Assistant Commissioner of Income Tax Central Circle-2(3), Bangalore V. Shri C J Vishwanth , Chikkamangaluru

ITA 1893/BANG/2018

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 7460 (ITAT-BANGALORE)
• Duration Of Justice: 3 year(s) 5 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 30-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMER SINGH MEENA; OSD
• Keywords: Unexplained cash credit; Business income; Business expenditure; Peak credit; Co-operative Credit Society; Set aside
• Section: 131; 68; 132; 80C; 143(3); 142(1); 153A; 139(5); 143(2); 13; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH : BANGALORE BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER ITA Nos.1891 to 1896/Bang/2018 Assessment year : 2008-09 to 2013-14 The Asst. Commissioner of Income-tax, Circle-2(3), Bengaluru. Vs. Shri C.J Vishwanath, Shanti Nivas, Chanapura Road, Kote, Chickmagalur-577 101. PAN – ADAPV 3014 C REVENUE ASSESSEE Revenue by : Shri Sumer Singh Meena, CIT-OSD-DR Assessee by : Shri Guruswamy H, ITP Date of hearing : 18.10.2021 Date of Pronouncement : 29.11.2021 O R D E R Per Chandra Poojari, Accountant Member These appeals by the Revenue are directed against the different orders of the CIT(A)-11 for the assessment years 2008-2009 to 2013-14. The issues in all these appeals are common with only changes in the figure. Hence, these are heard together and disposed of by this common order for the sake of convenience and brevity. ITA Nos.1891 to 1896/Bang/2018 Page 2 of 30 We consider grounds in ITA No.189/Bang/2018 which are as follows:- “1. Whether on the facts and circumstances of the case the CIT(A) was correct in deleting the addition of Rs. 2,06,72,127/- on account of unexplained credits in undisclosed bank accounts holding that addition made on the basis of only one side of the bank account being the credit side without considering the debit side is not sustainable in law. 2. Whether on the facts and circumstances of the case the CIT(A) was correct in holding that addition of unexplained cash credit has not been made on any material evidences attributable to the detection of any undisclosed income/asset or incriminating documents and rather on the basis of bank credits without appreciating the fact that it was only during the course of search action that several bank accounts not previously disclosed in the return of income were unearthed and the said fact was also admitted by the assessee vide statement recorded u/s 131 on 18/01/2013. 3. Whether on fact & circumstances of the case the CIT(A) was correct in deleting the additions made by the A.O. without considering the fact that even if the debits were to be considered, the peak credit would still constitute income in the hands of the assessee, as such amount of cash remains unexplained for the year under consideration even if the assessee were to establish the nexus between withdrawals and deposits. 4. Whether CIT(A)'s was correct in deleting the additions when the cash book submitted during the course of assessment proceedings claiming that the cash inflow was out of agricultural income, did not match with the sale receipts produced by the assessee to substantiate them, and when the AR of the assessee has merely stated that a couple of mismatches would not discredit the entire cash flow. ITA Nos.1891 to 1896/Bang/2018 Page 3 of 30 5. Whether the CIT(A)'s was correct in deleting the additions made by the A.O. without considering the A.O.'s finding that the expenditure on agriculture is not supported by evidence as well as the consolidated entries regarding house construction also do not have any evidence.” 2. The facts of the case stated are as follows: The assessee is engaged in the businesses of Liquor and Money Lending. The assessee in addition to the business income derived income from agriculture, house property and also income from other sources being interest on Fixed Deposits. The assessee is assessed before the Income-tax Officer, Chikmagalur, vide PAN ADAPV3014C. The assessee had filed Returns of Income regularly. A search u/s. 132 of the Act was conducted in the case of the assessee on 08.06.2012 both in the business premises and Residence. Consequent upon the assessee’s case was notified to the Office of the DCIT, Central Circle 2(3), Bangalore. Thereafter, a Notice u/s. 153A of the Act was issued on 28-01-2014 and called upon the assessee to file his Return of Income for the Assessment year 2008- 09. In response to the said notice, the assessee has filed his return of income on 29-10-2014 declaring total income of Rs.1,34,748/- besides agricultural income of Rs.14,70,170/-. ITA Nos.1891 to 1896/Bang/2018 Page 4 of 30 3. The AO has observed that the search conducted has revealed the fact that the assessee has held the following three Bank Accounts in his name and two Bank Accounts were held by his employee Miss. N. Pratibha. The details of the said bank accounts are furnished as under :- 4. The AO has also held that during the course of assessment proceedings one more Bank Account No. 479, held with HDFC Bank, Chikmagalur, jointly by the assessee and