Explained bank credits and materially incorrect reopening facts can defeat both section 69A addition and reassessment.

Section 69A is stated to apply only where unexplained money is found outside the books and the assessee fails to offer a satisfactory explanation. On the facts discussed, bank credits supported by books, confirmations, PAN details, returns and other documents were treated as explained, so the addition was described as unsustainable. The note also states that reassessment under sections 147 and 148 cannot rest on materially incorrect foundational information. Where reopening was based on wrong bank account particulars and incorrect credit details, the notice and reassessment were described as invalid.

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Issues: (i) Whether the addition made as unexplained money under section 69A was sustainable where the credits in the bank account were recorded in the books and supported by documentary evidence; (ii) Whether the reassessment initiated under section 147 read with section 148 was valid when the foundational information regarding the bank accounts and credits was found to be factually incorrect.

Issue (i): Whether the addition made as unexplained money under section 69A was sustainable where the credits in the bank account were recorded in the books and supported by documentary evidence.

Analysis: The assessee furnished books of account, bank statements, confirmations, PAN details, income-tax returns and other supporting material showing that the credits represented capital contributions, unsecured loans and advances from related concerns and family members. The essential statutory conditions for invoking section 69A require the assessee to be found owner of money not recorded in the books and to fail in offering a satisfactory explanation. On the facts found, the credits were recorded and explained, and no adverse material was brought to dislodge the explanation.

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

Issue (ii): Whether the reassessment initiated under section 147 read with section 148 was valid when the foundational information regarding the bank accounts and credits was found to be factually incorrect.

Analysis: The reopening was founded on information that the assessee maintained three bank accounts with substantial non-cash credits. The factual record accepted at the appellate stage showed that the assessee operated only one relevant bank account and that the amounts and account particulars forming the basis of reopening were incorrect. Since reassessment must rest on specific and correct information relating to the assessee, an initiation based on a materially erroneous factual foundation cannot be sustained.

Conclusion: The reassessment proceedings and notice under section 148 were held to be invalid, in favour of the assessee.

Final Conclusion: The Revenue's challenge to deletion of the addition failed, and the assessee's challenge to the reopening succeeded, resulting in complete relief to the assessee on the issues decided.

Ratio Decidendi: Section 69A applies only where unexplained money is found outside the books and the assessee fails to offer a satisfactory explanation, while reassessment under sections 147 and 148 cannot rest on materially incorrect foundational information.

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