PRAKASH NARAIN, A.M. ORDER assessee is dealer in Kirana. first contention in this appeal relates to addition of Rs. 3,404. ITO found that above amount represented purchases made by assessee for which payment was made in cash on 21st March, 19 79. It was submitted before him that payment was covered by r. 6DD of IT Rules, 19 62. ITO rejected this contention observing that payment had been made deliberately in violation of s. 40A(3) of IT Act, 19 61. He accordingly disallowed amount in computation of assessee s income. disallowance was also confirmed by AAC. 2 . assessee is now in appeal before us. submission of ld. counsel for assessee was that payment had been wrongly noted as having been made on 21st March, 19 79, while, in fact, correct date was 21st Jan., 19 79. He proved this fact by placing before us assessee s cash book. His second submission was that assessee had made purchases on 21st Jan., 19 79 and payment had also been made on same date, which happened to Sunday and, therefore, bank holiday. He further submitted that assessee was new firm having been started in year under appeal itself and, therefore, seller of goods was also new to assessee. He next submitted that assessee and also received cash discount on payment. In view of above facts, his submission was that assessee s case was covered by cls. (i), (iii) and (vi) of paragraph 4 of Board s Circular N o . 220 dt. 31st May, 19 77 ( 19 77) 108 ITR (St.) 8. On behalf of Department, findings of lower authorities were relied on. 3 . After looking into cash book of assessee, we are satisfied that payment had actually been made on 21st Jan., 19 79, which was Sunday, i.e., bank holiday. Clause (iii) or paragraph 4 of aforesaid circular states that transactions and payment should have been made on bank holiday. In this case, although payment was made on bank holiday, but it is not proved that transaction of purchase also took place on same date. contention of ld. counsel for assessee not doubt was that purchases were also made on 21st Jan., 19 79. That contention does not appear t o be correct. In copy of cash book submitted to us, it is clearly stated that payment related to bill dt. 19 th Jan., 19 79. It is also not proved that assessee was new to seller. However, in our opinion, cl. (vi) of paragraph 4 of circular applies to case. According to this, s. 40A(3) of Act will not be applicable to case if specific discount is given by seller for payment to be made by way cash. We have already stated above that assessee had received discount on cash payment. There is no dispute in case either about identity of payee or about genuineness of payment, which are other requirements of Rule 6DD. We, therefore, delete addition of Rs. 3,404. 4. next contention relates to two additions of Rs. 5,000 each. ITO found credits of Rs. 5,000 each in accounts of partners, Smt. Gayatri Devi and Shri Radhey Shyam. Both these amounts were credited in their respective accounts on 13th July, 19 78. firm was started on 12th June, 19 78. Smt. Gayatri Devi gave statement on oath to ITO stating that she had invested amount in firm as her capital on 12th July, 19 78 and that in represented her savings out of gifts received on her marriage which, we were told, was performed in 19 70. Shri Radhey Shyam had stated that amount of Rs. 5,000 represented his past savings of student life from tuitions etc. These explanations were not accepted by ITO. He held that both above amounts represented assessee s own income from other sources and accordingly included them in total income. additions were also confirmed by AAC. 5 . Here also assessee is in appeal before us. We have heard parties. In our opinion, additions are not justified, in view of principle laid down by Allahabad High Court in case of CIT vs. Jaiswal Motor Finance ( 19 83) 37 CTR (All) 217 : ( 19 83) 141 ITR 706 (All). It was held in this case that if there are cash credit enters in books of firm, in which accounts of individual partners exist, and it is found as fact that cash was received by firm from its partners, then, in absence of any material to indicate that they were profits of firm, it could not be assessed in hands of firm. In this case, ITO had found deposits in accounts of partners in first this case, ITO had found deposits in accounts of partners in first year of assessment of firm. assessee had explained that source of deposits was agricultural income of partners, which was rejected by ITO. Tribunal found that deposits had been made by partners as their capital, because without these investments they could not have become partners and that assessee had discharged onus of proving deposits in its accounts and was not further required to explain source of deposits in hands of depositors. On reference, it was held that onus placed on assessee by s. 68 of Act had been discharged. 