Section 68 burden of proof: identifiable third-party depositors and prima facie evidence defeated income addition on fixed deposits.

Where an assessee-bank produces depositors' particulars, affidavits, inspection material and supporting statements showing that fixed deposit credits are attributable to identifiable third parties, the primary burden under section 68 is discharged. The Revenue must then rebut that prima facie evidence; a mere discrepancy in records or failure to prove the depositors' source does not by itself justify treating the credits, or consequential interest, as the bank's income. On these facts, the additions were deleted because the Assessing Officer acted on surmise rather than evidence.

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Issues: Whether the addition made under section 68 in respect of fixed deposits and consequential interest was sustainable when the assessee-bank had produced depositors' details and explanations, but the Revenue relied on discrepancies in records and incomplete verification.

Analysis: The assessee-bank had offered an explanation supported by affidavits, depositors' particulars, inspection material, and the statements of its manager and clerk, which explained the discrepancies in specimen signatures and record maintenance. The appellate authorities found that the depositors were identifiable third parties, that the Revenue had not established that the apparent was not the real, and that failure to prove the depositors' source did not by itself justify treating the deposits as the bank's income. In applying the settled principle that the assessee must prove the identity of the third party and the genuineness of the credit, but not the source of the source, the Court held that the primary onus had been discharged and that the Assessing Officer's approach rested on surmise rather than evidence.

Conclusion: The addition of the fixed deposits and the consequential interest was rightly deleted, and the answer to the referred question was in the affirmative, in favour of the assessee and against the Revenue.

Ratio Decidendi: Once an assessee establishes the identity of independent third-party depositors and places prima facie evidence showing the credits are real, the burden shifts to the Revenue, and a mere failure to explain the depositors' source does not warrant treating the credits as the assessee's income under section 68.

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