his employee Ms. N. Pratibha was found out. In the said bank account, the AO has noticed that a sum of Rs.1,11,124/- was found debited towards the payment made to J.J.M. Medical College, Davangere towards the fees payable by the assessee’s son for his studies and further noted that a sum of Rs.1,000/- per month has been paid since 05-09-2012 towards the Recurring Deposit held by the assessee. On the basis of the above transactions, the AO has held that the said ITA Nos.1891 to 1896/Bang/2018 Page 5 of 30 Bank Account No.479 held with HDFC Bank, Chikmagalur even though jointly held, exclusively belongs to the assessee. The assessee submits that the AO was not justified to hold that merely on the basis of the two transactions, that the said joint Account exclusively belongs to the assessee ignoring the fact that his employee Ms. Pratibha was also a joint Owner who has operated the said Bank Account for her benefit. 5. It is pertinent to mention that the amount of Rs. 1,11,124/- paid from the joint Bank Account towards the fees of the assessee’s son was in fact refunded by the assessee’s wife Smt. Pankaja to Ms. N. Pratibha and later, the assessee has repaid the said amount to his spouse and squared up the transaction. The AO has ignored several transactions of the said bank account, but selectively he has chosen only two transactions stated above to hold that the said joint Account of the HDFC Bank, Chikmangalur exclusively belongs to the Appellant. 6. The Ld. AO has held that the Appellant has not disclosed the following Bank Accounts held in his name prior to the date of Search :- ITA Nos.1891 to 1896/Bang/2018 Page 6 of 30 a) Current Account No. 5331 held with Canara Bank, Chikmangalur b) Account No. 644009613966 held with SBM, Chikmangalur c) Account No. 226 held with Sri. Vasavi Multipurpose Co-operative Credit Society 7. The Ld. AO has also held that the Appellant has not disclosed the following Bank Accounts held by his Employee Miss. N. Pratibha: a) Account No. 2386101005551 held with Canara Bank, Chikmangalur b) Account No. 276 held with Sri. Vasavi Multipurpose Co-operative Credit Society 8. The AO has held that the above Bank Accounts were detected during the course of search. The assessee submitted that during the course of search, the search team did not find any incriminating documents and any other material evidence in support of undisclosed income if any relating to the asst. year 2008-09. ITA Nos.1891 to 1896/Bang/2018 Page 7 of 30 9. The search team did not find any undisclosed properties, money, bullion or jewellery and therefore, the search was conducted on the basis of information which was not well founded. A Search was conducted merely on surmise, suspicion and guess work without any material evidence. The Bank Accounts said to have not been disclosed did not yield substantial income for the purpose of taxation and, therefore, the said Bank Accounts were not taken into consideration for the purpose of determination of income. The non-disclosures of the Bank Accounts was held by the AO as a sole ground for holding the cheque credits and the cash credits amounting to Rs. 2,06,72,127/- as income of the Appellant. 10. Similarly, addition for other asst. years as follows:- Sl no YEAR ENDING CANARA BANK SBM S.V.M.C. C.S S.V.M. C.C.S HDFC TOTAL Account No. 5551 3966 226 276 479 1 31.03.2007 0715941 37778400 2 31.03.2008 05084312 1558751500 3 31.03.2009 09139567 17466415002,66,05.982 4 31.03.2010 011863612 18066785003.44,15.563 5 31.03.2011 02072618 20514245 2583330 03,56.76.272 6 31.03.2012 03664798 0 29391000 04.62,07.922 7 31.03.2013 10752551478920 0 7098220 677456 7 2.61,04.258 Total 1075255133019768 72013044 3907255 0 19,07,75,849 ITA Nos.1891 to 1896/Bang/2018 Page 8 of 30 11. Against this, the assessee went in appeal before the CIT(A). The CIT(A) observed that as follows:- “27. The facts of the case, the grounds of appeal, the Written Submissions, the AO's findings and various Judicial decisions are considered and found that the AO has made the addition only the basis of cash credits found in the Bank Account without considering the recycled deposits out of the periodical withdrawals. In the process the has not brought on record any sizable Cash Balance at the end of the year since it is found that the deposits and re-deposits are out of the same stock of Cash Initially invested. The frequent deposits and withdrawals were necessitated as a compulsion in the Money lending business where the cash would be drawn at the time of lending the Loan to the needy customers and after receiving back the loan amount so lent would be credited into the Bank and this cycling and recycling process was continued throughout the year. 28. It is seen from the Assessment Order that the addition was not based on any material evidence attributable to the detection of any undisclosed income/asset or incriminating documents, rather the addition was made merely on the basis of Bank Credits in the guise of an excuse that the two Bank Accounts mentioned above were not disclosed prior to the date of Search. In my opinion mere non disclosure of the Bank Account without finding any credible information as regards undisclosed income/asset or incriminating documents would not justify the additions merely on the basis of Bank Credits that- too without considering the periodical withdrawals ITA Nos.1891 to 1896/Bang/2018 Page 9 of 30 which were stated to be the source of re-deposits in the course of the Money lending business. 