Santosh laxmi Rice Mill, Rayagada V. ITO, Rayagada

ITA 402/CTK/2010

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 0775 (ITAT-CUTTACK)
• Duration Of Justice: 3 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-02-2011
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 21-02-2011
• Assessment Year: 2001-2002
• Appeal Filed On: 09-11-2010
• Court: TRIBUNAL
• Department Lawyers: S C MOHANTY DRD
• Assessee Lawyers: J M PATNAIK
• Keywords: Corroborative evidences

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK ( ) BEFORE . . , , HONBLE SHRI K.K.GUPTA, ACCOUNTANT MEMBER. /AND . . . , S HRI K.S.S.PRASAD RAO , JUDICIAL MEMBER / I.T.A.NO. 402/CTK/2010 / ASSESSMENT YEAR 2001 - 02 SRI SANTOSH LAXMI RICEMILL, AT: KOTHAPETA, RAYAGADA PAN:AAMFS 1380 D - - - VERSUS - ITO, RAYAGADA WARD, RAYAGADA. ( /APPELLA NT ) ( / RESPONDENT ) / FOR THE APPELLANT : / SHRI J.M.PATNAIK, AR / FOR THE RESPONDENT: / SHRI S.C.MOHANTY, DRD / ORDER . . , , SHRI K.K.GUPTA, ACCOUNTANT MEMBER. THE ASSES SEE IS IN APPEAL AGITATING THE ORDER OF THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) BY CONFIRMING THE ADDITION BROUGHT TO TAX BY THE ASSESSING OFFICER IN HIS ORDER U/S.143(3) R.W.S. 147/148 OF THE INCOME - TAX ACT,1961. 2. THE BRIEF FACTS, AS HAVE BEEN REITERATED BY THE LEARNED COUNSEL FOR THE ASSESSEE , ARE THAT THE ASSESSING OFFICER HAS RE - OPENED THE ASSESSMENT BASED ON A DEFENCE STATEMENT FILED BY THE MANAGING PARTNER OF THE FIRM IN A CIVIL SUIT, AND NOT BASED ON ANY ESCAPEMENT OF INCOME FROM IT RECORD S. THE AMOUNT PAID IF ANY WAS AN EXPENDITURE MADE FROM A KNOWN SOURCE OF RECEIPT FROM NEW PARTNERS. THE OLD FIRM CAME TO AN END ON DT.28.10.2000 AND THE ALLEGED PAYMENTS WERE MADE ON DT.29.10.2000 BY THE NEW PARTNERS CONSTITUTING THE NEW FIRM. ACCORDING TO THE COURT DECISION, RELIED ON BY THE AO THE OLD FIRM WAS NOT DISSOLVED ON DT.22.1O.200, BUT THERE WAS NO BAR IN ITS RECONSTITUTION UNDER THE INDIAN PARTNERSHIP ACT,1932 AND IT ACT W.E.F. DT.29.10.2000. THE LD. A.O. HAS RELIED ON ONE PORTION OF THE COURT O RDER AS IS I.T.A.NO. 402/CTK/2010 2 ADVANTAGEOUS TO HIM WITHOUT READING THE ORDER AS A WHOLE. THE COURT HAS DIRECTED TO SETTLE THE ACCOUNTS OF THE OLD FIRM WITH APPOINTMENT OF A COMMISSIONER. THE AO HAS IGNORED THAT PORTION OF THE ORDER TO PRE - JUDGE THE ISSUE. THE PLAINTIFF T. JAN ARDHAN RAO HAS STATED BEFORE THE AO THAT HE HAS NOT RECEIVED RS.1,60,000/ - , BUT ADMITTED BEFORE THE COURT TO HAVE