ARJUN SHETTY,MANGALURU V. INCOME TAX OFFICER, TPS, CIRCLE - 1(1), MANGALURU

ITA 61/BANG/2025

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The case revolves around the income tax return filed by Arjun Shetty, a neurosurgeon and partner in two firms, M/s Classic Plantations and M/s Classic Advertising. The return for the Assessment Year 2018-19 included a share of profit from these firms, which was inadvertently reported twice under different heads, leading to an additional tax payment. The Assessing Officer (AO) treated the agricultural income as unexplained cash credit under section 68 of the Act, and this was upheld by the CIT(A). However, the Tribunal found that the assessee had not received any agricultural income directly and that the mistake in the tax return was unintentional, leading to the allowance of the appeal and deletion of the addition under section 68.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 785167 (ITAT-BANGALORE)
• Duration Of Justice: 9 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-10-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2018-2019
• Appeal Filed On: 10-01-2025
• Other Referred Cases: Chetan N Shah vs CIT, VR Global Energy Pvt Ltd v. Income Tax Officer, ACIT vs. Shri Suren Goel, DCIT vs. M/s Glass Tech India Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S.PRANAV G AMBEKAR; V. NARENDRA SHARMA; ADVOCATES
• Keywords: Set aside; Unexplained cash credit; Salary income; Source of fund; Bonafide mistake; Earning of tax free income; Bogus
• Section: 143(3); 68; 69

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH : BANGALORE BEFORE SHRI.LAXMI PRASAD SAHU, ACCOUNTANT MEMBER AND SHRI.KESHAV DUBEY, JUDICIAL MEMBER ITA No.61/Bang/2025 Assessment Year : 2018-19 Arjun Shetty, 16-6-393/9 Shubha Krishna Building, Highland Falnir, Mangalore - 575002. PAN :AINPS5294H Vs. ITO, Ward – TPS, Circle – 1(1), Mangalore. APPELLANT RESPONDENT Assessee by : S/Shri. Pranav G Ambekar, V. Narendra Sharma, Advocates Revenue by : Shri. Nilanjan Dey,JCIT(DR)(ITAT), Bangalore. Date of hearing : 15.09.2025 Date of Pronouncement : 29.10.2025 O R D E R Per Laxmi Prasad Sahu, Accountant Member : This appeal is filed by the assessee against the Order passed by the NFAC, CIT(A)under section 250 of the Income Tax Act, 1961 (hereinafter called ‘the Act’) vide DIN & Order No. ITBA/NFAC/S/250/2024- 25/1070306473(1) dated 13.11.2024. 2. Briefly stated the facts of the case are that assessee is an individual deriving income from the medical profession by practicing as a neurosurgeon in Mangalore and also share profit from the partnership firms M/s. Classic Plantations (PAN:AADFC8258P) with 25% share and M/s Classic Advertising (PAN:AABFC2115R) and in which the assessee’s share is 25%. Assessee filed return of income on 17.09.2018 admitting total income of Rs.1,00,38,530/-. The case was selected for limited scrutiny under CASS. Accordingly, notice under section 143(2) of the Act dated 23.09.2019 was Printed from counselvise.com ITA No.61/Bang/2025 Page 2 of 16 issued to the assessee to verify the agricultural income of Rs.81,07,685/- and share of profit of Rs.82,41,054/- and subsequently, other statutory notices were issued. Assessee was requested to produce documentary evidence for location of land, survey No. and explain crops grown, the details of crops, books of accounts, bills/vouchers, profit and loss account, etc., with respect of other income / agricultural income on basis of estimation of agricultural income, bills and vouchers for expenditures incurred on agricultural activity etc., were called for. In compliance to the notice, assessee furnished reply stating that he is partner in partnership firm M/s. Classic Plantation with 25% share which is engaged in plantation of different crops i.e., coffee, arecanut, pepper and trading of the same and the firm is assessed to tax with PAN : AADFC 8258 P and assessment under section 143(3) of the Act for the Assessment Year 2018-19 was made in faceless assessment on 22.01.2021 by accepting the income returned of agricultural income of Rs.3,24,30,738/- and allowing exemption under section 10(1) of the Act. Assessee also produced relevant documentary evidences towards extent of land held of 501.2 acres, details of crops grown, sales bills of the agricultural produce and bills and vouchers for expenditure incurred in connection with agricultural activity as carried out by the above firm in which assessee is a partner with 25% share. Assessee is partner in partnership M/s. Classic Advertising (PAN AABFC 2115 R) in which assessee’s share is 25%. Assessee filed P & L A/c, Balance sheet, capital account and he got share of profit from Classic Advertising of Rs.1,33,369/-. The total share of profit received from partnership firm is Rs.82,41,054/- (Rs.81,07,685 + Rs.1,33,369) out