29. The AO's findings that some of the Cash entries in the Cash Book hardly matched the dates and amount of the agricultural sales, but the issue on hand is not related to the Agricultural receipts or otherwise, but it was related to the source of Cash Credits of the Bank for which the AR submitted that the earlier withdrawals were the source of re- deposits. The AO except stating the mismatch of the date of Agricultural receipts for rejection of the Cash Book has not brought on record any contrary evidence to establish that the cash credits were unexplained and such amount of unexplained cash credits was not proved to be transformed in the form of any undisclosed asset/income and that being so it cannot be said that the cash credits in the Bank Account would constitute Income chargeable to tax. 30. The judicial decisions relied upon by the AR are considered and found that both the sides of the Bank accounts being credits and debits are required to be considered in order to arrive at the ultimate income chargeable to tax, but the AO as seen from the Assessment Order has not considered the debits/withdrawals. The submissions made by the AR as regards the aggregate deposits and aggregate withdrawals at the end of the year resulted in negligible Cash Balance and in this view of the matter the addition does not seem to be justifiable. 31. Respectfully following the judicial decisions in the above cases, I am of the view that the addition made on the basis of only one sided of the Bank Account being the Credit side without ITA Nos.1891 to 1896/Bang/2018 Page 10 of 30 considering the debit side is not sustainable in law and therefore the addition so made amounting to Rs. 2,06,72,127/- for the AN 2008-09 is deleted.” 12. Against this, the Revenue is in appeal before us. Similar is the position for other assessment years 2008-09 to 2012-13. For asst. year 2013-14, the Revenue is in appeal before us with regard to quashing of asst. order on the reason that the issue of notice u/s 143(2) is time barred. ITA No.1891 to 1895/Bang/2018 (asst. year 2008-09 to 2012-13) 13. The ld.DR submitted that the addition made by the AO on the basis of deposit in bank account, which was unearth during the course of search action. The CIT(A) will not justify in deleting such addition made by the AO and the addition should be sustained at least to the extent of peak credit in accounts in each assessment year. 13.1 The ld.DR made one more plea before us that at least peak credits to be considered as income of the assessee in each of these asst. years. 14. On the other hand, the ld.AR submitted as follows: The Appellant is engaged in the business of Money Lending and Liquor business Apart from the business the Assessee also owned agricultural lands extensively and ITA Nos.1891 to 1896/Bang/2018 Page 11 of 30 declared substantial agricultural income periodically which has been accepted by the Department. The Appellant has disclosed the Business income, income from house property and Agricultural income of Rs. 14,70,170/-. The total income declared in response to notice u/s. 153A of the Act remains the same which was declared in the Original return of income. The Appellant was assessed prior to Search before the Income-tax Officer, Chikmangalur, vide PAN ADAPV3014C. The Appellant had filed Returns of Income regularly. 15. The Appellant submitted that a Search u/s. 132 of the Act was conducted on 08-06-2012 and the Appellant was called upon to file the return of income by issue of notice u/s. 153A of the Act for the assessment year 2008-09 which is a part of the Block Period. In response to the aforesaid notice the Appellant has filed his return of income on 29-10-2014 declaring income of Rs. 1,34,748/- as detailed below:- i) Net Income from House Property Rs. 67,200 /- ii) Business Income Rs. 1,42,860/- iii) Income from other Sources Rs. 5,042/- --------------------- ITA Nos.1891 to 1896/Bang/2018 Page 12 of 30 Rs. 2,15,102/- Less: Deduction u/s. 80C Rs. 80,354/- ---------------------- Net Income Rs. 1,34,748/- Rounded Off to Rs. 1,34,750/- --------------------- 16. The Ld. AO has completed an Assessment u/s. 143(3) r.w.s 153A of the Act dt: 26-03-2015 determining the total income at Rs. 16,04,918/- as against the declared income of Rs. 1,34,748/- besides agricultural income of Rs. 14,70,170 /-. The Ld. AO has made an addition of Rs. 2,06,72,127/- which was held as unexplained credits. The Ld. AO has held that the Appellant had owned the following bank accounts: Sl. No. Year Ending Account No. and name of the Bank Name of the Account Holder Amount of Credits (Rs.) Status of Account holding 1 31-03- 2007 3966 - SBM C.J. Vishwanath 50,84,312 Individual 2 31-03- 2007 226 – SVMCCS C.J. Vishwanath 1,55,87,515 Individual TOTAL 2,06,72,127 17. The Appellant submits that during the course of Assessment proceedings the Appellant has produced a ITA Nos.1891 to 1896/Bang/2018 Page 13 of 30 Cash Flow statement to show the source of bank credits. The credits and debits made into/from the Appellant’s Bank account were mentioned in the Cash Flow statement as Contra Entries which were self explanatory. But the Ld. AO has not appreciated the cash Flow statement merely on the ground that the Agricultural receipts were found mismatched. But the Appellant submits that the Cash Flow statement was actually based on the amounts deposited into the Bank and also withdrawn from the bank. The agricultural income received in cash was taken into the Cash Flow statement and the same agricultural income was accepted by the AO without any dispute amounting to Rs. 14,70,170/- and also he has provided Agricultural rebate of Rs.4,23,051/- Hence the telescoping effect ought to have been considered by the AO while considering the Bank deposits in respect of Agricultural income and declared income and also the opening balance as on 01-04-2007 which was withdrawn for the purpose of business of money lending and re-deposited the same amount after receiving from the borrower. 18. The Appellant begs to place reliance on the decision dt: 26-08-2014 of the Hon’ble Jurisdictional Karnataka ITA Nos.1891 to 1896/Bang/2018 Page 14 of 30 High Court in the case of Vanitha v/s. ITO Ward – 12(2) in ITA No. 636 of 2013, wherein it has been held that the authorities have not taken into account a pass book entries and the books of accounts maintained by the Assessee and therefore the matter was remanded back to the Assessing Officer for fresh consideration of all the entries in the Books of Account and the Pass Book maintained by the Assessee. In this view of the matter the Appellant submits that the Ld. AO has not considered the entries found recorded in the account books being Cash Flow statement with reference to the credits found in the Bank Account and therefore the addition is not sustainable since the Ld. AO has considered only credits ignoring the debits. 19. The Appellant placed reliance on the decisions of the Hon’ble Allahabad High Court in the case of CIT v/s. Adbul Haseeb Prop. M/s. JB Silk in ITA No. 213 of 2007, 214 of 2007, 215 0f 2007, 216 of 2007, wherein it has been held that : “The expression “any sum is found credited in the books of the assessee” means all entries on the credit side as well as on the debit side in the books of account. The word “credited” in relation to “any sum” does not mean an entry only on the credit side ITA Nos.1891 to 1896/Bang/2018 Page 15 of 30 but would also include any entry on the debit side as well. The word “credited” means an entry of a sum in the books of account. Consequently, for the reasons stated aforesaid, we do not find any substantial question of law arising in this appeal. The deletion made by the Tribunal does not require any interference. In the result, all the appeals are dismissed.” 20. In this view of the matter the Appellant submits that the Ld. AO was not justified only to consider the credit s of the Bank Account rejected the debits which served as a source of subsequent credits. 21. Further the Appellant relied upon the decision of the Hon’ble supreme Court in the case of Lalchand Bhagat Ambika Ram (1959) 37 ITR 288 wherein it has been held that “it was not therefore open to the Tribunal to accept the genuineness of these books of account and accept the explanation of the Appellant in part Rs. 1,50,000/- and reject the same in regard to the sum of Rs. 1,41,000/- and ultimately the Hon’ble Supreme Court held that “declining to take into consideration all materials which the Assessee wants to produce in support of the case constitutes a violation of the fundamental rules of justice and calls for interference”. In this view of the matter the ITA Nos.1891 to 1896/Bang/2018 Page 16 of 30 AO was not justified to reject the Appellant’s explanation as regards the debits and credits found recorded in the Cash Flow Statement merely on the ground that the Cash Flow Statement was not acceptable since certain agricultural receipts were found mismatched. 22. Reliance was placed upon the decision of the Hon’ble supreme Court in the case of Indore Malwa United Mills Ltd. V/s. State of Madhya Pradesh and others (1966) 60 ITR 41 (SC) wherein it has been held that “as the appellant produced before the assessing authorities all its registers, it was their duty to definitely come to one conclusion or the other in regard to the reliability of every one of the relevant accounts filed by the appellant, and in the absence of any such finding it was not open to them to pick and choose some of the registers, which were more favourable to the revenue”. In this view of the matter the Appellant submits that the AO has not considered the totality of the evidence as regards the agricultural receipts recorded in the cash flow statement and the Ld. AO was not justified to rely upon the undisclosed Bank accounts