RECEIVED RS.1,60,000/ - WHICH IS AVAILABLE IN COURT ORDER. THE AO HAS CHANGED THE STATUS OF THE ASSESSEE TO THAT OF AN AOP IGNORING THE FRESH P ARTNERSHIP DEED IN WHICH THE SHARES OF PARTNERS WERE CLEARLY ASCERTAINABLE. THE STATUTES AS OF NOW DO NOT GIVE ANY AUTHORITY TO THE AO TO CHANGE STATUS. THE RECONSTITUTED DEED WAS NEVER HELD TO BE ILLEGAL BY THE COURT, AS MENTIONED IN 1ST PAGE OF THE ORDER OF THE LD. A.O. HENCE, THE FRESH INSTRUMENT OF PARTNERSHIP WAS NOT A VOID DOCUMENT AS HELD BY HIM TO TREAT THE STATUS AS THAT OF AOP. THE LD. A.O. HAS MENTIONED THAT THE RECORDED CAPITAL OF THE NEW FIRM WAS RS.4,46,018.38 AND YET H E LD THAT THE PAYMENTS OF RS.3,25,455/ - WAS MADE OUT OF UNDISCLOSED SOURCES OF THE NEW FIRM LEADS TO COMPLETE NON - APPLICATION OF MIND. WHEN THE RETIRING PARTNERS ADMITTED THE RECEIPTS, THE AO WAS BENT UPON RECORDING STATEMENTS FROM NEW PARTNERS AS FAVORABLE TO HIM, IN A MANNER AS IF THE PAYMENT WAS IN DOUBT AND NOT MADE BY THEM. THIS EVENTUALITY HAS MADE EVEN AFTER EXAMINATION OF THE NEW PARTNERS CAPITAL ACCOUNT IN THE BOOKS. WHO ACTUALLY TRANSACTED THE MONEY PHYSICALLY HAS NO RELEVANCE AND SIGNIFICANCE IN SETTLEMENT OF THE ACCOUN TS. THE LD. CIVIL COURT HAS RENDERED THE MANAGING PARTNER PRAKASH RAO TO RENDER ACCOUNTS AND HAS SAID NOTHING ABOUT THE NEWLY CONSTITUTED FIRM. THAT IS THE ONLY DECREE. THE LD. COURT HAS NOT FORBIDDEN THE RECONSTITUTION, BUT ASKED THE MANAGING PARTNER TO R ENDER ACCOUNTS TO PLAINTIFF THROUGH AN APPOINTED COMMISSIONER. COURT HAS RATHER SAID THE PLAINTIFF CANNOT ENTER THE MILL AFTER THE DISPUTE AS CLEARLY REVEALED FROM THE ORDER OF LD. CIVIL COURT,RAYAGADA. I.T.A.NO. 402/CTK/2010 3 3. THE ASSESSING OFFICER IN HIS DETAILED ORDER INCO RPORATING THE DETAILS OF THE CAPITAL CONTRIBUTED BY THE INCOMING PARTNERS CONSIDERED PAYMENTS BY THE VERY PARTNERS OF THE FIRM TO THE RETIRING PARTNERS INTER ALIA NOTED THE FINDINGS OF THE JUDGMENT OF THE CIVIL COURT BROUGHT TO TAX THE UNACCOUNTED PAYMENTS MADE TO TH E RETIRING PARTNERS ALONG WITH THE SUNDRY CREDITORS BALANCE OUTSTANDING AMOUNTING TO 84,200 AS UNEXPLAINED ON ACCOUNT OF ANY PURCHASE AND SALES HAVING BEEN CONDUCTED PRIOR TO THE DATE OF INVOKING PARTNERS. THE LEARNED CIT(A) ON THE BASIS OF FACTS RECORDED BY THE ASSESSING OFFICER HELD THAT THE RETIRING PARTNERS HAD BEEN PAID 1,60,000 EACH WERE THEREFORE TO BE CONSIDERED OUT OF UNDISCLOSED INCOME IN THEIR HANDS TO HAVE CONTRIBUTED THE BALANCE AMOUNT IN THE NEW FIRM AS INCOME U/S.68 OF THE I.T.ACT. HE ALSO FURTHER CONFIRMED THE ADDITION OF CREDITORS OF 84,200 BY HOLDING THAT THE AMOUNT HAD NOT BEEN RECEIVED FROM THE SAID PARTIES WHICH WAS PURPORTED TO HAVE BEEN OBTAINED FOR PAYMENT OF THE LOAN OF THE ERSTWHILE PARTNERS. 