of which Rs.81,07,685/- was received from agriculture. On examination of the income tax return of schedule exempt income at Sl.No.4(i), assessee has shown agricultural income of Rs.81,07,685/- and further at Sl.No.5(i), assessee has shown share profit from partnership firm under section 10(2A) of the Act of Rs.82,41,054/-. Accordingly, the total exempt income was claimed at Rs.1,63,48,739/-. The Printed from counselvise.com ITA No.61/Bang/2025 Page 3 of 16 AO noted that assessee has received share of profit from 2 partnership firms of Rs.82,41,054/- (inclusive of share profit of Rs.81,07,685/- from M/s. Classic Plantation and Rs.1,33,369/- from M/s. Classic Advertising). Assessee submitted that income received from M/s. Classic Plantation has been shown twice firstly under Sl.No.4 of schedule of income as agricultural receipts and the same is included in the exempt claimed under section 10(2A) of the Act under Sl.No.5(i). Therefore, it is wrongly mentioned while filing return of income. Due to this wrong mention of figure, assessee has paid extra tax of Rs.1,27,464/- and assessee for last six years including 2016-17 has adopted same practice and the share of profit from M/s. Classic Plantation was shown twice in the income tax return under the schedule ‘exempt income’. Therefore, assessee was paying extra tax every year. Assessee filed letter on 17.02.2021 explaining that journal entry was passed in his books of accounts debiting M/s. Classic Plantation income and crediting agricultural income account instead of crediting capital account and further affirmed that all the payments from M/s. Classic Plantation received through cheques / RTGS and not in cash. Transactions are made only through banking channel. In support of his arguments assessee filed copy of cash book and entire ledger and entries made in the books of accounts during Financial Year 2017-18 and stated that provisions of section 68 of the Act are not applicable and further submitted that admission of agricultural income for claiming rebate is not causing any loss and it happened by unintentional mistake in filing ITR but the explanation offered by the assessee was not accepted. Accordingly, agricultural income shown of Rs.81,07,685/- was treated as unexplained cash credit and added into the income of the assessee and applied section 115BBE of the Act. 3. Aggrieved from the above Order, assessee filed appeal before the learned CIT(A). During the appellate proceedings, detailed submissions were Printed from counselvise.com ITA No.61/Bang/2025 Page 4 of 16 made but the learned CIT(A) did not accept submissions of the assessee and dismissed appeal of the assessee. 4. Aggrieved from the above Order, assessee is in appeal before the Tribunal. 5. The learned Counsel reiterated the submissions made before the lower authorities and he has filed written synopsis which is as under: 1. The appellant i.e. Shri. Arjun Shetty, is an individual and is a Doctor by profession and is a neurosurgeon practicing in Mangalore and is deriving income from the medical profession and is also a partner in certain partnership firms i.e. M/s Classic Plantations and M/s Classic Advertising having share of 25% in the said partnership firms respectively. 2. The appellant is maintaining regular books of accounts and the said books are subject to audit as per the provisions of the Act. The appellant is filing his return of income regularly and is paying the applicable taxes to the government. 3. For the impugned Assessment Year 2018-19, the appellant apart from professional income had the following source of income: (Computation in page 51 of the paper book) a. Salary income from Kasturba Medical College b. Share of profit from partnership firms M/s. Classic Plantations and M/s. Classic Advertising c. Rental income d. Interest income 4. The appellant for the impugned assessment year 2018-19 filed his return of income on 17.09.2018 within the due date prescribed under the provisions of section 139(1) of the Act. The appellant for the AY 2018-19 earned a share of profit of Rs. 81,07,690/- as his Printed from counselvise.com ITA No.61/Bang/2025 Page 5 of 16 25% share from the partnership firm M/s Classic Plantation and Rs. 1,33,369/- as share of profit from M/s Classic Advertising. 5. It is submitted, that the appellant for the said assessment year does not own any agricultural land individual hands and consequently does not have any agricultural income. However, the firm M/s Classic Plantations owned agricultural lands was engaged in agricultural activities, wherein the appellant is one of the partner in the said firm (Return of income, audited financial statements of M/s Classic Plantation in page 83 to 126 of the paper book). 