Incorrect reopening facts and recorded books entries can defeat reassessment and unexplained-money additions.

Reassessment based on materially incorrect facts is unsustainable, and section 69A cannot apply where the relevant bank entries and transaction details are recorded in the assessee's books of account. The note states that reopening under sections 147 and 148 was vitiated because the recorded reason proceeded on an factual assumption about the assessee's share in a property transaction. It further notes that, once the reassessment failed, the consequential addition as unexplained money also lacked legal support. The stated result is annulment of the assessment proceedings and deletion of the addition.

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Issues: (i) Whether reassessment was valid when the reopening was founded on incorrect information regarding the assessee's share in the property transaction; (ii) Whether addition under section 69A could be sustained when the relevant bank entries and transaction details stood recorded in the assessee's books of account.

Issue (i): Whether reassessment was valid when the reopening was founded on incorrect information regarding the assessee's share in the property transaction.

Analysis: The reopening was based on a belief that the assessee had entered into a property transaction of a much higher value, whereas the material on record showed only a fractional share in the property. Since the foundational information for issuance of notice under section 148 was factually incorrect, the basis for forming the requisite belief under sections 147 and 148 was vitiated. In such circumstances, the reassessment proceedings could not be sustained.

Conclusion: The reopening of assessment was held invalid and was quashed, in favour of the assessee.

Issue (ii): Whether addition under section 69A could be sustained when the relevant bank entries and transaction details stood recorded in the assessee's books of account.

Analysis: The assessee had maintained books of account and the relevant transaction entries were shown to have been recorded therein. On that footing, the conditions for treating the amount as unexplained money under section 69A were not satisfied. Once the reassessment itself was found unsustainable, the consequential addition also lacked support.

Conclusion: The addition under section 69A was deleted in favour of the assessee.

Final Conclusion: The assessment proceedings were annulled and the consequential income addition was set aside, resulting in full relief to the assessee.

Ratio Decidendi: Reassessment cannot be sustained where the recorded reasons rest on materially incorrect facts, and section 69A cannot be invoked for amounts/entries duly recorded in the assessee's books of account.

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