4. THE LEARNED COUNSEL FOR THE ASSESS EE INITIATING HIS ARGUMENTS SUBMITTED THAT ASSESSEE - APPELLANT IS A PARTNERSHIP FIRM DEALT WITH RICE MILLING AND SELLING BY WAY OF PURCHASING PADDY FORM LOCAL FARMERS. THIS FIRM INITIALLY COMMENCED BUSDINESS W.E.F. DT.20/01/1999 AND FILED ITS RETURN SINCE A SST. YEAR 2000 - 01 ONWARDS BEFORE THE I.T.O., RAYAGARA WARD , RAYAGARA. THE APPELLANT FIRM W AS RECONSTITUTED DUE TO RETIRING OF 3 PARTNERS AND ADMITTANCE OF 5 PARTNERS ON DT.29/10/2000 FOR WHICH TWO SET OF STATEMENT OF AFFAIRS HAVE BEEN SUBMITTED BEFORE TH E LD. A.O. I.E. ONE FOR THE PERIOD COVERING DT.01/04/2000 TO DT.28/10/2000 AND ANOTHER DT.29/10/2000 TO DT.31/03/2001. THE APPELLANT FIRM HAS SUBMITTED ITS RETURN FOR THE ASST. YEAR 2001 - 02 DISCLOSING NET LOSS AT ( - ) 24,105 WHICH HAS PROCESSED U/S. 143(1 ) OF THE I.T. ACT. THE APPELLANTS CASE WAS RE - OPENED U/S. 147 OF THE I.T. ACT BASING ON TWO I.T.A.NO. 402/CTK/2010 4 GROUNDS WHICH LEADS TO LACK OF SATISFACTION OF THE LD. A.O. FOR SUCH RE - OPENING. A PRELIMINARY DECREE PASSED BY THE LD. CIVIL JUDGE(SENIOR DIV.), RAYAGARA VIDE C.S . NO. - 12 OF 2005 DECIDED ON DT.15/07/2006 WHICH HAS SET - ASIDE BY THE LD. ADDI. JUDGE, RAYAGARA ON DT.10/09/2009 VIDE RFA NO.17/2006 [ CONSIDERED AT INTERNAL PAGE - 4, PARA - 2 OF THE ORDER OF CIT(A), BERHAMPUR VIDE I.T.A. NO.0033/2007 - 08 FOR THE ASST. YEAR 2001 - 02]. BASING ON THE ORDER PORTION OF THE SAID JUDGMENT A SATISFACTION CAN NOT BE DRAWN AS THE ORDER HAS NOT COME ITS FINALITY. TRADE CREDITORS HAVE INCREASED WHERE THERE WAS NO PURCHASE BETWEEN THE PERIOD ON DT.O1/04/2000 TO DT.28/1O/2000 (AS REVEALED AT P ARA - 2.1 OF THE ORDER O F CIT(A). BUT, THE FACTS REMAIN , THE APPELLANT FIRM HAS ALREADY COVERED ONE ASST. YEAR I.E. ASST. YEAR 2000 - 01, WHERE THERE WAS TRANSACTIONS AS REVEALED FROM THE TRADING AND P/L. A/C. FOR THE PERIOD DT.O1/04/2000 TO DT.28/1O/2000 BASI NG ON THE OPENING STOCK DISCLOSED IN THE SAID TRADING & P/L. A/C. HENCE, IT LACKS OF SATISFACTION. HENCE, THE RE - OPENING OF THE ASSESSMENT IS BAD IN LAW AND ACCORDINGLY ASSESSMENT ORDER SHOULD BE QUASHED. SO FAR AS ADDITION OF 3,25,455/ - IS CONCERNED, ALL THE RETIRING PARTNERS HAVE STATED