in respect of the credits without considering the debits which served as a source for re-credit (recycling) subsequently in the same previous year. ITA Nos.1891 to 1896/Bang/2018 Page 17 of 30 23. The Appellant relied on the decisions dt: 23-06-2010 of the ITAT Bangalore (2010) 5 ITR (Trib) 129 (ITAT/Bang) in the case of Dr. M. Somashekar v/s. ACIT, wherein it has been held as under;- “Repeated cash transactions of deposits, withdrawals, re- deposits and re-withdrawals made, time and again, from the same stock of cash resulting in huge cash turnover, had not been reconciled. Each and every item of deposit and withdrawal could not be treated as an independent item of undisclosed income and added severally. The unexplained cash and withdrawals need not be treated as independent amounts of undisclosed income. They could be accounted against the cash turnover out of the funds generated from unauthorized activities carried out by the assessee” in the block period. Therefore, the additions in respect of unexplained cash and unexplained withdrawals were deleted.” 24. The Appellant placed reliance on the decisions dt: 24-06-2016 of the Hon’ble ITAT Bangalore Bench in ITA No. 731/Bang/2015 in the case of S. Kiran Kumar v/s. ITO Ward - 9(2), wherein it has been held that : “Assessee had withdrawn money in cash and also deposited money in cash to his bank account. Assessee had already mentioned before the AO that he intended doing the real estate business. There was no reason why this explanation was disbelieved. It is a fact that withdrawals during the year 2007-08 were more than the deposits made by Rs. 37,88,190/-. Assessee could very well show it as a source for the deposits made by him in the succeeding year. I am of the opinion that the Assessee had produced ITA Nos.1891 to 1896/Bang/2018 Page 18 of 30 sufficient details to prove its case. I do not find any reason to sustain the addition. It stands deleted.” 25. The Appellant placed reliance on the decisions dt: 29-04-2016 of the Hon’ble ITAT Bangalore Bench in ITA No. 612/Bang/2014 in the case of R. Nagendra v/s. ITO Ward – 8(1) wherein it has been held that : “Source of cash deposit has been explained by the assessee as business receipt, but it was not accepted by the AO. It is pertinent to note that the AO considered only deposit side of the bank account without considering the withdrawal. Further when the AO accepted the gross receipt from the business of studio, then to that extent the deposit in bank account can be considered as explained source if the expenditure incurred by the assessee from the corresponding withdrawal in the bank account has not been examined by the authorities below. Accordingly we set aside this issue to the record of AO to examine the same afresh by considering the deposit as well as explaining the withdrawals by matching the same with the business receipts and business expenditure of the assessee.” 26. The Appellant begs to place reliance on the decisions dt: 22-06-2015 of the Hon’ble ITAT Lucknow Bench in ITA No. 634/LKW/2014 in the case of ITO – 6(4) v/s. Vishan Lal wherein it has been held as under:- “Considering the facts, as discussed above that the cash deposits and withdrawals in the bank account was made regularly by the assessee during the year, it is very reasonable to say that the same was business turnover outside books and therefore, only gross profit addition is justified in the facts of the ITA Nos.1891 to 1896/Bang/2018 Page 19 of 30 present case. Hence, we do not find any reason to interfere in the order of the CIT(A) and therefore, we decline to interfere in the same. In the result, the appeal of the Revenue stands dismissed.” 27. The Appellant relied on the decision dt: 25-07-2014 of the Hon’ble Jurisdictional Karnataka High Court in the case of CIT v/s. Jayesh S Mehta, in ITA No. 545/2008,595/2008 wherein it has been held as under:- “The Assessee admits during the search that a portion of the profit is not accounted for and it is deposited in various banks. He submitted that he shall certificate the profit component of this under billed quantity for the block period and shall pay the tax accordingly. However, the Assessing Authority took that amount in deposit as profit and levied tax. On that basis the First Appellate Authority found fault with the way the Assessing Authority had calculated the undisclosed income and profit thereon. After carefully examining the turnover for 1996-97, 1997-98 and 1998-99 and comparing with the turnover of 1999- 2000, 2000-01, 2001-02, 2002-03 and also taking into consideration the profit earned by another firm M/s. SRV and Sons, he was of the view that 4% would be the gross profit of the firm and he wanted the tax to be levied on that basis. The Tribunal found fault with the said finding on the ground that when the First Appellate Authority is relying on Comparable cases, first there should be factual foundation showing the total turnover of that business and then the profit margin.” 