6. It is submitted that while filing the return of income in Schedule EI: Details of Exempt Income (Income not to be included in Total Income) (Page 47 of the paper book) the appellant under point 5, i.e. under the line-item Share of profit from partnership u/s 10(2A) disclosed total of share of profit from partnership firms as Rs. 82,41,054/- (Total of share of profit of Rs. 81,07,690/- as his 25% share from the partnership firm M/s Classic Plantation and Rs. 1,33,369 as share of profit from M/s Classic Advertising.). 7. However, inadvertently and due to confusion while filing the ITR, the appellant inadvertently also mentioned under point 4i i.e. Gross agricultural receipts the share of profit from M/s Classic Plantation of Rs. 81,07,690/- by inadvertent mistake. As a result, the total exempt income claimed in the return of income amounted to Rs. 1,63,48,739/- as against the correct exempt income under section 10(2A) of the Act of Rs. 82,41,054/-. As a result of this mistake the appellant paid an additional tax of Rs. 1,27,464/-. 8. The appellant submits that the same mistake was carried on from the AY 2016-17 to AY 2020-21 and accordingly, paid additional taxes due to the error in filing the return of income and it was a bonafide mistake which resulted in paying excess taxes. 9. The return filed for AY 2018-19 was selected for limited scrutiny under CASS for the reason of “Large Agricultural income”. The learned Assessing Officer (hereinafter referred to as the learned “AO”) issued notices under section 143(2) of the Act requesting the appellant to produce the documentary evidence for location of land, crops grown in respect of agricultural income. Printed from counselvise.com ITA No.61/Bang/2025 Page 6 of 16 10. Only on receipt of the notices the appellant realized the mistake in the returns of income filed and approached his tax consultants and filed replies dated 31.10.2020, 15.12.2020, 28.01.2021 and 16.02.2021 to the learned assessing officer detailing the oversight while filing the return of income (Pages 72 to 82 of the paper book). 11. However, without considering the submissions of the appellant, the learned AO passed an order of assessment under section 143(3) of the Act dated 03.03.2021 wrongly concluding that, the agricultural income in the schedule EI being the agricultural income to the extent of Rs. 81,07,685/- was treated as unexplained cash credits under section 68 of the Act and brought to tax under income from other sources and taxed the same by applying special rate of taxes under section 115BBE of the Act. The AO computed the total income of the appellant in the impugned order of assessment as under – Particulars Amount in Rs. Amount in Rs. Returned income 1,00,38,530 Add: Unexplained cash credit claimed as agricultural income 81,07,685 Assessed income 1,81,46,220 12. The appellant being aggrieved by the order of the learned AO, filed appeal before the learned CIT(A), written submissions dated 23.07.2025 (Page 179 of the paper book) were filed, wherein the appellant submitted that addition made by the learned AO was made merely on the basis of surmises and assumptions and that the appellant is not directly engaged in agricultural activities only the firm in which he is a partner is engaged in carrying on agricultural activities and the income reported in the notes to the ITR is due to inadvertent bonafide mistake. The appellant also placed reliance on the circular no. 14(XL-35)/1955, dated 11.04.1955 issued by the Central Board of Direct Taxes wherein the Revenue authorities have been directed not take advantage of the ignorance of the assessee and to assist assesses in claiming relief under the provisions of the act. Printed from counselvise.com ITA No.61/Bang/2025 Page 7 of 16 13. The learned CIT(A) vide order dated 13.11.2024 dismissed the appeal filed by the appellant. The learned CIT(A) without considering the facts of the case, submissions made by the appellant, wrongly upheld the double mention of agricultural income i.e. a sum of Rs. 81,07,690/- once being the share of profit being exempt and the inadvertent mistake in mentioning as agricultural income of Rs. 81,07,690/- in the income tax return as unexplained cash credit under section 68 of the Act. 14. The appellant being aggrieved by the order of the learned CIT(A) passed under section 250 of the Act dated 13.11.2024 to the extent which is against him, has filed this present appeal before the Hon’ble Tribunal by raising several grounds. 15. The core issue in this appeal is that whether the CIT(A) was justified in affirming the action of the learned AO in making an addition under section 68 of the Act merely because the appellant had wrongly mentioned twice an amount of Rs. 81,07,690/- in the schedule Exempt Income in the return of income filed. 