THEY HAVE ONLY RECEIVED THE AMOUNT DEPICTED IN THE BALANCE SHEET AS ON DT.28/1/2000. HOWEVER, THE LD. A.O. HAS MADE AN ADDITION OF 3,25,455/ - [ 4,80,000.OO 1,54,545.00 (M. RATH - > RS.48 ,428.27 + D. MANI - > 60,098.27 + T. J. RAO - > 46,018.30]. AS PER THE ADMITTANCE BEFORE THE LD . CIVIL JUDGE, THE LD A.O. HAS T OOK A VIEW THAT ALL 3 RETIRING PARTNERS HAVE RECEIVED @ 1,60,000/ - EACH. AS THE DIFFERENCE AMOUNT HAS NOT EXPLAINED, THEREBY THE LD. AO. HAS CONSIDERED THE SAME AS UNEXPLAINED INCOME. THE ORDER OF LD. CIVIL JUDGE HAS NOW BEEN SET - A - SIDE BY THE LD. ADDL. DISTRICT JUDGE, RAYAGARA. THEREFORE, THE AFORESAID ADDITION SHOULD BE DELETED. EVEN THOUGH, IF IT MAY BE ACCEPTED IN VIEW OF TH E ORDER OF LD. A.O., THE UNEXPLAINED CONTRIBUTION OF THE PARTNERS COULD NOT BE CONSTRUED I.T.A.NO. 402/CTK/2010 5 AS THE ESCAPED INCOME OF THE FIRM. AS ALL THE INCOMING PARTNERS ARE THE EXISTING ASSESSEE BEFORE THE LD. A.O. WHO HAS PASSED THIS ORDER OF ASSESSMENT UNDER CHALLENGE. IT IS OPEN TO THE LD. A.O. TO MAKE ASSESSMENT OF THE SAID INCOMING PARTNERS INSTEAD OF MAK ING SUCH ADDITION IN THE HAND OF THE FIRM IN VIEW OF THE DECISION OF THE HONBLE ALLAHABAD HIGH COURT, HONBLE DELHI HIGH COURT AND HONBLE APEX COURT WHICH COMPILATI ON IS ON RECORD . THEREFORE, THE SAID ADDITION SHOULD BE DELETED FROM THE HAND OF THE FIRM. THE LD. CIT(A) HAS ACCEPTED THE STATUS OF THE APPELLANT AS A FIRM BASING ON THE SET - A - SIDE ORDER OF THE LD. ADDI. DIST. JUDGE, RAYAGARA, THEREBY THE STATUS TO BE CON STRUED AS FIRM INSTEAD OF A.O.P.. SIMILARLY, THE SALARY & INTEREST PAID TO PARTNERS OUGHT TO BE ALLOWED AS THERE IS NO CROSS APPEAL FILED BY THE DEPARTMENT TO THAT EFFECT. IN RESPECT OF ADDITION OF 84,200 U/S. 68 TO THE I.T. ACT IS CONCERNED, THE SAID AD DITION CANNOT BE MADE U/S. 68 OF THE I.T. ACT AS ALL THE CREDITORS ARE LOAN CREDITORS AND CONFIRMATION HAVE SUBMITTED WITHOUT PERSONAL APPEARANCE OF THE SAID PERSONS BEFORE THE LD. A.O.. THEREFORE, THE AFORESAID ADDITION MAY BE SET - A - SIDE TO THE FILE OF TH E A.O. FOR PROVIDING AN OPPORTUNITY TO THE ASSESSEE FIRM IN ORDER TO PRODUCE THE 5 CREDITORS BEFORE THE LD.A.O. 5. THE LEARNED DR OPPOSED THE CONTENTION OF THE LEARNED COUNSEL PRIMARILY ON THE SCORE THAT CHALLENGING THE VALIDITY OF REOPENING THE ASSESSMENT U/S.147/148 HAS NOT BEEN ARGUED BY WAY OF A SPECIFIC GROUND IN THEIR APPEAL THEREFORE MAY BE CONSIDERED ON THE BASIS OF FACTS BROUGHT ON RECORD. SECONDLY, THE STATUS