28. The Appellant begs to place reliance on the decision of the Hon’ble Supreme Court in the case of Sumati Dayal ITA Nos.1891 to 1896/Bang/2018 Page 20 of 30 V/s. CIT (1995) 214 ITR 801 (SC) wherein it has held been that in all cases in which a receipt is sought to be taxed as income, the burden lies on the Department to prove that it is within the taxing provision. 29. The assessee placed reliance on the decision of the Hon’ble Bombay High Court in the case of CIT v. Bhai Chand.H. Gandhi (1983) 141 ITR 67 (BOM), wherein it has been held that the Bank credits do not constitute income of the Appellant and provision of section 68 of the Act is not applicable since the Bank Pass Book does not constitute as the Books of the Assessee. The Ld. AO has made an addition of Rs. 2,06,72,127/- being the deposits found credited in the State Bank of Mysore amounting to Rs. 50,84,312/- and SVMCCS(Sri Vasavi Multipurpose Credit Co-operative Society) amounting to Rs. 1,55,87,515/- (Rs. 50,84,312/- + Rs. 1,55,87,515/- = Rs. 2,06,72,127/-). The Ld. AO has held that the deposits made into the Bank amounting to Rs. 2,06,72,127/- was unexplained and undisclosed credit and therefore the said amount was held as income of the Appellant without appreciating the fact that the Ld. AO has not considered the amounts withdrawn by way of debits which were re- deposited into the Bank Account. The Bank Account was ITA Nos.1891 to 1896/Bang/2018 Page 21 of 30 operated on cycling and Recycling process, but the Ld. AO has not considered the debits. Therefore the addition made merely on the ground of credits is not justifiable in law since the AO has not considered the debits of the same Bank Account which has served as source of re- deposit in the subsequent period of the same Previous year 31-03-2008 relevant to the A.Y 2008-09. The addition was made against to the facts, circumstances and weight of evidence and therefore the addition made was not in accordance with law and therefore the addition so made amounting to Rs. 2,06,72,127/- is liable to be deleted in the inertest of justice and equity. 30. We have heard both the parties and perused the materials on record and also case laws cited by the parties. 31. In the present case, the AO made additions on the reasons that the assessee has not disclosed certain bank accounts to the department while filling the return of income. The AO considered the entire deposits made by assessee to various bank accounts as income of the assessee. Thus, the AO made additions for this asst. years as follows:- ITA Nos.1891 to 1896/Bang/2018 Page 22 of 30 Asst. Years Additions as unexplained credit 2008-09 Rs.2,06,72,127/- 2009-10 Rs.2,66,05,982/- 2010-11 Rs.3,44,15,563/- 2011-12 Rs.3,56,76,272/- 2012-13 Rs.4,62,07,922/- 2013-14 Rs.2,61,04,258/- 32. The AO rates total amount deposited by the assessee into various bank accounts either in the name of the assessee or in joint name with his employee, Prathibha N. The assessee filed before the lower authorities details of transactions i.e., both deposits and withdrawals into various accounts and also fund flow statement. The AO not at all considered explanation offered by the assessee with regard to the source of deposits into various bank accounts. 33. On the other hand, the CIT(A) accepted the explanations of the assessee and observed that the deposits into various bank accounts is from reliable source of income i.e. from agricultural income as well as from money lending business. Further, it was observed by the CIT(A) that the assessee carried on the money lending business and received bank loan amount and the assessee deposited the same into various bank accounts. ITA Nos.1891 to 1896/Bang/2018 Page 23 of 30 The CIT(A) observed that because this bank accounts not disclosed to the dept. that itself cannot lead to the conclusion that deposits are unexplained. Further, he observed that in the bank accounts both credits and creditors are required to be considered in order to arrive at conclusion that income chargeable to tax. Further, the AO considered only deposits to bank accounts of the assessee and not the withdrawal of the amount from that account which is unjustified. 34. Before us, the claim of the assessee is that purely all deposits are into bank account is duly accounted in the books of account of the assessee and there is no concrete adverse findings by the AO that a particular deposits in bank accounts is not explained by the assessee. In support of the claim, the assessee filed a paper book in the form of cash flow statement for the period from April 2006 to March 2007 i.e. from financial years 2007-08, 2008-09, 2009-10, 2010-11, 2011-12 and 2012-13 and explained each deposits into various bank accounts. This cash flow statement was also filed before the lower authorities and it cannot be said that there is any unexplained deposits in bank account merely for the reason that total deposits into bank account exceeded the ITA Nos.1891 to 1896/Bang/2018 Page 24 of 30 total agricultural income and amount advanced by the assessee in money lending business. It was explained that there is continuous withdrawals and redeposits money from this account and the amount circulated in money lending business is subject to redeposits into these bank accounts and these are duly explained by the assessee in its cash flow statement filed by the assessee for these asst. years. Being so, the CIT(A) correctly observed that the entire deposit into bank account in each asst. year is duly explained by the assessee i.e. total receipts from agricultural income because of redeposit of the amount in the circulation of money lending business. In our opinion, the assessee explained each deposit into bank account and there was specific finding by AO that particular bank deposit not explained by the assessee. Being so, there cannot be any addition towards treating it as unexplained. 