TaxTMI 
TaxTMI 
TaxTMI 
2022 (4) TMI 454
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....on of addition of Rs. 4,17,350/- towards interest from money lending business; and confirmation of addition of Rs. 6,67,857/- towards unexplained investment in residential house. 3. Pithily put, the facts for the A.Y. 2002-03 are that a search and seizure action u/s.132(1) of the Income-tax Act, 1961 (hereinafter also called 'the Act') was taken on 18-10-2007 at the residential and business premises of Vasa Group at Sangli. The assessee is part of this group. Notice u/s.153A(a) was issued requiring the assessee to furnish return of income. The assessee filed a return declaring total income of Rs. 1,87,910/-. The Assessing Officer (AO) noted that the search transpired that the assessee had not maintained any books of account for the previou....
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....interest on money lending activity at Rs. 9.72 lakh on the basis of total advances taken at Rs. 40.59 lakh on which interest rate of 24% per annum was applied. He accepted the assessee's contention that some of the advances given were towards purchase of land, being the core business activity. He went with the assessee's figure of loans and advances given in money lending business at Rs. 23,18,590/-. Taking into consideration the fact that rate of interest on bank FDRs was 15%, he applied interest rate on money lending activity at 18% p.a. This is how, he computed the amount of interest includible in the assessee's income at Rs. 4,17,350/-. No credit was given towards interest income offered by the assessee in the return pursuant to search ....
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....t income thereon, no evidence, much less any cogent evidence, has been placed on record to substantiate the same. It is seen that the AO adopted rate of interest at 24%, which the ld. CIT(A) brought down to 18%. On being called upon to put forth any evidence about the rate of interest at which the assessee lent the money, the ld. AR failed to put across any material or document. We have also examined the submission of the assessee recorded u/s.132(4) of the Act in which he admitted to have been involved in money lending activity but there is no reference to the rate of interest at which the money was lent. Considering the fact that the assessee was engaged in the money lending activity, which is obviously with a purpose of earning interest ....
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.... Rs. 6,67,857/- towards unexplained investment in the residential house construction. 7. The facts apropos this issue are that the assessee showed Rs. 5,40,256/- towards construction of Bungalow 'Hemangini Palace". As per the report of the District Valuation Officer (DVO), the cost of construction during the F.Y. 2001-02 was computed at Rs. 11,74,700/-. On being called upon to explain as to why the differential amount of Rs. 6,34,444/- be not added to the total income, the assessee submitted that the total value of the property as per DVO report was Rs. 58,73,500/- as against Rs. 37,51,000/- determined by the Registered Valuer. The assessee submitted, inter alia, that the DVO applied CPWD rates while valuing the property at Rs. 58.73 lakh,....
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....mprimatur to the judgment of the Hon'ble High Court approving the view taken by the Tribunal, wherein local PWD rates were held to be applicable for valuation of property rather than the Central PWD rates. In view of the fact that the value has to be determined on the basis of State PWD rates and the ld. AR contended that the DVO applied Central PWD rates, we set aside the impugned order and remit the matter to the file of the AO for examining the rates applied by the DVO in determining the value of the property. In case, he applied the CPWD rates in determining the value of the property, then such value should be re-worked out by applying the State PWD rates. 9. The next contention of the ld. AR was that the amount of interest income adde....
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....he file of the AO for doing accordingly. 10. In the result, the appeal is partly allowed. A.Yrs. 2003-04 and 2004-05 : 11. The facts of these two appeals are admittedly similar to those of the A.Y. 2002-03 as discussed above except for the amount of addition sustained by the ld. CIT(A) towards interest on money lending activity and the amount of unexplained investment in Bungalow. For the A.Y. 2003-04, the amount of interest on money lending activity on the amount of investment as per the assessee's own version has been computed by the ld. CIT(A) at Rs. 4,17,350/- as per para 20 of the impugned order. For the A.Y. 2004-05, the amount of such interest on money lending activity, calling for the addition, has been computed at Rs. 4,65,280/-....