OF THE FIRM HAS BEEN GRANTED AS REGISTERED PARTNERSHIP BY THE LEARNED CIT(A) THEREFORE CA N NOT BE AGITATED AS A GROUND BEFORE THE TRIBUNAL AS POINTED OUT BY THE LEARNED COUNSEL. IMMEDIATELY THERE UPON THE LEARNED COUNSEL POINTED OUT THAT THE LEARNED CIT(A) DID NOT ADJUDICATE THE CONSEQUENT UPHOLDING DISALLOWANCE OF REMUNERATION TO I.T.A.NO. 402/CTK/2010 6 PARTNERS WHIC H MAY KINDLY BE CONSIDERED BY A DIRECTION TO THE ASSESSING OFFICER TO ALLOW THE DISALLOWANCE OF REMUNERATION PAI D TO THE PARTNERS CONSIDERED TAXABLE AS OTHERWISE RETURNED BY THE ASSESSEE. THE LEARNED DR POINTED OUT THAT THE INFORMATION AVAILABLE TO THE ASS ESSING OFFICER WAS ON THE BASIS OF COURT ORDER OR WHICH HAS BEEN FURNISHED BY THE LEARNED COUNSEL IN THE PAPER BOOK AND HAS BEEN REITERATED BY THE ASSESSING OFFICER IN HIS ORDER INDICATING THAT THE FUNDS FOR SQUARING OFF THE RETIRING PARTNERS AND INTRODUCT ION OF NEW PARTNERS DID NOT MATCH AS PER THE RETURN FILED BY THE ASSESSEE THEREFORE WAS SUBJECT ED TO TAXATION AS UNACCOUNTED PAYMENTS MADE TO THE RETIRING PARTNERS. THE LEARNED CIT(A) CLARIFIED THE FACTS BY NOTING THAT AS THE NEW PARTNERS HAD NO CREDITWORT HINESS TO HAVE INDEPENDENT SOURCE OF INCOME , INTRODUC ING THE SAME IN THE FIRM WAS THEREFORE TO BE R EDUCED FROM THE AMOUNT PAID TO THE RETIRING PARTNERS COLLECTIVELY LEAVING THE RESIDUAL BALANCE OF 3,25,455 PAID TO THE RETIRING PARTNERS OUT OF THE ASSETS AND PROFITS OF THE ASSESSEE FIRM. FURTHER HE CONFIRMED THE ADDITION OF THE SUNDRY CREDITORS AMOUNTIN G TO 84,200 ON THE FACT THAT THE VERY PARTNERS, WHO DID NOT HAVE CREDITWORTHINESS SOUGHT TO PARK THEIR FUNDS FOR SQUARING OFF ANOTHER LOAN USED BY THE EARLIER FIRM. HE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW FOR HIS PART SUBMISSIONS. 6. WE HAVE HEAR D THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE HAVE ALSO PERUSED THE COPY OF THE JUDGMENT DT.17.5.2006 OF THE LEARNED CIVIL JUDGE, SENIOR DIVISION, RAYAGADA. THE LEARNED COUNSEL HAS ALSO INCLUDED THE RECONSTITUTED PARTNERSHIP DEED DT.29.10.2000 ALONG WITH THE FINANCIAL STATEMENTS FOR THE TWO PERIODS NAMELY, FROM 1.4.2000 TO 28.10.2000 AND FROM 29.10.2000 TO 31.3.2001. ON OUR CAREFUL PERUSAL OF THE FACTS OF THE CASE, WE ARE INCLINED TO HOLD THAT THE INFORMATION AVAILABLE TO THE ASSE SSING OFFICER TO INVOKE THE PROVISIONS OF I.T.A.NO. 402/CTK/2010 7 SECTION 147/148 WAS THE JUDGMENT OF THE CIVIL JUDGE, SENIOR DIVISION, RAYAGADA WHEREIN THE PARTNERS INDICATED