TMI Blog1982 (6) TMI 94X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment proceedings were on merits justified. Before we deal with the grievance of the parties, we project for our own consideration the facts which are relevant for the determination of the issues involved. 2. The assessee is a registered firm working under the name and style of M/s. Maman Chained Sham Sunder Lal. It has adapted the financial year as the previous year. For the asst. yr. 1977-78, the assessee firm was constituted for six partners, namely, Sir Gopal Khemka, Anand Kumar Khemka, Uma Shankar Khemka, Ram Shankar Khemkar, Vijay kumar Khemka and Ashok kumar khemka, each having 1/6th share in the profit and loss of the firm. These partners are brothers inter se. There is another concern M/s. Neera Industries constituted of four ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee's paper book. The assessee had paid interest of Rs. 30,940 on the amount of Rs. 2,50,000 received from M/s. Neera Industries. The interest paid by the assessee during the previous year relevant to the assessment year under appeal was Rs. 1,51,887.38 as per copy of details of interest filed at page 6 of the assessee paper book. In this interest was included the sum of Rs. 30,940 paid to M/s. Neera Industries. In this amount of Rs. 1,51,887.38 was also included a sum of Rs. 40,296 paid by the assessee as interest to its partners. From the total sum of Rs. 1,51,887.38 the assessee had deducted the interest from various parties amounting to Rs. 41,951.15 the net debit to profit and loss account was Rs. 1,09,936.23. when the ITO mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITO not only added back the interest of Rs. 30,940 but clubbed into the total income of the assessee the income belonging to another firm working under the name and style of M/s. Vijay brothers to the extent of Rs. 43,280. It may be observed here before going further that the ITO had already completed the assessment of Mr. Vijay brothers on a total income of Rs. 43,280 granting registration to that firm and considering it as genuinely constituted separate entity. This assessment was challenged in appeal. 4. The ld. CIT(Appeals) has held that, "the ITO was not justified in reopening the assessment as he did and, therefore, the reassessment as made by the ITO thereafter is hereby cancelled." As projected above, the revenue is against his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the ITO had not applied his mind to the facts which have now been considered for purposes of reopening the assessment. Pointing out to the balance-sheet, the details of interest, the accounts of the partners and other material referred to by the ITO, the ld. counsel for he assessee submitted that these were all before the ITO when he completed the original assessment and it was only after applying his mind that the had disallowed a part of interest from the total claim made by the assessee and completed the original assessment. It was contended that the ITO was guided by the opinionated information given by the revenue audit party that this loan should be treated in a particular manner. The ITO was fully aware of the action that he had t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to Neera Industries had not been paid in this manner in the immediately proceeding assessment year. In the balance sheet which was very much before the ITO and which he scrutinised, there by way of loan. If the ITO looks into this at the original assessment stage and does not think it fit to add the amount, the opinionated information given by the revenue audit party which the ITO was fair enough to record in his reassessment order that, "this amount of Rs. 2,50,000 which was as a matter of fact money belonging to the assessee firm" does entitle him to reopen the assessment. In other words, the revenue audit party sat over the judgement of the decision taken by the ITO after due deliberation. Therefore, in his order when he relied on the Ju ..... X X X X Extracts X X X X X X X X Extracts X X X X
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