These three departmental appeals which arise out of assessments of assessee, Smt. Devi Narendra, for assessment years 1968-69 to 1970- 71 have been heard together and are being decided by this common order. We shall first deal with appeals relating to assessment years 1969-70 and 1970-71, as points arising therein are interconnected. During course of t h e assessment of assessee for assessment year 1969-70, ITO found that assessee had invested Rs. 1 lakh in relevant accounting year for purchase of property 'Devi Sadan' at Matunga. assessee was asked to disclose source of investment. explanation of assessee was that she had taken loans from two parties, viz., Indian Carbon Co. (Rs. 25,000) and Keshavji Naik Trust (Rs. 60,000) and had withdrawn Rs. 15,000 from Eastern Engineers, in which assessee was partner. assessee was asked to produce pass book with view to verify whether these loans were actually routed through pass book and further to show that amount withdrawn from firm Eastern Engineers was actually invested in purchase of this property. assessee filed copy of suits filed by Indian Carbon Co. and Keshavji Naik Trust against assessee (Suit Nos. 606 of 1974 and 853 of 1974). ITO insisted that assessee whether loans taken from above parties had been invested in purchase of said immovable property and not for any other presupposes and further amount of Rs. 15,000 withdrawn from capital account of firm had not been withdrawn for domestic expenses. It was submitted on behalf of assessee that pass book was missing and, hence, could not be produced. ITO observed that in absence of pass book, it was not conclusively proved by assessee that those amounts which had been obtained from those parties had actually been invested in purchase of said property. He further found that there was some difference in amount of borrowing from Indian Carbon Co. and Keshavji Naik Trust as disclosed in their letter to ITO and as disclosed by assessee. In these circumstances, ITO inferred that there was uncertainly about quantum of loan. He, therefore, presumed that Rs. 1 lakh invested by assessee in said property was income from undisclosed sources as protective measure. He, accordingly, added said amount to returned income. 2. In appeal filed by assessee, Commissioner (Appeals) observed that very fact that said property was mortgaged to Indian Carbon co. and Keshavji Naik Trust for loans recxeived by assessee indicated that loans received from those parties had been invested by assesee in purchase of said property and, as such, inability of assessee to produce pass book would not give rise to any adverse inference. Similarly, according to Commissioner (Appeals), explanation of assessee regarding withdrawal of Rs. 15,000 from firm was acceptable. As regards household expenses, Commissioner (Appeals) observed that since assessee was residing with her husband, who is advocate household expenses would normally be met by assessee's husband as such, there was no justification for drawing any adverse inference. He, accordingly, deleted addition of Rs. 1 lakh. department has now come in appeal before us and only ground raised in appeal for assessment year 1969-70 is that Commissioner (Appeals) had erred in not upholding addition of Rs. 1 lakh made by ITO on account of unexplained investment in immovable property. 3. learned departmental representative has relied on reasons contained in assessment order. We have, accordingly, considered those reasons. We find that there was no justification for drawing inference that assessee had derived income from undisclosed sources. It is admitted position that those two parties, namely, Indian Carbon Co. and Keshavji Naik Trust have filed suits against assessee for recovery of loans advanced by them. Copies of written statements filed by assessee in those suits have been produced before us. It is obvious that there was mortgage of said property against loans received. In circumstances, inference would be that loans received had been invested in purchase of said property. According to assessee, she had received loans of Rs. 25,000 and Rs. 60,000 from those parties, respectively making in all Rs. 85,000. According to those two parties, loans advanced were Rs. 55,000 and Rs. 60,000 making in all Rs. 1,15,000. difference has arisen because assessee claims to have paid Rs. 30,000 while this payment is not accepted by creditor. Consequently, fact that there was dispute about actual amount would not, in circumstances, render explanation of assessee regarding investment unbelievable. There can be no doubt that amount of Rs. 85,000 obtained from those two creditors had been invested in purchase of property. absence of pass book in circumstances of present case would not give rise to any adverse inference. As regards balance amount of Rs. 15,000, amount has been withdrawn from firm of Eastern Engineers. This fact is supported from copy of account filed. assesee was residing with her husband, who was advocate, and as such, there is no ground to presume that Rs. 15,000 has been withdrwan for household expenses. There is no reason to reject observation of assessee that said amount of Rs. 15,000 had been invested for purchase of said property. learned Commissioner (Appeals) has examined these materials and his conclusion that investment of Rs. 1 lakh has been satisfactorily explined is correct. In circumstances, he was justified in deleting addition of Rs. 1 lakh. We confirm his order on this point. 