6 . Similar position, as was found in case of Jaiswal Motor Finance (supra) exists in present case. In this case also deposits have come as capital contribution from partners at time of start of firm. Without these, business of firm could not have commenced. In our opinion, therefore, assessee has succeed in discharging its onus in terms of s. 68 of Act in view of principle already stated above. It is, therefore, not necessary for us to deal with order cases cited at bar. addition of Rs. 10,000 is, therefore, deleted. 7. ITO found further cash credit in various accounts as under ; Shri Narendra Deo on 19 - 1. Rs. 3,000 3- 19 79 Shri Hardwari Prasad on 2. Rs. 2,900 19 -3- 19 79 Shri Satish Chand on 19 - 3. Rs. 2,100 3- 19 79 Shri Rajendra Prasad on 4. Rs. 2,000 19 -3- 19 79 5. -do- on 24-3- 19 79 Rs. 3,233 8 . assessee submitted confirmations from all these parties. Shri Narendra Deo stated that he had come with cash to purchase gains from market in Basti. Since he did not get grain and as it was getting late, he deposited money with assessee for security sake. It was received by him much later. somewhat similar explanation has been given by Shri Hardwari Prasad. According to him, he had given money of Rs. 2,900 to his uncle for making purchase required for marriage in house. uncle did not get required articles and since it was getting late, he deposited money with assessee. He has further stated that subsequently he got articles from Gorakhpur and did not require any money. deposit from assessee was taken back long after. similar explanation has come from Shri Satish Chand also. Shri Rajendra Prasad has stated that sum of Rs. 2,000 represented sale proceeds of his grain, which due to getting late, was deposited with assessee firm of sake of safety. According to him, he did not require amount immediately and took it back sometime thereafter. It appear that no explanation was offered regarding deposit of Rs. 3,233 on 24th March, 19 79. This amount has, of course, been debited to his account in two sums of Rs. 2,000 and Rs. 1,233 on 31st March, 19 79. ITO did not believe explanations. He was of opinion that all these amounts represented assessee s own income from other sources. His view was upheld by AAC. 9. assessee is now in appeal before us. first submission of ld. counsel for assessee before us was that assessee did not require any money as he had enough cash on various dates and, therefore, it also did not pay any interest on deposits, which had been made voluntarily by parties. His second submission was that assessee had proved not only identity of parties, but also genuineness of transactions and, therefore, above amounts could not be treated as its income. In this connection, he referred to two decision, one of Bombay High Court in Orient Trading Co. Ltd. vs. CIT ( 19 63) 49 ITR 723 (Bom) and other of Supreme Court in CIT vs. Daulat Ram Rawatmull 19 72 CTR (SC) 411 : ( 19 73) 87 ITR 349 (SC). On behalf of Department, reliance was placed on decisions of lower authorities. 10. We have carefully considered submissions placed before us. In our opinion, assessee has failed to discharge its burden in terms of s. 68 of Act, which is applicable to this case. Sec. 68 states that where any sum is found credited in books of assessee, and assessee offers no explanation credited in books of assessee, and assessee offers no explanation about nature and source thereof or explanation offered by him is not, in opinion of ITO, satisfactory, sum so credited may be charged to income-tax as income-tax as income of assessee. explanation offered by assessee about all above credits, except sum of Rs. 3,233 is practically same, namely, that parties had left there amounts with assessee as they did not want to Carrie them because of its safety. It is, however, surprising that none of them required amounts immediately. Shri Narendra Deo wanted to purchase grain. It is not understood how his requirement of grain suddenly disappeared. Similarly, it is not, understood how Shri Hardwari Prasad could get articles for marriage from Gorakhpur without any payment or that he did not require money even for other purposes in marriage. some explanation will apply to Shri Satish Chand also. In case of Shri Rajendra Prasad, he came to sell grain, obviously as he required money for his purposes. How that requirement remained to more, is again mystery. Besides, looking to totality of facts and circumstances of case, we are not convinced about genuineness of these explanations or genuineness of receipt of money from these parties. Bombay High Court in case of Orient Trading Co. Ltd. (supra) has laid down that initial burden lying on assessee can be discharged only where entry stands in name of third party and assessee satisfies ITO as to identity of that party and also supplies such other evidence which will show, prima facie, that entry is not fictitious. In present case, we are of opinion that entry in books of assessee is fictitious. assessee cannot, therefore, be said to have discharged its burden in terms of s. 68 of Act. We, therefore, uphold addition of Rs. 13,233. 11. In result, appeal is partly allowed. *** SWASTIC KIRANA CO. v. INCOME TAX OFFICER