1978 (10) TMI 26

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..... --While making assessment of M/s. Kapoor Brothers, the assessee, the ITO found that a deposit of Rs. 2,015 was entered in the assessee's account books in the name of each of its five partners. The deposits were entered as on 20th October, 1966. The accounting period for the assessment year 1967-68 ended on 11th November, 1968. He called upon the assessee, a partnership firm, to explain the sources .....

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..... should be considered as the income of the partners in their individual assessments. In the absence of any material to connect the deposits with the firm, they cannot be treated as firm's income from undisclosed sources. We, therefore, delete the additions." At the instance of the CIT, the Tribunal has referred the following question of law for our opinion : " Whether, on the facts and in the cir .....

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..... e considered as belonging to the partners. The firm was required to establish the sources of these deposits. To establish this the firm offered explanations. If they were disbelieved, the result would be that the firm had failed to prove that the money belonged to the partners. It would be a case of failure to establish the bona fides of the ostensible lender or depositor. If the assessee failed t .....

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..... stands in the name of a third party then the assessee discharges his burden if he proves to the satisfaction of the Income-tax Officer the identity of the third party and also supplies evidence to show prima facie that the entry is not fictitious. If I may say so, the case in hand falls within the second category. If cash credits are found in the account books of a partnership firm in the names o .....

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..... ot justified in treating the amount as the income of the individual partner in view of the finding that the assessee had failed to establish that the partners have actually deposited the money and that the entries were not fictitious. Accordingly, we answer the question referred to us by holding that the cash credit entries standing in the names of the partners in the account books of the firm co .....

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