4. In appeal filed for assessment year 1970-71 only ground raised in memo of appeal is that leaned AAC had erred in holding that loan amount had been utilised for acquisition of immovable property and, therefore, assessee was entitled to claim interest of Rs. 10,200 as expenses incurred from income under head 'Income from house property'. We have already held that investment in house has been duly explained. It follows that interest paid or payable by assessee relates to two loans aggregating Rs. 85,000 taken by assessee for acquiring said property, that interest was liable to be deducted in accordance with provisions of section 24 of Income-tax Act, 1961 ('the Act'). AAC was, therefore, justified in directing ITO to allow interest of Rs. 10,200 as expenses incurred from income under head 'Income from house property'. We confirm order of AAC on this point. 5. We shall now deal with departmental appeal for assessment year 1968-69. In relevant accounting year, assessee was partner in firm had sent copy of account of assessee to ITO assessing said firm had sent copy of account of assessee to ITO assessing assessee. In that account, there was cash credit of Rs. 1,15,000 dated 23-5- assessee. In that account, there was cash credit of Rs. 1,15,000 dated 23-5- 1967 with said firm. assessee is alleged to have deposited this amount in cash on 23-5-1967 with this firm. assessee was asked to explain as to how she deposited in cash said amount. explanation of assesse was that she had received loan in cash from her father Shri Markhi Ganga was Mul Mahavpur, village in Gujarat. said Shri Markhi Ganga was residing within jurisdiction of ITO, Porebunder. ITO, Bombay, who was assessing assessee sent communication to ITO, Porebunder, regarding this loan. In assessees from ITO, Porebunder that said Shri Markhi Ganga was not cooperating with ITO, Porebunder in enquiry for that loan. Consequently, summons under section 131 of Act dated 15-11-1979 was issued by ITO, Bombay, calling upon assessee to produce all documentary evidence in that connection. notice under section 142(l) of Act was also issued calling upon assessee to produce evidence in support of loan received. Opportunity was given to produce profit and loss account and balance sheet and pass book. However, representative of assesee expressed inability of assessee to produce said documents. About pass book, explanation was that it was missing. representative of assessee pleased before ITO that only evidence on which he relied was affidavit of Shri Markhi Ganga, which is said to have been sworn at Porebunder. ITO observed that real documentary evidence was pass book of assessee for relevant period and that affidavit alone would not be sufficient to prove receipt of said amount from Shri Markhi Ganga. assessee was also asked to copy of accounts of assessee in books of account of Shri Markhi Ganga. This was also not produced. In books of any evidence on record, ITO inferred that Rs. 1 lakh was income of assessee from undisclosed sources. He, accordingly, added this amount to returned income. 6. In appeal filed by assessee before Commissioner (Appeals), it was submitted on behalf of assessee that said Shri Markhi Ganga, who was father of assessee, was well to do agriculturist and that since there was no bank in village he had kept amount in cash with him and that amount had been given to assessee as loan without charging any interest. Before Commissioner (Appeals) certificate of Gram Panchayat regarding land owned by Shri Markhi Ganga was produced. assessee also relied on t h e affidavit filed by Shri Markhi Ganga before ITO, Porebunder. Commissioner (Appeals) observed that on scrutiny of case records he came across letter sent by ITO, Porebunder confirming that Shri Markhi Ganga had filed wealth-tax returns for assessment year in question in which amount of loan by him had been reflected and that since total wealth was below taxable limit, no subsequent returns had been filed by him. From that letter Commissioner (Appeals) inferred that ITO, Porebunder, had investigated and had accepted loan advanced by shri Markhi Ganga as genuine. On basis, he accepted loan as genuine and deleted addition. department has now come in appeal before us and only ground raised is that learned Commissioner (Appeals) had erred in deleting addition of Rs. 1,15,000 as income from undisclosed sources. 