16. The other issues involved in this appeal are as follows – a) The CIT(A) and AO failed to appreciate that by inadvertently including the agricultural income of Rs. 81,07,690/- from the partnership firm i.e. M/s. Classic Plantations for rate purposes, the appellant has in fact paid more taxes than the actual computation of tax that was to be paid by the appellant. b) The addition made by the AO and confirmed by CIT(A) under section 68 of the Act is bad in law as the required conditions and the parameters to invoke the provision of section 68 of the Act have not been complied with. c) Without prejudice, the CIT(A) and the AO were not justified in taxing the appellant as per special rates of taxes as per provisions of section 115BBE of the Act. 17. Whether the learned CIT(A) was justified in affirming the action of the learned AO in making an addition under section 68 of the Act merely because the appellant had wrongly mentioned twice Printed from counselvise.com ITA No.61/Bang/2025 Page 8 of 16 an amount of Rs. 81,07,690/- in the schedule Exempt Income in the return of income filed. a) The appellant submits that he is a practicing neuro surgeon and for the AY 2018-19 earned a share of profit of Rs. 81,07,690 as his 25% share from the partnership firm M/s Classic Plantation and Rs. 1,33,369 as share of profit from M/s Classic Advertising. The appellant is maintaining regular books of accounts and is subject to audit. b) It is submitted that in the Schedule EI: Details of Exempt Income (Income not to be included in Total Income) (Page 47 of the paper book) the appellant under point 5 has disclosed the Share of profit from partnership u/s 10(2A) disclosed total of share of profit from partnership firms as Rs. 82,41,054/- (Total of share of profit of Rs. 81,07,690/- as his 25% share from the partnership firm M/s Classic Plantation and Rs. 1,33,369/- as share of profit from M/s Classic Advertising). c) However, inadvertently and due to confusion while filing the ITR, the appellant inadvertently also mentioned under point 4i i.e. Gross agricultural receipts the share of profit from M/s Classic Plantation of Rs. 81,07,690/- by inadvertent mistake. As a result, the total exempt income claimed in the return of income amounted to Rs. 1,63,48,739/- as against the correct exempt income under section 10(2A) of the Act of Rs. 82,41,054/-. As a result of this mistake the appellant paid an additional tax of Rs. 1,27,464/-. d) Thus, in the schedule Exempt Income, for the reasons as mentioned above, share of profit from firm and since the firm derived income from agricultural activities wrongly mentioned the same amount as agricultural income also which was a Bonafide mistake and is very apparent from the ITR filed by the appellant. e) As a result of this mistake the appellant paid an additional tax of Rs. 1,27,464/- (Comparision of computation of income as per return and computation of income without error in page 203 of the paper book). Printed from counselvise.com ITA No.61/Bang/2025 Page 9 of 16 f) It is further submitted that as could be seen from the financial statements of the appellant which has been filed, it is clear that the appellant has not received any agricultural income at all and to such extent there are no entries to that effect and consequently there are no credits in the books maintained by the appellant for it to be treated as unexplained cash credits under section 68 of the Act. g) The appellant submits that his mother Smt. Shanthasheela Bhaskar Shetty who is also one of the partners of M/s Classic Plantations also made the same mistake in her return of income filed by mentioning the profit from the firm as agricultural income also. Accordingly, the additional income tax has been paid for the AY 18-19 by the appellant’s mother as well. However, when the matter was selected for scrutiny in the case of mother Smt. Shanthasheela Bhaskar Shetty, the learned AO passed an order under section 143(3) of the Act, dated 26.02.2021, wherein the learned AO after considering the submissions made and also the details and explanations filed by her, accepted the explanation of the appellant’s mother and provided relief and held that, “it is found that assessee has shown agricultural income of Rs. 1,94,35,449/- which consist share of profit from M/s Classic Plantations to the tune of Rs. 81,07,685/- and balance Rs. 1,13,27,764/- from her own proprietary firm M/s Classic Tea Estates. Since the share of profit from M/s. Classic Plantation had already been exempted as per section 10(2A) of the Act in the ITR of M/s Classic Plantation, the agricultural income of the assessee is reduced to Rs. 1,13,27,764/- instead of Rs. 1,94,35,449/-. Though the assessment has been concluded by accepting the returned income i.e. Rs. 19,34,710/-.” (Page 196 to 202 of the paper book). h) The appellant submits that recording the amount twice in the schedule EI was done due