Law:

Section:

Section 68 of the Income-tax Act, 1961 - Cash credits - Assessment year 1962-63 - Whether if credit entry stands not in name of any such person having close relation or connection with assessee, but in name of an independent party, burden will still lie upon assessee to establish identity of that party and to satisfy Income-tax Officer that entry is real and not fictitious - Held, yes - Whether once such identity is established and creditors pledge their oath that they have advanced said amounts to assessee, burden immediately shifts on to department to show as to why assessee's case could not be accepted and as to why it must be held that entry, though purporting to be in name of third party, still represented assessee's income from suppressed source - Held, yes FACTS In respect of two cash credits found in the assessee's books of account in the names of 'Z' and 'R', both the creditors stated on oath that they had made the deposits with the assessee. The ITO however, rejected the creditors' statement in absence of evidence to prove their sources of money and added the amounts as assessee's income from undisclosed sources under section 68. On appeal, the AAC held that in the case of third parties where they came forward and admitted to have advanced loans to an assessee, the onus of proving that the said loans were non-genuine ones and actually emanated from the assessee shifted on the ITO. It was further held that the mere fact that no convincing explanation regarding sources out of which the loans were advanced by the third parties could be given would not make the said loans assessable in the hands of the assessee. He accordingly, deleted the addition. On revenue's appeal, the Tribunal held that the mere admission by the depositors could not lead to the conclusion that they were in a position to advance the money to the assessee, and, since the assessee could not prove that the depositors were in a position to make the deposits to the extent they stood in the books, the onus that lay on the assessee had not been discharged. All the same, the Tribunal also found that both the depositors were doing some business and subsequently, they had filed returns showing…

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