Income Tax Act, 1961

--Income from undisclosed sources--Addition under section 68Cash credit in capital account of partners--Partners of the assessee-firm deposited certain amount in their capital account in the firm During the course of the assessment proceedings, asked assessee to explain the source of the aforesaid deposits. Assessee explained that partners had received the amount by way of gift from various persons and all of than had filed their Income Tax Returns and gift Tax Return. Assessing officer did not accept the plea of assessee and made an addition towards unexplained deposit under section 68. Tribunal held that the amount deposited by the two partners was liable to be added under section 68 on the ground that the gifts received by the respective partners from the various persons could not be explained as the creditworthiness of the donors had not been established. On appeal assessee submitted that only the creditworthiness of the depositor had to be established and not the source of the source of the depositor had to be explained. Held: Assessee could not be asked to prove the source of source or the origin of origin. Since assessee explained the nature and source of the deposit and has discharged its burden. Therefore, Tribunal was not justified in sustaining the addition.

Income Tax Act, 1961 Section 68

IN THE Allahabad High Court