to an inadvertent error and the AO and CIT(A) ought to have given relief to the appellant as per the circular no. 14(XL-35)/1955, dated 11.04.1955 issued by the Central Board of Direct Taxes, wherein the Revenue authorities have been directed not take advantage of the ignorance of the assessee and to assist assesses in claiming relief under the provisions of the act. The appellant reiterates that the objective of the department is not to maximize tax collection, but to ensure correct tax is collected. Printed from counselvise.com ITA No.61/Bang/2025 Page 10 of 16 i) Further, appellant submits that the order is bad in law, as conditions for invoking section 68 of the Act was not fulfilled. The order is bad in law as section 68 was invoked merely because of double mention of the same amount under two heads, without there being any unexplained actual flow funds. 18. The CIT(A) and AO failed to appreciate that by inadvertently including the agricultural income of Rs. 81,07,690/- from the partnership firm i.e. M/s. Classic Plantations for rate purposes, the appellant has in fact paid more taxes than the actual computation of tax that was to be paid by the appellant. a) The appellant submits that he has not received any tax benefit due to this inadvertent error, in fact the appellant has paid an additional income tax of Rs. 1,27,685/- due to this mistake in filing the return of income. (Comparision of computation of income as per return and computation of income without error in page 203 of the paper book) b) Further, the appellant places reliance on the circular no. 14(XL- 35)/1955, dated 11.04.1955 issued by the Central Board of Direct Taxes wherein revenue authorities have been directed not take advantage of the ignorance of the assessee and to assist assessees in claiming relief provided under the provisions of the Act. Also, the circular entails that, the objective of the Department is not to maximize tax collection, but to ensure correct tax is collected. c) The appellant places reliance of the ruling of Chetan N Shah vs CIT [2015] 53 taxmann.com 18 (Bombay)[16.09.2014] wherein it was held that assessee is eligible for refund along with interest as he had paid excess amount chargeable to tax on account of mistake. d) The appellant further submits that the AO failed to consider that by taxing Rs. 81,07,690/- as unexplained credit the AO’s action has lead to double taxation of the same income which is not permissible under the taxation laws. 19. The addition made by the AO and confirmed by CIT(A) under section 68 of the Act is bad in law as the required conditions and Printed from counselvise.com ITA No.61/Bang/2025 Page 11 of 16 the parameters to invoke the provision of section 68 of the Act have not been complied with. a) The appellant submits that the appellant in the return of income for the assessment year 2018-19 in the schedule Exempt Income due to inadvertence and confusion recorded twice the amount of Rs. 81,07,685/- one under the heading share of profit from partnership firm M/s Classic Plantations and another under Agricultural income. (Page 47 of the paper book). b) It is also relevant to point out that the appellant is maintaining regular books of accounts and the same are subjected to audit. It is submitted that the appellant in his books has not recorded any receipts as agricultural income and there are no entries to this effect in the books maintained by the appellant. c) The appellant submits that, without there being physical transfer of money, the provisions of section 68 of the Act cannot be invoked. The appellant submits that without there being any actual receipt of money, a mere double mention in the schedule Exempt Income could not be construed to be an unexplained cash credit. The wrong mention in the schedule of the income tax return without any real credit of cash to the cash book cannot give rise to inclusion of the amount of the entry increasing bank balance as unexplained cash credit. d) Without prejudice, the appellant further submits that, as per the provisions of section 68 of the Act, it is not just an entry of cash credit in the books of accounts that would create liability of explanation from the appellant, but there should be an actual flow of funds. Only once the flow of funds are established, then, the question of explanation from the appellant actually arises. e) The appellant places reliance of the decision of the Madras High Court in VR Global Energy Pvt Ltd v. Income Tax Officer in (2018) 96 taxmann.com 647(Madras), wherein it was held “The cash credits towards share capital were admittedly only by way of book adjustment and not actual receipts which could not be substantiated as receipts towards share subscription money. The Printed from counselvise.com ITA No.61/Bang/2025 Page 12 of 16 appeal