1. The applicant, M/s. Gumani Ram Siri Ram, is a registered firm carrying on the business of general merchants at Muktsar. In the books of account of the applicant for the financial year 1966-67, the following two entries appeared :
April 2, 1966, Rs. 5,500 deposited by Smt. Malan Devi, widow of Shri Gumani Ram.
2. April 4, 1966, Rs. 5,100 deposited by Smt. Parvati Devi, widow of Shri Jiwan Dass.
3. Smt. Parvati Devi was the sister of Shri Gumani Ram. From the order of the Income-tax Officer dated April 21, 1969, it is apparent that the firm was being carried on by the sons of Gumani Ram. While making the assessment for the assessment year 1967-68, the Income-tax Officer noticed these two cash credits appearing in the names of Smt. Malan Devi and Smt. Parvati Devi and asked the assessee-firm to explain the source of these credits. It was explained by the assessee's representative that Smt. Parvati Devi Bhatia had no independent source of income and was wholly dependent on the partners of the firm who were her brother's sons. Smt, Malan Devi was reported to be having some property yielding incomeof about Rs. 1,000 annually and she had no other source of income. The Income-tax Officer was not satisfied with that explanation and held that from the income of Rs. 1,000 per annum, Smt. Malan Devi could not be expected to save anything. He, accordingly, included the sum of Rs. 10,600 in the income of the applicant-firm as income from undisclosed sources. The assessee firm filed an appeal before the Appellate Assistant Commissioner, who observed in his order :
'Moreover, as per order sheet entry dated 21st April, 1969, at the time of assessment, the appellant had agreed before the I.T.O. that there was no evidence available with the ladies in support of the cash credits mentioned above. The affidavits of Smt. Malan Devi and Smt. Parvati Devi were filed after the assessments were completed and, therefore, could not have been considered by the I.T.O.'
4. In view of the fact that the assessee himself had admitted that there was no evidence in support of the cash credits, the Appellate Assistant Commissioner held that the sum of Rs. 10,600 had rightly been treated as income of the assessee by the Income-tax Officer. The contention of the assessee-firm was repelled. Against that order, the assessee filed an appeal before the Income-tax Appellate Tribunal, which was partly accepted with the following observation :
'But from the Income-tax Officer's order, we find that it was stated that Smt. Malan Devi had income from property to the extent of Rs. 1,000 per year. The probabilities of some saving in the hands of the lady cannot be ruled out out of the source which is extant. We, therefore, give the benefit of savings in the hands of the creditor to the extent of Rs. 2,000 and sustain an addition of Rs. 3,500. As regards the cash credit in the name of Smt. Parvati Devi, no evidence was produced before the authorities below nor any evidence has been produced before us. The addition is confirmed.'
5. This order was passed on January 12, 1972, and the applicant filed an application under Section 256(1) of the Income-tax Act, 1961, before the Income-tax Appellate Tribunal for referring the following questions of law arising out of its order dated January 12, 1972:
'(i) Whether, on the facts and in the circumstances of this case, there was any material before the Appellate Assistant Commissioner to hold that the cash credit entries of Rs. 5,500 and Rs. 5,100 standing in the name of Smt. Malan Devi and Parvati Devi, respectively, in the books of account of the firm represented the undisclosed income of the assessee
(ii) Whether, on the facts and in the circumstances of this case, it was for the assessee to prove the source from which the depositor got the money ?''
6. That application was rejected by order dated April 7, 1972, on the ground that the findings of the Tribunal were pure findings of facts on the basis of the material on record and no question of law arose. The assessee-firm then filed the present petition for directing the Income-tax Appellate Tribunal to refer the same two questions of law, set out above, for the opinion of this court.
7. The first question, in our opinion, does not require any reference. The Appellate Assistant Commissioner had noticed that the representative of the assessee-firm had agreed before the Income-tax Officer that there was no evidence available with the ladies in support of the cash credits shown in their names and the Income-tax Officer was not satisfied that these credits really belonged to the two ladies. That was an inference drawn from the facts on the record and the finding arrived at was a pure finding of fact. No question of law can be said to arise out of the decision of that matter by the Income-tax Appellate Tribunal.
8. The second question relates to the onus of proof, that is, whether it was for the assessee to prove the source from which the depositor-ladies got the money. It may be pointed out that the credits were shown in the account books of the assessee-firrn and, according to the Supreme Court decision in Kale Khan Mohammad Hanif v. Commissioner of Income-tax : 50ITR1(SC) the burden of proving the source of the cash credits is on the assessee. It was observed by their Lordships :
'It is well-established that the onus of proving the source of a sum of money found to have been received by the assessee is on him. If he disputes liability for tax, it is for him to show either that the receipt was not income or that if it was, it was exempt from taxation under the provisions of the Income-tax Act.'
9. The learned counsel for the petitioner, however, relies on the judgment of the Division Bench of the Assam High Court in Tolaram Daga v. Commissioner of Income-tax the facts of which were :
'A deposit was shown to have been made by the wife of the partnerin the firm who claimed the money as hers and stated that it was shewho made that deposit. The Income-tax Officer did not challenge thegenuineness and regularity of the accounts. It was held that the accountswere relevant and were prima facie proof of the entries and the correctnessthereof under Section 34 of the Evidence Act, and the entry therein isprima facie proof that the amount in question was deposited by the personin whose name the deposit stood. The mere fact that the third partymaking the deposit happened to be the wife of the assessee did not ipsofacto make the assessee to come into the knowledge of the sources fromwhich the money was realised. Under law, in the absence of specific proofof that knowledge, it cannot be assumed the assessee has the knowledge inquestion within the meaning of Section 106 of the Evidence Act. To require the firm or the partners thereof to adduce proof of the sources from which the deposit was made would be placing a burden on the firm which is not required or justified by law.'
10. It is quite apparent that the facts of that case are distinguishable. In that case, the assessee stated that he did not know wherefrom his wife--the depositor--had received the amount. In the present case, it was stated by the representative of the assessee before the Income-tax Officer that Smt. Parvati Devi Bhatia had no independent source of income and was wholly dependent on the partners of the asses see-firm. With regard to Suit. Malan Devi, the assessee firm disclosed that she had an annual income of Rs. 1,000 from property. The assessee-firm did nor plead ignorance of the knowledge of the source from which the two ladies got the amount. The ratio oi the Assam decision, therefore, cannot be made applicable to the instant case.
11. The learned counsel for the department has referred to Section 68 of the Income-tax Act, 1961, which is as under :
'68. Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof, or the explanation offered by him is not, in the opinion of the Income-tax Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year,'
12. The language of this section shows that it is general in nature and applies to all credit entries in whomsoever name they may stand, that is, whether in the name of the assessee or a third party. This section has, therefore, removed the distinction which was drawn in some decisions between the credits held in the name of the assessee and those held in the name of a third party. Under Section 68 now the assessee has to prove that such third party was in a position to lend such sums and that he did, in fact, so lend to the assessee in order to satisfy the Income-tax Officer that the credits shown in the account books were genuine. This section has laid the onus of proof on the assessee. The Income-tax Officer, therefore, called upon the assessee-firm to prove the source of the deposits by the two ladies and since he was not satisfied with the explanation given by the representative of the assessee-firm, he treated those two deposits as the income of the firm. Under the circumstances, no question of wrong placing of onus arises in the case and no question of law arises out of the order of the Income-tax Appellate Tribunal.
13. For the reasons given above, we find no merit in this petition which is dismissed but the parties are left to bear their own costs.