Unexplained money addition fails where bank credits are duly recorded in audited books and supported by reconciliation and confirmations.

Amounts recorded in duly audited books of account could not be added as unexplained money under section 69A merely because the Assessing Officer remained unsatisfied with the explanation. Where the bank book and allied records were audited, the books were not rejected, and the difference between bank credits and turnover was supported by reconciliation, confirmations, advances, refunds and third-party settlements recorded in the accounts, the addition was unsustainable. The decision emphasised that a mere lack of further verification, without meaningful enquiry or use of available enquiry powers, does not justify treating accounted receipts as unexplained. The addition was deleted.

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Issues: Whether the addition of bank credits as unexplained money under section 69A of the Income-tax Act, 1961 was sustainable when the impugned receipts were recorded in duly audited books of account and supported by reconciliation and confirmations.

Analysis: The books of account, including the bank book and allied records, were audited and the revenue authorities did not reject the books or dispute the audit report. The difference between bank credits and turnover was explained by advances, refunds, third-party settlements and related transactions recorded in the books. The assessment order proceeded mainly on the absence of further verification, without meaningful enquiry into the confirmations or invoking the available enquiry powers. Amounts reflected in the books could not be treated as unexplained money merely because the Assessing Officer was not satisfied with the explanation, where the receipts were already accounted for in the books.

Conclusion: The addition under section 69A was rightly deleted and the revenue's challenge failed.

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