35. The deposit into bank accounts may contain cash receipts from loan repayment portion which was advanced in earlier years, contra entries and receipts from agricultural and other business receipts. In our opinion, in the absence of any adverse finding by the AO with regard to availability of agricultural income or receipt of ITA Nos.1891 to 1896/Bang/2018 Page 25 of 30 money from money lending business, it is not appropriate to come to conclusion that the entire deposit to bank account is unexplained income of the assessee. In our considered opinion, the CIT(A) adopted the correct approach on the basis of cash flow statement filed by the assessee for these asst. years before him and on appraisals of the same, he came to conclusion that there is no unexplained deposit into the bank accounts of the assessee. In these findings of the CIT(A), we do not find any infirmity since the assessee has explained the entire deposits into bank accounts by filing entire cash flow statement for all these asst. years and the ld.DR is not able to identify that any deposit is unexplained. In such circumstances, we are not in a position to reverse the order of the CIT(A)on this issue. Further, in the case of Mr. M.A. Siddique in ITA Nos.62 to 66/Bang/2020 dated 14.8.2020, this Tribunal held that “17. We have considered the rival submissions. We find that in Para 10 on page 61 of the assessment order, the AO has noted that total deposits in the blank accounts of the assessee in the form of cash deposit and by way of clearing in the A. Y. 2015 – 16 is Rs. 120,89,582/- and declared turnover is Rs. 55,20,720/- and he concluded that such excess deposit in the bank account Rs. 65,68,862/- is unaccounted income of the assessee. The AO has observed on the same page of the assessment order that cash deposit in Bhatkal Urban Cooperative Bank and IDBI Bank include those made under the duplicate PAN of the assessee Rs. 56,02,200/- although the assessee claims ITA Nos.1891 to 1896/Bang/2018 Page 26 of 30 that the said PAN was never used. In our considered opinion, the basis adopted by the AO to make this addition is not a valid basis. This is undisputed fact that the books of account of the assessee are audited. This is also the claim of the assessee that all the entries in the various bank accounts are duly entered in the books and there is no concrete adverse finding of the AO that a particular bank account is not appearing in the books of the assessee or that some specific entries of the declared bank accounts is not appearing in the books of the assessee. If all the bank accounts of the assessee opened with original PAN or duplicate PAN are appearing in the books and all entries in such bank account is appearing in the books, it cannot be said that there is any unexplained deposit in bank merely for this reason that it exceeds the declared turnover. Learned CIT (A) has very correctly observed that the entire cash deposit of the year may not be the turnover of the particular year and he also observed very correctly that it may contain cash receipts from the credit sales of the earlier years, contra entries, loans and advances etc. But after making these correct observations, he jumped to this incorrect conclusion that the assessee has failed to lead any evidence in this regard before him or before the AO and therefore, He has no option but to confirm this addition. In our considered opinion, when there is no specific finding of the AO that a particular bank account is not appearing in the books of the assessee or that some specific entries of the declared bank accounts is not appearing in the books of the assessee, this cannot be said that that there is any unexplained deposit in bank merely for this reason alone that it exceeds the declared turnover. In this regard, these observations of CIT (A) clinches the issue in favour of the assessee that entire cash deposit of the year may not be the turnover of the particular year and he also observed very correctly that it may contain cash receipts from the credit sales of the earlier years, contra entries, loans and advances etc. Under these facts, we hold that there is no valid basis of this allegation of the AO that there is unaccounted cash income simply on this basis that deposits in bank accounts exceed the declared turnover. We delete this addition. This Ground No. 4 is allowed.” ITA Nos.1891 to 1896/Bang/2018 Page 27 of 30 36. Regarding