Satish Chandra, C.J.
1. While making assessment of M/s. Kapoor Brothers, the assessee, the ITO found that a deposit of Rs. 2,015 was enteredin 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 of these deposits. The firm put forward the explanation that these amounts represented the sale proceeds of certain assets belonging, to the partners. Since no evidence was produced, the same was rejected. The ITO added these amounts as the income of the partnership firm.
2. The firm appealed. Before the AAC, it put forward a different explanation that tbe deposits represented sale proceeds of Banarsi sarees sold by the partners. This explanation was also found not believable and was rejected. The addition was upheld.
3. The assessee went up to the Tribunal. The Tribunal observed :
'18. We do not see any justification for the addition. The partners have owned the deposits and offered some explanation. If the explanation is not satisfactory or there is no evidence to support it, the deposits 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.'
4. 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 circumstances of the case, could the cash credit entries standing in the names of the partners in the account books of the firm be treated to be the income of the individual partner from undisclosed source or would it be the income of the firm '
5. We have some difficulty in appreciating the observation of the Tribunal that if the explanation is not satisfactory or there is no evidence to support it, the deposit should be considered as the income of the partners. The deposits were entered in the account books of the firm. The firm was called upon to explain its source. The firm's case was that the money belonged to the partners but it was deposited with the firm.
6. If the explanation offered by the firm had been proved or believed, then alone the question would arise that the deposit should be 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 to prove even the identity, the revenue is entitled to draw the inference that the amount deposited constituted the income of the assessee-firm.
7. In the present case, the explanation was disbelieved. There was no occasion to conclude that the partners really owned the money. There was, hence, no occasion to hold that the deposits should be assessed in the individual assessment of the partners.
8. In Hardwarmal Onkarmal v. CIT : 102ITR779(Patna) , Untwalia C. J. (as he then was) observed (p. 786) :
'If the credit entry stands in the name of the assessee himself, the burden is undoubtedly on him to prove satisfactorily the nature and source of the amount of that entry; if the entry stands in the name of the assessee's near relation, in that case also the burden is on him. If the entry, however, 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 of the partners then such cash credits are in the names of persons who cannot call themselves as being related to the firm but surely are in the names of persons who constitute the firm itself. That being so, in such a case, the onus is on the assessee to establish that the partners had actually deposited the money and that the entries were not fictitious.'
9. In that case, the entries were alleged to have been made a week before the end of the accounting period. In the present case, the entries were made about three weeks prior to the end of the accounting period. Identical amounts were entered as deposited in the name of each partner. Different explanations were given by the assessee at different stages of the proceedings. They were disbelieved. In this view of the matter, the Tribunal was not 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.
10. 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 could validly be treated as the income of the firm from undisclosed sources. As no one appeared on behalf of the assessee, there will be no order as to costs.