracts X X X X ..... ding business. The assessee also explained to the authorities that out of Rs. 67,38,155/-, a sum of Rs. 50,02,000/- was the principal amount invested by the assessee. The balance of Rs. 17,36,155/- was the interest received by the assessee from money lending business. 4. During the course of assessment proceedings, it was explained before the Assessing Officer that a sum of Rs. 50,02,000/- represented the total advances made by the assessee as on 30.11.1997 to various persons and Rs. 17,36,155/- recorded in the books of account represented the recovery made upto 30.11.1997. On verification of seized material, the Assessing Officer found that the total recovery of loan upto the date of search was Rs. 26,50,000/- and the total outstanding was Rs. 23,52,000/-. The Ld. D.R. further submitted that the interest element to the extent of Rs. 4,41,700/- was deducted in advance and embedded in the total loans advanced to various persons. The Assessing Officer verified and allowed the claim of the assessee. The Assessing Officer determined the outstanding amount as on the date of search as Rs. 19,10,300/-. However, the CIT(Appeals) allowed the claim of the assessee on the basis of the balanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ard to the claim of the assessee towards bad debts to the extent of Rs. 16,60,000/-. 8. Dr. S. Moharana, the Ld. Departmental Representative, submitted that the assessee claimed bad debts to the extent of Rs. 16,60,000/- out of the total outstanding loan which was determined by the Assessing Officer at Rs. 19,10,300/-. According to the Ld. D.R., the loan was not written off in the books. In response to the Question No.5, during the course of examination, the assessee explained that no bad debts existed in respect of the outstanding loan. The CIT(Appeals), however, found that individual debtor accounts need not be written off. The seized material also did not disclose the entry of bad debts. However, CIT(Appeals) found that no such entry as bad debts is found in the seized material. Therefore, the CIT(Appeals) is not justified in deleting the addition made by the Assessing Officer. 9. On the contrary, Shri S. Sridhar, the Ld.counsel for the assessee, submitted that the seized material has to be taken in toto. The seized material shows the outstanding amount as on the date of search, in the money lending business and it also shows the bad debts. The CIT(Appeals), after referring to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ddition. 13. On the contrary, Shri S. Sridhar, the Ld.counsel for the assessee, submitted that Shri Subramanian, son of the assessee, filed his return of income disclosing profit in the money lending business. The Assessing Officer accepted the return filed by the assessee and assessed the income with regard to the very same investment. When the Assessing Officer accepted the return of the assessee's son, according to the Ld.counsel, there cannot be any addition in the hands of the assessee. Therefore, the CIT(Appeals) has rightly deleted the addition. 14. We have considered the rival submissions on either side and perused the relevant material on record. It is not in dispute that a pocket diary was found during the course of search operation, which disclosed the assessee's investment in the money lending business. The issue now arises for consideration is whether the investment of Rs. 29,37,400/- in the money lending business, belongs to the assessee or his son. The Revenue claims that the money lending business belongs to the assessee. However, the assessee claims that the investment was disclosed in the return filed by the assessee's son. The details of such assessment made in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he basis of State PWD rates, the addition made by the Assessing Officer would reduce considerably. 18. We have considered the rival submissions on either side and perused the relevant material on record. The seized material found during the search operation which was marked as VSR/B&D/S-4 shows the cost of construction from 03.07.96 to 1.12.97 at Rs. 23,48,748/-. However, the cost of construction admitted by the assessee in the return of income as on 31.3.97, 31.3.98 and 31.3.99 are Rs. 12,00,000/-, Rs. 29,00,000/- and Rs. 37,50,000/- respectively. Therefore, it may not be right to say that there was no seized material. The Assessing Officer referred the matter to the Valuation Officer and assessed the undisclosed investment to the extent of Rs. 15,13,165/- as undisclosed income. Now the contention of the assessee before this Tribunal is that the valuation has to be made only on the State PWD rates. We find much force in the contention of the assessee. State PWD rates have to be preferred when compared to the Central PWD rates. State PWD rates are prepared as per the local condition prevailing in the particular State. Therefore, this Tribunal is of the considered opinion that the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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