Assessee, a partnership firm, was reconstituted on 1^st April 2004 on which date Rs. 3 lakhs each was introduced as capital in the firm by 3 incoming partners. As the assessee was unable to prove credits in the capital account and also did not produce the partners for examination, Assessing Officer treated 50% of the total amount introduced as unexplained and added the same as income of the assessee firm. CIT(A) as well as Tribunal upheld the addition on the ground that no evidence had been provided to support the claim that the partners had the capacity to introduce cash of Rs. 3 lakh as capital of the assessee firm. High Court dismissed the assessee’s appeal. High Court rejected the assessee’s submission that unexplained cash credit should have been taxed in the hands of the individual partners and not in the hands of the firm. High Court held that the onus was on the assessee firm to demonstrate that the money introduced as capital of the reconstituted firm was sufficiently explained with reference to Bank accounts or other documents of credible nature. High Court also held that the amendment in section 68 by the Finance Act, 2021 which requires proof of ‘source of source’ to be established is clarificatory in nature and that it was incumbent on the assessee firm to satisfactorily explain the source of cash credits. (AY.  2005 – 06)