Unexplained money addition failed where recorded professional receipts and reconciled cash books sufficiently explained the cash balance.

Cash found with the assessee could not be taxed as unexplained money where the cash book, bank statement and ledger showed that the balance arose from recorded professional receipts already offered to tax. The date-wise receipts and cash position were reconciled with the books, and the available cash on the relevant date was sufficient. As the statutory condition for invoking section 69A was not met and the source explanation was accepted as satisfactory, the addition was deleted.

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Issues: Whether the cash of Rs. 16,00,000 found with the assessee could be added as unexplained money under section 69A of the Income-tax Act, 1961.

Analysis: The assessee produced the cash book, bank statement and ledger of professional to show that the cash balance was derived from professional receipts already recorded in the books and offered to tax. The date-wise cash receipts from one client and cheque receipts from another client were reconciled with the books, and the cash balance on the relevant date was found to be sufficient. On these facts, the statutory condition for invoking section 69A was not satisfied because the money was recorded in the books and the explanation for its source was accepted as satisfactory.

Conclusion: The addition under section 69A was not sustainable and was deleted in favour of the assessee.

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