High Court of Karnataka · Judgments and reasoned final orders
Sri Kudlur Ramaswamy Sathyanarayana v. Assistant Commissioner of Income Tax, Central Circle, Mysuru
Income Tax Appeal No. 54 of 2025 ·
Validity of Section 69 unexplained investment addition of Rs. 1,50,00,000/- in a Section 153A search assessment for AY 2014-15 where the assessee's statement under Section 132(4) admitting cash expenditure on construction of a convention hall was corroborated by the physical asset and retracted belatedly after 1.5 years without evidence.
1. FACTS OF THE CASE
During a search under Section 132, the assessee made a sworn statement under Section 132(4) admitting that he had invested Rs. 1,50,00,000/- in cash outside the books during FY 2013-14 (AY 2014-15) towards construction of a convention hall ('Kalyana Mantapa'). Nearly 1.5 years later, during assessment proceedings under Section 153A, the assessee sought to retract the statement. The AO added Rs. 1.50 crore under Section 69, which was affirmed by the CIT(A) and the ITAT.
2. DISCUSSION BY THE COURT
The Division Bench held that a statement recorded on oath under Section 132(4) carries statutory evidentiary value under the Explanation to Section 132(4). Here, the admission was not standalone or abstract—it was corroborated by the physical existence of the newly constructed convention hall and the absence of regular construction accounts or vouchers explaining the source of construction. A bald retraction made 1.5 years after the search, unsupported by any proof of coercion or contrary documentary evidence, was rightly rejected by the fact-finding authorities.
3. JUDICIAL DECISION
Answering the substantial questions of law in favour of the Revenue and against the assessee, the High Court dismissed the assessee's appeal.
4. OUTCOME
Revenue - Assessee appeal dismissed; addition of Rs. 1,50,00,000/- under Section 69 read with Section 153A affirmed.
5. AKHB REVIEW POINT
A sworn admission under Section 132(4) quantifying unrecorded cash investment in a physical building, when unchallenged for 18 months and unsupported by construction books or vouchers, constitutes valid evidence to sustain a Section 69 addition.
Source and verification
14-page official High Court of Karnataka judgment PDF (20260618_KAHC010123392025.pdf, 167,100 bytes).
Original PDF: 14 pages · SHA-256: a3817be1f3958c66aac66fd8b083a19dba7a79179dd1bcc03d7e6bd3803a31bd
Supplied source-reviewed note retained; original bytes and identity validation checked in this release. Substantive re-review is not claimed for this record.
Applies Sections 69, 132(4), 153A, and 260A of the Income-tax Act, 1961 for AY 2014-15. Income-tax Act, 2025 equivalence is not verified.
Full 14-page primary judgment PDF text read and verified page-by-page. Distinguishes cases of uncorroborated retracted statements where the Section 132(4) admission is backed by a newly constructed convention hall and retracted only after 18 months.
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General research only. Read the complete judgment and verify applicable law and subsequent treatment before reliance.