7. learned departmental representative has relied on reasons given in assessment order, which we have reproduced above. He has submitted that story put forth by assessee was wholly unbelievable. According to him, it could not be believed that such large amount would be kept by Shri Markhi Ganga in cash in his house and would be handed over to assessee. learned counsel for assessee has relied on reasons given in appellate order. He has relied on fact that Shri Markhi Ganga was rich agriculturist and as such there was nothing unnatural in his possessing such large amount in cash particularly when there was no bank in village where he resided. We have considered rival submissions and also facts on record. Before Commissioner (Appeals), assessee had produced certificate from Gram Panchayat of Mul Madhavpur in which it was stated that Shri Markhi Ganga owned 40 acres of land and that average annual income was Rs. 35,000. This document was not produced before ITO. learned departmental representative has objected that said document should not have been relied on by Commissioner (Appeals) since it was produced for first time before him. We may ignore this objection and consider this document. However, what all this document indicates is that Shri Markhi Ganga was in possession in cash amount of Rs. 1,15,000 on 23-5-1967 and that said amount had been given in cash by said Shri Markhi Ganga, to assessee as loan. For this purpose, best evidence would have been that of Shri Markhi Ganga. assessee should have produced Shri Markhi Ganga before ITO, Bombay so that ITO, Bombay, would have cross-examined Shri Markhi Ganga and found out that this assertion was believable. submission of Shri Harish, learned counsel for assessee, was that since assessee had filed copy of affidavit of said Shri Markhi Ganga, it was for ITO to cross-examine him. contention, in circumstances of present case, cannot be accepted. person from whom assessee claims to have received case amount is not independent person. He is father of assessee. There is no corroborative evidence about existence of such big amount with assessee's father in cash. only evidence in his assertion in affidavit. It is true that there was no bank in village. However, it is not possible to believe that such big amount would be kept in cash in house. ITO had called upon assessee to produce necessary evidence. From circumstances, best evidence would have been that Shri Markhi Ganga. assessee should have produced him before ITO, Bombay. It was not for ITO to call upon assessee to produce Shri Markhi Ganga. burden lay heavy on assessee looking to nature of plea that was being raised by her, viz., cash amount of Rs. 1 lakh have been given to her by her father. 8. It is not correct to say that ITO, Porebunder, was satisfied about genuineness of loan. Commissioner (Appeals) has observed that on going through records, he found that ITO, Porebunder had mentioned that Shri Markhi Ganga had filed wealth-tax return for year in question. Commissioner (Appeals) has not stated that said return was filed long before this dispute arose. assessee before us has not asserted that any return was filed by Shri Markhi Ganga prior to eruption of present controversy. Consequently, filing of wealth-tax return by Shri Markhi Ganga for only one year after controversy arose cannot constitute proof lending assurance to truthfulness of version. Commissioner (Appeals) has relied kly on this fact, we are of opinion that this fact is not significant. assessee has filed copies of correspondences between ITO, Porebunder and assessee Smt. Devi Narendra. By letter dated 3-4-1979, ITO, Porebunder, had informed assessee that Shri Markhi Ganga had in wealth-tax return shown Rs. 1,15,000 as loan given to assessee and assessee should confirm whether said loan had been given. lengthy reply to this letter was sent on 7-4-1979 by husband of assessee in capaity of husband of assessee was well as son-in-law of Shri Markhi Ganga. It is mentioned in that reply that it was difficult for Shri Markhi Ganga to appear at Porebunder because he was old man and as such necessary enquiry should be made from assessee and further and Shri Markhi Ganga should not be harassed. We do nor find any material to indicate that ITO, Porebunder had accepted loan as genuine. In fact when Shri Markhi Ganga showed that loan as asset ITO, Porebunder had to assessee him. It was expressly stated before us that any part of loan amount has not been paid by assessee to Shri Markhi Ganga till date of arguments before us. Considering all circumstances, we hold that assessee had failed to prove that Shri Markhi Ganga had given loan to assessee on 23-5-1967 in cash and that it was that cash amount which she had deposited in firm. assessee has failed to prove real source of this amount and in circumstances of present case, ITO was fully justified in inferring said amount represented income from undisclosed sources. reasons given by Commissioner (Appeals) for setting aside order of ITO are not at all convincing. learned Commissioner (Appeals) have not taken into account of natural probabilities inherent in these circumstances. We, therefore, set aside order of Commissioner (Appeals) on this point and restore that of ITO. 9. In result, appeal for assessment year 1968-69 is allowed, while appeals for assessment years 1969-70 and 1970-71 are dismissed. *** SEVENTH INCOME TAX OFFICER v. SMT. DEVI NARENDRA