The assessee had discharged the primary onus of proving the nature and source of the loans by providing details of the transactions, including the names of the creditors, the amounts involved, and the mode of transactions. The transactions were completed through account payee cheques, which provided evidence of the identity of the creditors and the sources of income. The onus then shifted to the Department to verify the information provided by the assessee.

Ashwini Kumar Sinha, J.

1. This is a reference under Sec.256(1) of the I.T. Act, 1961, made by the Income-tax Appellate Tribunal, Patna Bench, Patna, and the following question of law has been referred for the opinion of this court :

"Whether, on the facts and in the circumstances of the case, the Tribunal was right in deleting the addition of Rs. 20,000 as the respondents income from undisclosed sources and in allowing the interest of Rs. 1,318 on the same ?"

2. The case relates to the assessment year 1964-65. The assessee is a private limited company deriving income from business in paper, stationery and machinery, etc. The ITO, in the course of assessment proceedings, found that there were two deposits of Rs. 10,000 each in the names of Gopaldas Mohanlal and Lilaram Govindram of Calcutta on April 23, 1963, and July 23, 1963, respectively. The ITO required the asseseee to explain the nature and source of these amounts totalling Rs. 20,000. The assessee submitted before the ITO that these items represented genuine loans taken from the parties concerned. The assessee further submitted that the amounts in question were paid to the assessee by cheques and the assessee also repaid the amounts in question by means of account payee cheques. The amount of interest was also paid by cheque and so also the brokerage in each case. The assessee further stated that letters were addessed to the parties concerned for confirmation of the deposits but the same came back with a postal remark "addressee left".

3. For the reasons mentioned in the assessment order, the ITO added back the amount of Rs. 20,000 as the assessees income from undisclosed sources and disallowed the interest of Rs. 1,318 on the same. A copy of the order of the ITO is marked as annexure A to the statement of case.

4. The assessee went before the AAC against the order of the ITO and the order passed by the ITO was confirmed. A copy of the order of the AAC is marked as annexure B to the statement of case.

5. Against the appellate order, the assessee went in appeal before the Tribunal and before the Tribunal the assessee submited that the authorities below were not right in confirming the addition of Rs. 20,000 as the assessees income from undisclosed sources and were also not right in disallowing the interest of Rs. l,318on the same. It was submitted on behalf of the assessee that the lenders advanced loan by means of account payee cheques in favour of the assessee from their bank accounts. The assessee encashed the cheques through his banker (Canara Bank Limited) and the assessee gave the cheque numbers and all the details along with the certificate of the bank were also produced by the assessee. The assessee also submitted that the brokerage amount was also paid by account payee cheque, vide bankers certificate dated April 24, 1963. The assessee further submitted that the creditors were genuine persons and they had telephones and their names appeared in the Calcutta Telephone Directory also. The assessee further submitted that the loans in question were repaid by the assessee by account payee cheques drawn on Canara Bank Limited and the same was encashed through their bank account.

6. It is true that the letter of request sent by the assessee to the creditors for confirmation of the loan came bank with the postal remark "addressee left". It seems this was on account of the lapse of time as the loans in question were taken in 1963 and the assessment proceedings started in 1969.

7. Submissions advanced by the assessee, as above, were common with regard to both the creditors.

8. The Tribunal on the materials placed before it, came to the conclusion that the assessee had discharged the primary onus that lay upon him to prove the nature and source of loans which were duly repaid and it held that the assessee had established that the creditors were not fictitious persons. The Tribunal further held that the fact that the creditors were not fictitious persons was never di