Unexplained money assessment fails when alleged cash loan rests solely on retracted third-party statements without independent corroboration.

Section 69A applies only where an assessee is found to own unrecorded money and cannot satisfactorily explain its nature and source. An amount characterised by the department as a loan is not, without more, unexplained money. Where both the alleged creditor and debtor deny the transaction, the third-party statements relied upon have been retracted, and no independent corroborative evidence exists, an addition cannot be sustained solely on those statements. Applying the approach followed in similar additions for earlier years, the Section 69A addition was deleted.

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Issues: Whether an alleged cash loan could be assessed as unexplained money under Section 69A of the Income-tax Act, 1961 solely on retracted third-party statements without corroborative material.

Analysis: Section 69A applies where the assessee is found to be owner of money not recorded in the books and fails to satisfactorily explain its nature and source. The departmental allegation itself characterised the amount as a loan, which constituted an explained source rather than unexplained money. The alleged transaction was denied by both creditor and debtor; the statements forming the sole basis of the addition stood retracted, and no independent corroborative material was produced. Consistent with the coordinate-bench decisions concerning similar additions in the assessee's earlier years, the addition could not be sustained.

Conclusion: The addition under Section 69A of the Income-tax Act, 1961 was unsustainable and was deleted, in favour of the assessee.

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