Unexplained money in respect of NSEL receivables treated as investments overturned due to books evidence and recovery efforts affirmed

Dispute concerns treatment of outstanding receivables related to NSEL transactions and applicability of unexplained money provisions where transactions were recorded in books. The legal basis emphasized that unexplained money provisions apply to unrecorded transactions, and because the transactions were reflected in the assessee's books the addition could not be sustained; consequence: deletion of the addition. The assessment officer's characterisation of receivables as investments made in the year was also rejected due to evidence of recovery efforts, partial recoveries and sub judice proceedings, resulting in dismissal of the revenue appeal.

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Issues: Whether the Assessing Officer was justified in treating Rs. 4,88,00,000 as unexplained money and making an addition under Section 69A of the Income-tax Act, 1961.

Analysis: Section 69A applies to money, bullion, jewellery or other valuable articles found to be the assessee's property which are not recorded in the books of account and for which the assessee offers no satisfactory explanation about the nature and source of acquisition. The appellate authority found on the facts that the impugned transactions were recorded in the assessee's books of account, transactions were routed through banking channels (the expression 'CAS PRES CHQ' indicating cheque clearance), and the assessee furnished material showing efforts by NSEL to recover amounts and that several matters remained sub judice. The Assessing Officer treated outstanding receivables from earlier years as investments of the year and relied on suspicion arising from termination of NSEL activities rather than establishing that the sums were unrecorded or without source. The appellate authority concluded that the addition rested on surmise and suspicion and that the statutory requirement for invoking Section 69A was not satisfied.

Conclusion: The addition under Section 69A of Rs. 4,88,00,000 is deleted and the Revenue's appeal is dismissed; decision is in favour of the assessee.

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