is, thus, allowed and the judgment and order of the Tribunal is set aside, for the reasons discussed above. Additions under section 68 are also set aside.” On appeal the apex court upheld the decision of the Madras High court in [2020] 113 taxmann.com 31 (SC). f) Also, the appellant places reliance on the decision of the ITAT Delhi Bench in Acres Buildwell Pvt. Ltd. v. ITO, Ward 1(3) in ITA No. 2191/Del/2022 before Shri GS Pannu, hon’ble Vice President and Shri. Anubhav Sharma, Judicial Member, wherein it was held that, ”7. We are of the considered view that for the purpose of section 68 of the Act, the conclusion drawn by the CIT(A) was erroneous because on the one hand, without there being any actual receipt of money, a mere journal entry was passed during the year in regard to entries of borrowed funds standing as unsecured loan and amount receivable from two different set of parties. On the other hand, the CIT(A) has doubted the identity of two lenders on the basis that companies are deregistered and their whereabouts are not known. However, the addition is made on the basis that source of credit shown as unsecured loan received from M/s Vrinda Developers Pvt. Ltd., remains unexplained. The journal entry only shows cessation of liability towards the two companies – SNB Realtors Pvt. Ltd. and M/s Amaya Overseas Private Ltd. on the basis that these liabilities are taken over by M/s Vrinda Developers Pvt. Ltd. Thus, the conclusion of failure to explain the source of funds credited during the year in the name of M/s Vrinda Developers Pvt. Ltd. is an erroneous finding. 7.1 The journal entry had the debit effect on the bank account with the increase in the bank balance and credit effect on the loan account. The assessee has explained that no entry in this regard was effected in the P&L Account as a credit effect on the unsecured loan account was reflected in the balance sheet only. As for the purpose of section 69 of the Act, it is imperative for the Revenue that there was cash involved in the transaction. The present journal entry is merely adjustment of accounts by way of set-off entries. We are of the considered view that the opening balances on account of unsecured loans of the two parties and certain amount receivable from M/s Vrinda Developers Pvt. Ltd., being in the background of journal entry, then for the purpose of section 68 of the Act, it cannot be said to be an unexplained cash credit. The fictitious cash entry in the bank account without any real credit of cash to the cash book Printed from counselvise.com ITA No.61/Bang/2025 Page 13 of 16 cannot give rise to inclusion of the amount of the entry increasing bank balance as unexplained cash credit. 7.2 The judgment to which the ld. AR has relied for the proposition of law that without there being physical transfer of money, the provisions of section 68 cannot be invoked are applicable to the issue before us. In fact, in ACIT vs. Shri Suren Goel (supra) the Revenue has challenged before the Tribunal the deletion made by the CIT(A). In that case, the balance sheet of the assessee as on 31.03.2007 has revealed that liability increased by Rs.25 lakhs towards Pritam Goel. The assessee has explained that to maintain credit returns enjoyed by the partnership firm, a journal entry was passed in the books of account of the partnership firm M/s Lyra Industrials wherein assessee’s capital account was credited and father Shri Pritam Goel’s capital account was debited by an equal amount. The fact of journal entry passed in the books of the firm was duly incorporated in the books of the assessee. The AO had made addition of Rs.20 lakhs which was deleted by CIT(A) by observing that: “In the case of book entries/adjustments, there is no question of mode of payment or actual receipt of money from one party to another. Book entry transfer lets transfer only through the respective accounts in the books of the concerns.” Accordingly, the deletion was made which was sustained by the Tribunal further observing that since there was no physical transfer of money from the account of Shri Pritam Goel and only a journal entry was passed, the findings of the AO that transaction was sham is baseless. 