Unexplained money under section 69A fails where books and bank records explain deposits; interest income requires fresh verification.

Fixed deposits recorded in the books and supported by bank statements and ledger accounts could not be added as unexplained money under section 69A merely because of earlier non-compliance, since primary documentary evidence shifted the burden to the Revenue to rebut the explanation with cogent material. The addition was therefore deleted. Interest income, however, was not fully reconciled on the existing record, as the books and Form 26AS showed only a partial verification of the amount. That issue required fresh factual examination by the Assessing Officer and was remanded for verification.

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Issues: (i) Whether the addition of time deposits as unexplained money under section 69A could be sustained when the assessee produced bank statements, ledger accounts and other documentary evidence showing that the deposits were recorded in the books. (ii) Whether the interest income required fresh verification before a final conclusion could be reached on its taxability.

Issue (i): Whether the addition of time deposits as unexplained money under section 69A could be sustained when the assessee produced bank statements, ledger accounts and other documentary evidence showing that the deposits were recorded in the books.

Analysis: The documents placed on record showed that the fixed deposits were reflected in the books of account and bank records. Once the assessee furnished primary evidence explaining the source and nature of the deposits, the burden shifted to the Assessing Officer to rebut that explanation with cogent material. An addition under section 69A cannot rest merely on non-filing of return or lack of compliance during assessment when the assessee later substantiates the deposits and no contrary material is brought on record.

Conclusion: The addition relating to the time deposits was not sustainable and was deleted.

Issue (ii): Whether the interest income required fresh verification before a final conclusion could be reached on its taxability.

Analysis: The books and Form 26AS showed a substantial reconciliation, but the record did not fully establish the correctness of the interest income for the entire amount. In these circumstances, the issue required factual verification at the assessment stage rather than a final determination on the existing record.

Conclusion: The issue of interest income was remanded to the Assessing Officer for verification.

Final Conclusion: The Department's appeal succeeded only in part, with the deletion of the addition on time deposits sustained and the interest-income issue sent back for fresh examination.

Ratio Decidendi: An addition for unexplained money can be made only when the assessee fails to satisfactorily explain the source and the Revenue rebuts the explanation with material evidence; once primary documentary evidence is produced, the burden shifts to the Revenue, and any unresolved factual component may be remanded for verification.

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