The assessee discharges the initial onus under Section 68 of the Act by furnishing the correct name, address and G.I.R. number of the creditor. The Revenue must then issue a notice u/s 131 of the Act to test the veracity or the genuineness of the transaction or the capacity of the creditor to pay.

Ashwini Kumar Sinha, J.

1. In pursuance of this courts order dated November 8, 1978, the Income-tax Appellate Tribunal, A Bench, Patna, was directed to state the case and refer the following question of law for the opinion of this court :

" Whether, on the facts and in the circumstances of this case, the deletion of the addition of Rs. 41,500 and allowing the interest by the Tribunal is legal and proper ? "

2. The assessee is a registered firm and derives income from jute. The ITO found a credit of Rs. 41,500 in the name of M/s. Laxmi Narayan Atma Ram of 36, Indian Exchange Place (4th floor), Calcutta-1. The assessee was called upon to explain the nature and source of the deposit. The assessee filed a confirmatory letter stating the address and the G.I.R. number of the creditor. The ITO, on information to the effect that the creditor had made a confession before the income-tax authorities at Bombay, where the head office of the creditor is situated, that the loans and advances and other transactions recorded in their books at their head office at Bombay and at the branch office at Calcutta were not genuine, came to the conclusion that the transactions were not genuine and, accordingly, added Rs. 41,500 and disallowed interest thereon. The order of the ITO is marked annexure A to the statement of case.

3. The assessee went in appeal before the AAC and contended that the confirmatory letter was filed from the creditor and the creditor had also stated in the certificate that the books of the appellant for the relevant year were lost. The AAC confirmed the addition on the sole ground that the creditor having made a confession before the ITO, Bombay, the confirmatory letter issued subsequently became meaningless. The AAC further observed that it was the duty of the appellant-assessee to satisfy the ITO by producing the creditor and his books of account which was not done. The AAC thus also confirmed the disallowance of interest. The order of the AAC is marked annexure B to the statement of case.

4. The assessee thereafter went before the Tribunal and contended that it had filed a confirmatory letter showing the address and the G.I.R. number of the creditor. The assessee further contended that the ITO did not refer the matter to the creditor for verification. It was further contended by the assessee that whatever confession was made by the creditor before the income-tax authorities at Bombay, if at all made, was not made available to the assessee. As such, the primary onus was properly discharged and the addition had to be deleted. On the other hand, it was contended on behalf of the Revenue, that the creditor was not traceable at the Calcutta address and as the creditor had made the confession to the effect that all the transactions done by it were bogus, the addition was properly made and it did not call for any interference.

5. Having heard the arguments of both sides, the Tribunal observed as follows:

" The assessee took a loan of Rs. 41,500 as stated from M/s. Laxmi Narayan Atma Ram. Being called upon to explain the nature and source of the deposit, it filed the confirmatory letter from the party. The confirmatory letter contained the address of the party at Bombay as well as at Calcutta. It also contained the G.I.R. number of the creditor (wrongly printed as assessee). As such the primary onus was shifted to the Department and it was the duty of the Department to refer the matter for verification either through the assessing ITO or by issue of notice under Sec.131 to the Calcutta or Bombay address for verification of the loan. In turn, the Department did not choose either of the methods and simply relying on the confession which was purported to have been made by the party at Bombay, made the addition. It is a well-settled view that when the deposit stands in the name of the third party and the assessee furnishes the complete address of the depositor and the file number, the initial onus is discharged by the assessee.