7.3 A coordinate Bench at Delhi in the case of DCIT vs. M/s Glass Tech India Ltd., (supra) on which one of us (Judicial Member) was a party, while dealing with the provisions of section 68, has held that it is not just an entry of cash credit in the books of account that would create liability of explanation from the assessee, but, there should be an actual flow of funds. Once the flow of funds is established, then, the question of explanation from the assessee actually arises. Thus, we are inclined to allow these grounds of the assessee.” g) Further, the appellant places reliance on the following decisions: a. Jatia investment co. v. CIT in [1994] 206 ITR 718 (Cal.) b. Anil Mithas v. DCIT in ITA 7542/Del/2017 c. ITO v. Bhagwat Marcom Pvt. Ltd. in ITA 2236/Kol/2017 d. ACIT v. Suren Goel in ITA 1767/Del/2011 Printed from counselvise.com ITA No.61/Bang/2025 Page 14 of 16 e. ITO v. Hindustan Breweries and bottling Ltd. in ITA 1673/Pun/2019 f. ITO v. Pansu Commercial Pvt. Ltd. in ITA 1859/Kol/2017 g. DCIT v. Glass Tech India in ITA 6241/Del/2017 h) Wherefore, the appellant humbly prays and submit that the addition made by the learned assessing officer and confirmed by the learned CIT[A] amounting to Rs. 81,07,685/- as unexplained credits under section 68 of the Act, requires to be deleted. It is prayed accordingly. 20. Without prejudice, the CIT(A) and the AO were not justified in taxing the appellant as per special rates of taxes as per provisions of section 115BBE of the Act. a) It is submitted that the addition made by the learned assessing officer and confirmed by the learned CIT[A] amounting to Rs. 81,07,685/- as unexplained credits under section 68 of the Act, itself is not maintainable, sustainable and justified for the reasons as mentioned in the above paragraphs and consequently the provisions of section 115BBE of the Act is not applicable. b) The appellant submits he has only bank interest income as income from other sources (Page 51 of the paper book). Therefore, under no stretch of imagination the AO could have taxed the alleged income of Rs. 81,07,985/- under income from other sources and tax the same under special rates of taxes. 21. Wherefore, the appellant in view of the above submissions humbly prays before this Hon’ble Tribunal – a) To allow the appeal filed by the appellant. Pass such orders as this Hon’ble Tribunal may deem fit on the facts and circumstances of the case. 5. On the other hand, the learned DR relied on the Order of the lower authorities and submitted that there is malafide intention of the assessee to Printed from counselvise.com ITA No.61/Bang/2025 Page 15 of 16 claim excess agricultural income to build capital by paying lower tax due to this twice the agricultural income is shown. Assessee has shown excess income. Assessee could not substantiate his case and since Assessment Year 2016-17 assessee is showing excess income. 6. Considering the rival submissions and on perusal of entire material available on record and Orders of authorities below, we noted that here the dispute is only with regard to exemption income claim of Rs.81,07,685/-. Assessee is partner in M/s. Classic Plantation and Classic Advertising he has received share of profit of Rs.81,07,685/- as 25% share of profit and the Classic Plantation is engaged in agricultural produce and income is exempt under section 10 of the Act (Classic Plantation). Assessment under section 143(3) of the Act has also been completed for the same Assessment Year2018- 19. On 22.01.2021 where the agricultural income of Rs.3,24,30,738/- is accepted and assessee’s share is 25% of agricultural income shown by the firm which is Rs.81,07,685/-. There is dispute on the quantum of income received and shown twice in the ITR filed. Here the dispute is regarding claim of exempt income. Assessee is also partner in another partnership firm M/s. Classic Advertising. Share of profit is 25% and received amount of Rs.1,33,369/-. Accordingly, total share of profit from both the partnership firms is Rs.82,41,054/- (Rs.81,07,685 + 1,33,369) and assessee has claimed it under schedule of exempt income at Sl. No.5(1). During the course of hearing, learned Counsel submitted that share of profit from M/s. Classic Plantation has been shown wrongly twice in the income tax return. Considering submission of the learned AR to examine whether assessee has credited twice his capital account by the same figure we examined the capital account of the assessee as well as capital account in the books of M/s. Classic Plantation. The books of accounts of the assessee are audited and we do not find in his financial statement that assessee has credited his capital account twice by the Printed from counselvise.com ITA No.61/Bang/2025 Page 16 of 16 same figure. There is no credit entry found twice in the financial statement of Rs.81,07,685/-. Accordingly, we conclude that assessee has not built bogus capital in his financial statement. It is only shown in the income tax return twice. Therefore, we delete the addition. 7. In the result, appeal filed by the assessee is allowed. Pronounced in the open court on the date mentioned on the caption page. Sd/- Sd/- (KESHAV DUBEY) (LAXMI PRASAD SAHU) Judicial Member Accountant Member Bangalore. Dated: 29.10.2025. /NS/* Copy to: 1. Appellants 2. Respondent 3. DRP 4. CIT 5. CIT(A) 6. DR,ITAT, Bangalore. 7. Guard file By order Assistant Registrar, ITAT, Bangalore. Printed from counselvise.com "