OF HAVING RETIRED AFTER TAKING COMPENSATION FROM THE INCOMING PARTNERS WAS TO BE VERIFIED BY THE COMMISS IONER WHO WAS DIRECTED BY THE LEARNED CIVIL JUDGE TO VERIFY THE ACCOUNTS FROM 1.4.1998 TO 31.3.2005.THE ACCOUNTS, WHICH HAVE BEEN VERIFIED AND PLACED ON RECORD CLEARLY INDICATE THAT THERE APPEARS TO BE NO QUESTION ON THE PART OF THE PARTNERS EITHER RETIRIN G OR INCOMING TO HAVE MADE PAYMENTS FOR AVAILING THE PARTNERSHIP OR THE GOODWILL OF PARTNERSHIP FIRM ON ANY TERMS. THE ASSETS AND LIABILITIES CONTINUED TO BE HELD BY THE FIRM ALONG WITH THE LOANS FROM FINANCIAL CORPORATION AND ENTREPRENEUR FUNDS. THERE WER E NO PURCHASE AND SALES FOR THE PERIOD WHICH RESULTED IN RETIREMENT OF PARTNERS AND INTRODUCTION OF NEW PARTNERS TO INVOLVE IN PAYMENT OF MORE THAN THE AMOUNTS STANDING TO THEIR CREDIT BY A LOSS MAKING FIRM. IT WAS AN EXERCISE IN FUTILE TO INTERROGATE THE NEW PARTNERS WHETHER HAD PAID TO RETIRING PARTNERS WAS PROPERLY REP LIED TO BY THE INDIVIDUAL CONCERN ED, THEREFORE ALONE COULD NOT BE CORRELATE D TO THE FACT THAT THE PARTNERS DID NOT HAVE THE WORTH TO HAVE PAID OR ASSUME SOME OF THE RETIRING PARTNERS , WHO W ERE NOT ENTITLED , INSOFAR AS TO THE ASSESSEE FIRM IS CONCERNED TO REPAY . THE FACTS THEREFORE CLEARLY INDICATE THAT THE ASSESSING OFFICER WAS TO VERIFY THE SAME IN THE VERY INDIVIDUAL CAPACITY WHICH THE LEARNED COUNSEL BEFORE US HAS POINTED OUT HAS BEEN SE TTLED BY THE HONBLE SUPREME COURT IN THE CASE OF LOVELY EXPORTS (SUPRA).IN ANY CASE, THE AUTHORITIES BELOW HAVE MISDIRECTED TO CONSIDER THE ACTUAL INTRODUCTION OF CAPITAL AND ACTUAL DISBURSEMENT OF CAPITAL BROUGHT TO THE INCOMING PARTNERS AND OUTGOING PAR TNERS WHICH ALONE COULD BE THE USE FOR CONSIDERING THE OTHER PAYMENTS INSOFAR AS THEY HAVE REDUCED THE AMOUNT FOR TAXATION ONLY BY NOTING THE AMOUNTS ORALLY CONFRONTED FOR BRINGING TO TAX FROM THE INDIVIDUAL CONCERN ED . NO CORROBORATIVE EVIDENCES HAVE BEEN BROUGHT ON I.T.A.NO. 402/CTK/2010 8 RECORD, THEREFORE, JUSTIFIES THE PLEA OF THE LEARNED COUNSEL OF THE ASSESSEE THAT THE SAME COULD NOT BE TAXED IN THE HANDS OF THE ASS ESSEE FIRM HERE WHEN THE ISSUE W AS NOT EVEN REMOTELY CONNECTED TO THE FAC TS OF THE CASE. THE MATTER RELATES TO THE AY 2001 - 02 THEREFORE, WAS THE SOLE CRITERIA FOR THE AO TO TAKE NOTE OF THE FACT THAT THE LEARNED CIVIL JUDGE HAD ALSO DIRECTED THE ACCOUNTS TO BE REFRAMED WHICH WOULD CLARIFY THE POSITION FOR ONLY SUCH ENTRIES OF P AYMENTS IN CASH EITHER TO THE