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TMI Blog2003 (7) TMI 301X X X X Extracts X X X X X X X X Extracts X X X X ..... l drawings, and addition made on account of deposits into the bank. Each of these issues are dealt with in the following paragraphs in the order in which they have been noted above. 3. The order of assessment shows that the premises of the assessee was searched on 11-12-1997 and continued till 12-12-1997. It further show that the search proceedings continued in the residential premises on 5-1-1998,8-1-1998 and 27-2-1998. During the course of the search cash of Rs. 8,32,000 as well as bank balances amounts to Rs. 9,19,172 were seized. The assessee apparently gave a statement under section 132(4) of the Income-tax Act, 1961 declaring income from undisclosed sources to the tune of Rs. 54,76,700. The assessee was apparently carrying on the business of aluminium processing through two of his proprietorship concerns, viz., M/s. Eswarappa Metal Works and M/s. Eswarappa Refinery Works at his factory situated in SIDCO Industrial Estate, Ranipet. In addition the assessee was also running a hotel and mentioned the occupancy level at 20 to 25 and on that basis the assessee offered Rs. 49,56,700 as unaccounted income from the hotel business. He also offered on account of inflation of expenses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... However, it is accepted that the reminders dated 7-1-1999 and 13-1-1999 were received by the assessee. As observed above, the notice format used by the department is for its own convenience and indicating that the assessee could be called upon the file a return by means of a letter also. The reminders calling upon the assessee to file a return of income consequent to search could also be taken to be a notice. On this basis, the plea raised by the assessee that there was no notice has to be rejected. 6. The legal issue touched upon by the assessee is with regard to the assessment being barred by time. The return that was filed by the assessee was on 6-9-1999. The search apparently was made on 11-12-1997 and 12-12-1997. The further searches made in the month of January, 1998 and February, 1998 are claimed to be riot in continuation of the earlier searches but mere examination. Prohibitory orders under section 132 of the Act had been issued restraining the assessee from opening, operating bank accounts and so on. The assessee relied on certain decisions to the effect that the time taken for examination of items covered by the prohibitory order is not valid. The assessee further plead ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tation shall be deemed to be extended accordingly." A reading of the above proviso shows that consequent to referring the matter to the auditor for submission of his report, the Assessing Officer would get time for framing of the assessment which would be 6 years. The Assessing Officer shall be deemed to get 60 days from the date of submission of the audit report. Section 142(2A) of the Act indicates that the Assessing Officer if desirous of getting the accounts audited should get the previous approval of the CIT and direct the assessee to get accounts audited and call for filing of the report in the prescribed form. Section 142(2C) of the Act provides that the Assessing Officer shall extend the period of furnishing of the audit report for a total of 180 days from the date of direction given by him to the assessee. For the purpose of framing of an assessment and for calculating the time available namely the limitation available, section 153(3) contains a provision for exclusion of time taken for submission of the audit report. Identical wordings have been added in section 158BE of the Act for exclusion of the time taken for furnishing of the audit report, i.e., 180 days will be ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taxi drivers and others who brought customers to the hotel. Ultimately the Assessing Officer restricted the disallowance to 25% of the claim. The assessee other than making the submissions could not substantiate his claim and accordingly we confirm the orders of the authorities below, on this point. 11. Coming to the issue of addition made on account of inadequate personal drawings, the CIT(A) found that the addition was called for considering the fact that the children were undergoing education in graduate and post-graduate colleges and the drawings were just insufficient for meeting all those expenses. The assessee could not place any material suggesting that the personal expenses covered the drawings and we therefore uphold the orders of the authorities on this point. 12. The addition made on account of deposit of Rs. 1,50,000 in Allahabad Bank Account was confirmed by the CIT(A) on the reasoning that the assessee could not furnish any satisfactory explanation. The situation remains the same before us and accordingly we do not interfere with the order of the CIT(A) on this point. 13. The last issue is with regard to treating the cash and bank balances found at the time of se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n lakhs ---------------------------------------------------------------- Opening balance of money lending debtors 18.90 Add: Amount lent 32.00 Less: Amount unpaid by the borrowers 13.10 9.30 ------ ------ 18.90 9.60 Less: Amount written off as bad debts 7.60 ------ ------ 18.90 2.00 Interest received in advance Rs. 35 lakhs Interest income on period basis 1.91 1.84 ---------------------------------------------------------------- The CIT(A) in para 18.2 of his order had noted that 33 parties were lent on an average of Rs. one lakh each except in the case of 2 parties to whom Rs. 50,000 was lent. He accordingly noted that the total aggregate of money lent was Rs. 32 lakhs. On that basis he had reworked and noted that the closing balance did tally with the statements and records. He accordingly deleted the addition. These facts as found by the CIT(A) could not be controverted by the learned departmental representative and accordingly we uphold the order of the CIT(A) on this point. 17. The last point raised in the appeal by the Department is with regard to the deletion of disallowance of bad debts of Rs. 76 lakhs. The learned departmental representat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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