the ld. DR’s argument to remit the issue to the AO for considering the peak credits, in our considered opinion, no second innings should be given to department to appreciation the same set of facts which are already before the AO. It is admitted fact that assessee filed the cash flow statement for all these asst. year before AO and explained each deposit into this bank accounts and all deposit and withdrawals are from the known source of income. When all the deposit are explained there is no question of considering the peak credits as income of the assessee. Being so, we are not in a position to agree with the contention of the ld.DR to remit the matter to tax the peak credit in these bank accounts, when the AO himself not exercised distinction to consider the peak credit in first innings as income of the assessee. In the present case, it is more so, for the assessee has explained each and every entry of deposits into bank account, which is from known source of income and there is no question of remitting the issue back to the file of AO to tax the peak credit which he failed to do so on earlier occasions when same set of facts were available on record. Further, in the case of M/s. Volvo Auto (India) Pvt. Ltd. In IT No.3431/Del/2016 dated 11.8.2020 it was held as under:- ITA Nos.1891 to 1896/Bang/2018 Page 28 of 30 “13. We have given thoughtful consideration to the orders of the authorities below. We do not find any force in this contention of the ld. DR. In our considered opinion, no second innings should be given to appreciate the same set of facts which were already before the Assessing Officer.” 37. Accordingly, all the grounds of the Revenue raised before us are dismissed in toto in all asst. year i.e 2008- 09 to 2012-13. ITA No.1896/Bang/2018 (Asst. year 2013-14) 38. The Revenue has raised following grounds of appeal. “1.Whether on the facts and circumstances of the case, the CIT(A) has erred in not considering the fact that the return of income filed on 29.10.2014 was filed beyond the date allowed by notice u/s 142(1) and had also shown higher income than the original return of income and thus, this return of income filed on 29.10.2014 was in the nature of revised return of income as per section 139(5) and hence issue of notice u/s 143(3) in respect of this return of income was valid & legal. 2. Whether on the facts and circumstances of the case, the CIT(A) was correct in deleting the addition of Rs. 2,61,04,258 on account of unexplained cash credits on the ground that the service of notice was not within the stipulated time rendering the notice invalid when in the instant case the return has been filed on 29.10.2014 and as such the notice u/s 143(2) could be validly issued and served on or before 30.09.20 15 3. Whether on the facts and circumstances of the case the CIT(A) is correct in allowing the assesee's appeal without appreciating the fact that notice u/s 143(2) was issued consequent to return of income filed on 29.10.2014 and not any earlier return of income and the time for issue and service of such notice u/s 143(2) was available upto 30/09/2015. ITA Nos.1891 to 1896/Bang/2018 Page 29 of 30 4. Whether on the facts. and circumstances of the case the CIT(A) was correct in deleting the additions, disallowances made in the assessment order without any reasoning on the merits.” 39. We have heard both the parties and perused the materials on record. In this asst. year 2013-14, the assessment is a regular assessment and not covering block period. Notice u/s 143(2) dated 30/10/2014 served on 3/11/2014 on one Smt. Pankaja, spouse of assessee. Relating to this, there is no dispute. In this case, the return of income for the assessment year 2013-14 has been filed by the assessee on 30/9/2013. The time limit to issue notice u/s 143(2) is within 6 months from the end of financial year in which the return is furnished. The contention of the AR is that this notice served on assessee on 3/11/2014 is time barred which should have been served within 6 months from the end of financial year 31/3/2014 i.e on or before 30/9/2014. Since notice u/s 143(2) was served on 3/11/2014, obviously barred by limitation of time. The Hon’ble Madras High Court in the case of CIT Vs. Gitsons Engineering Co. Ltd., 370 ITR 87 (Mad), where it has been held that the service of notice within the prescribed time is mandatory. Being so, the CIT(A) is justified in quashing the asst. by holding that ITA Nos.1891 to 1896/Bang/2018 Page 30 of 30 issue of notice us/ 143(2) is beyond time. Accordingly, we do not find any infirmity in the order of CIT(A). The same is confirmed. Accordingly for the assessment year 2013- 14, the appeal filed by the Revenue is dismissed. 40. In the result, all the appeals filed by the Revenue are dismissed. Order pronounced in the open court on 29 th Nov, 2021. Sd/- Sd/- (BEENA PILLAI) (CHANDRA POOJARI) Judicial Member Accountant Member Bangalore, Dated, 29 th Nov, 2021 / vms //Desai S Murthy / Copy to: 1. The Appellant 2. The Respondent 3. The CIT 4. The CIT(A) 5. The DR, ITAT, Bangalore. By order Asst. Registrar, ITAT, Bangalore