RETIRING PARTNERS OR TO THE INCOMING PARTNERS WAS FOUND IN THE BOOKS OF ACCOUNT. THEREFORE, WE ARE UNABLE TO ACCEPT THE CONTENTION OF THE AUTHORITIES BELOW THAT IT IS THE INCOMING PARTNERS WHO MUST HAVE BEEN PAID T HE RETIRING PARTNERS TO DISTRIBUTE THE ADDITIONS AMONGST THEM WHICH UNDER NO CIRCUMSTANCES COULD BE TAXED IN THE HANDS OF THE ASSESSEE FIRM. WE DIRECT THE DELETION OF THE SUM OF 3,25,455, WHICH HAS BEEN COMPUTED BY CONSIDERING THE VERY BASIS FINANCIAL STATEMENT WERE PREPARED ON THE DIRECTION OF THE LEARNED CIVIL JUDGE IN HIS ORDER. WE ARE ALSO FURTHER INFORMED THAT THE SAID JUDGMENT HAS BEEN SET ASIDE BY THE DISTRICT JUDGE THEREF ORE LEAVE NO MATERIAL FOR THE ASSESSING OFFICER TO RELY UPON FOR BRINGING TO TAX THE INCOME IN THE HANDS OF THE ASSESSEE FIRM. COUPLED WITH THE FACT THAT THE DECISION OF HONBLE SUPREME COURT RELIED UPON AND ON THE BASIS THAT NO EFFORTS HAVE BEEN MADE BY T HE ASSESSING AUTHORITIES TO ESTABLISH CREDITWORTHINESS EVEN AFTER THE LAPSE OF SO MANY YEARS, THE AMOUNT TAXED AS A NOTIONAL AMOUNT IN THE HANDS OF THE ASSESSEE FIRM IS DIRECTED TO BE DELETED. 7. ON THE ISSUE OF ADDITION OF 84,200 BEING THE AMOUNT OWED TO THE SUNDRY CREDITORS WHICH AMOUNT WAS PAID TO SQUARE OFF THE OSFC LOAN, THE LEARNED COUNSEL HAS PRAYED TO RESTORE THE SAME TO THE FILE OF THE ASSESSING OFFICER FOR VERIFICATION ON THE BASIS OF DOCUMENTS AVAILABLE TO TH E ASSESSEE FOR VERIFICATION UNDER THE PROVISIONS OF SECTION 68 . THE SAME IS, THEREFORE, RESTORED TO THE FILE OF THE ASSESSING OFFICER TO VERIFY AND PROCEED WITH I.T.A.NO. 402/CTK/2010 9 ACCORDANCE WITH THE PROVISIONS OF THE I.T.ACT. FURTHER THE AMOUNT OF REMUNERATION TO PARTNERS D ISALLOWED BY THE ASSESSING OFFICER IS DIRECTED TO BE DELETED AS THE LEARNED CIT(A) HAS CONFIRMED THE STATUS OF THE ASSESSEE AS A REGISTERED FIRM. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED AS STATED IN THE FOREGOING PARAGRAPHS . THIS ORDER IS PRONOUNCED IN OPEN COURT ON DT. 25 TH FEBRUARY, 2011 SD/ - SD/ - ( . . . ) , ( K.S.S.PRASAD RAO), JUDICIAL MEMBER ( . . ) , , (K.K.GUPTA), ACCOUNTANT MEMBER. ( ) D ATE: 25 TH FEBRUARY, 2011 - COPY OF THE ORDER FORWARDED TO: 1 . / THE APPELLANT : SRI SANTOSH LAXMI RICEMILL, AT: KOTHAPETA, RAYA GADA 2 / THE RESPONDENT: ITO, RAYAGADA WARD, RAYAGADA. 3 . / THE CIT, 4 . ( )/ THE CIT(A), 5 . / DR, CUTTACK BENCH 6 . GUARD FILE . / TRUE COPY, / BY ORDER, [ ] SENIOR PRIVATE SECRETARY ( ), ( H.K.PADHEE ), SENIOR.PRIVATE SECRETARY.