Crystal Hatcheries Private Limited Vs ACIT (Karnataka High Court)
The Karnataka High Court dealt with an addition of ₹45 lakh made under Section 69 (unexplained investment) based on materials found during a search in a third party’s premises (developer). The assessee had earlier failed to satisfactorily explain the nature of the transaction before the authorities and the Tribunal, leading to confirmation of the addition. However, before the High Court, the assessee produced additional documents including sale deeds, ledger accounts, and confirmation of refund from the developer, to establish that the amount related to a property transaction that was later cancelled and refunded, and hence not an unexplained investment.
The Court held that if the assessee is able to substantiate the source and nature of the amount, even at a later stage, such explanation deserves consideration. Since the issue involves factual verification of documents, the matter was restored to the ITAT (final fact-finding authority) for fresh adjudication. Accordingly, the Tribunal’s order was set aside to the limited extent of the Section 69 addition, and all issues were kept open for reconsideration.
FULL TEXT OF THE JUDGMENT/ORDER OF KARNATAKA HIGH COURT
This appeal is against a portion of the order dated 05.08.2025 [Annexure-A] by the Income-tax Appellate Tribunal, ‘A’ Bench, Bengaluru [for short, the Tribunal] in ITA No.256/Bang/2025. The Tribunal’s impugned common order in ITA Nos.251-257/Bang/2025 is relevant to the assessment years 2014-15 to 2020-21. The appellant/assessee has substantially succeeded in these appeals with the Tribunal allowing the appeal in ITA Nos. 251 to 255/Bang/2025 and ITA Nos.257/Bang/2025 in entirety and the appeal in ITA No.256/Bang/2025 [relevant to the assessment year 2019-20] partly.
