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TMI Blog1981 (3) TMI 112X X X X Extracts X X X X X X X X Extracts X X X X ..... r. The expenses shown were not supported by bills or vouchers. The ITO thought that an estimate at 10 per cent of the disclosed turnover would be a fair estimate of the income. Thus, he fixed the income from arrack business at Rs. 20,610. 2. Before the AAC, the assessee claimed that the income as shown was also fair and reasonable and should be accepted. He also claimed that the assessee had maintained a motor car for the purpose of his business and the expenses thereon as well as depreciation should be considered as a deduction. While upholding the estimate of 10 per cent on the turnover, the AAC allowed the assessee's claim but rejected the expenditure and depreciation on motor car to 50 per cent. The assessee is further appeal on this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment for the year 1975-76. He contacted some of the debtors and got statements from them to the effect that the assessee was charging interest at the rate of 8 per cent per month. In the assessment order for 1975-76, he gave details of seven such debtors who were examined and who had given him statements with regard to the rate of interest. This was put before the assessee. Thereupon, the assessee gave statements from certain other creditors who supported the assessee's pleas and who stated that only 1 per cent per month was being charged. The ITO, however, rejected these evidences and completed the assessment at the rate of 8 per cent per month. Against this order, the assessee appealed and the AAC upheld the ITO's rejection of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regard to the money lending business, his contention is that there is no basis to hold that the rate of interest was 6 per cent per month. At this rate, the annual rate comes to 72 per cent which is highly excessive. No doubt, the ITO had placed reliance on the statements of some of the debtors. But there is no way of verifying these statements. As against these statements the assessee had also produced a set of confirmatory letters from some other debtors who had vouchsafed that the rate of interest was only 1 per cent. There is no reason why these letters should be discarded. He also submitted that the expenses allowed are not at all sufficient. In the nature of things, the daily collection from debtors would involve employing a lot of pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is also material to show the extent of acquisition of properties during this year. 13. Now the first question is the contention of Shri Rangamani whether the findings of the search have to be considered as evidence or not. If they constitute relevant pieces of evidence, then the next question is whether it could be admitted at this stage. That the search materials constitute evidence cannot be seriously doubted. If the assessee had earned income as estimated by the ITO, it should be reflected in some form or the other in the assets acquired or in the expenditure incurred. The assets found in the seizure in November 1979 and the documents showing expenditure during these years are certainly a measure of the earnings of the assessee in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es to hold that the search materials have to be admitted and considered in this appeal. Now, the search has revealed that the advances made in money lending business as on the date of search were Rs. 1,33,494. This shows that the advances in money lending had remained more or less stationary throughout these years since the advances as on March 1976 were Rs. 1,33,325 as per the ITO's order. This is certainly a piece of evidence to show that the fantastic rates of profits alleged by the Department are not correct. Had it been so, it would have been reflected in the course of these years increase in the advances. Surely, the advance which would fetch such high percentage is an investment to be preferred over other investments of the assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in a building. He also at that time purchased a vehicle costing Rs. 19,671. These two amount to Rs. 32.881. the assessee has also some agricultural property which is also evidenced by the papers found in the search. These agricultural properties would be yielding him some income. Apart from that, if we make a further estimate of Rs. 8,000 as expenditure, the total income for this year would be again around about Rs. 40,000. Either way, we find that the estimate should not exceed this figure. 20. In view of the foregoing, we would much rather place our estimate on the former grounds of materials seized in the search and on that basis we would keep the estimate at Rs. 40,000 in respect of both the businesses of the assessee i.e. arrack as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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