BURDWAN ROAD PROPERTIES PVT. LTD.,,KOLKATA vs. ITO, WARD 12(1),, KOLKATA

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ITA 678/KOL/2025Status: DisposedITAT Kolkata24 August 2026AY 2009-105 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that if no addition is made for the income that formed the basis of the reasons recorded for reopening, the AO cannot make any other addition discovered during the reassessment proceedings. The addition of ₹1,57,00,000 was therefore quashed.

What were the facts?

The AO reopened the assessment based on information about an undisclosed investment of ₹20,00,000. During reassessment, the AO also noted unexplained share capital of ₹1,57,00,000. The AO ultimately made no addition for the initial reason for reopening but added the share capital.

What were the issues?

Whether the AO has jurisdiction to make additions on issues not forming the basis of the reasons recorded for reopening, when no addition is made on the original issue.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 68

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “A” BENCH, KOLKATA

For Appellant: Shri Akkal Dudhwewala, AR
For Respondent: Shri Sallong Yaden, DR
Hearing: 09.07.2026Pronounced: 24.08.2026

Per Rajesh Kumar, AM:

This is an appeal preferred by the assessee against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 20.02.2025 for the AY 2009-10.

The only issue raised at the time of hearing was whether the 2. addition of ₹1,57,00,000/- sustained by the Ld. CIT(A) was valid which not subject matter of the reasons recorded u/s 148(2) of the Act, and since the addition made in respect of the item which was subject matter of reasons recorded, had not been retained by the AO, whether the lower authorities had

ITA No. 678/KOL/2025 Burdwan road Properties Pvt. ltd; A.Y. 200-10 jurisdiction to make any other addition which the ld. AO has noticed during the course of hearing.

3.

Facts in brief are that the assessee filed its return of income u/s 139 of the Act declaring total income of ₹28,950/-, which was processed u/s 143(1) of the Act dated 24.01.2011. Thereafter, the ld. AO received information that the assessee had made an investment of ₹20,00,000/- in the shares of M/s Sharda Steel Industries Limited on 30.03.2009, as that as per the available records, the assessee had not shown this investment in the balance sheet and that the assessee had not claimed to have sold the same too. The AO accordingly added the investment of ₹20,00,000/- in shares of M/s Sharda Steel Industries Limited by way of undisclosed investment to the total income. Thereafter, during the course of re-assessment proceedings, the ld. AO noted that the assessee has raised share capital of ₹1,57,00,000/- during the year and that the summons issued to the shareholder(s) remained unattended. The AO therefore treated the same as unexplained u/s 68 of the Act and added to the total income of the assessee.

4.

Aggrieved assessee preferred the appeal before the ld. CIT(A), who observed that the AO had not made any separate addition in the assessment order and therefore no interference was called for. He further held that, in absence of documentary correlation between the profit & loss account, Computation of income & assessment figures, the allegation of double taxation in the computation sheet remained unsubstantiated. The Ld. CIT(A) accordingly, dismissed the appeal of the assessee.

5.

Now aggrieved assessee is in appeal before us.

ITA No. 678/KOL/2025 Burdwan road Properties Pvt. ltd; A.Y. 200-10 6. The ld. AR sated that consequent to the directions of the ld. CIT(A), the AO had passed the order u/s 250/147 of the Act dated 08.09.2025 wherein after examination of the facts on record, he found the claim of the assessee to be tenable and delete the addition made by way of undisclosed investment of ₹20,00,000/-. Further, the ld. AR for the assessee contended that when no addition was ultimately made on the issue for which reopening was initiated i.e. undisclosed investment of ₹20,00,000/-, then ld. AO has no jurisdiction to make other additions which he came across during the course of assessment proceedings. The Ld. AR relied on series of decision namely, Ranbaxy Laboratories Ltd. Vs. CIT[2011] 12 taxmann.com 74 (Delhi), CIT Vs. Jet Airways (I) Ltd.[2021] 133 taxmann.com 233 (Bom), CIT Vs. M/s. Infinity Infotech Parks Ltd. in GA No. 1736 of 2014 dated 15.11.2022 and the decision of Coordinate Bench in the case of Ganesh Steel & Alloys in ITA No. 929/Kol/2023 dated 11.06.2024.

7.

The ld. DR relied on the orders of the lower authorities.

8.

After hearing the rival contentions and perusing the materials available on record, we find that the ld. AO had reopened the assessment u/s 147 read with section 148 of the Act after recording reasons to believe that investments of ₹20,00,000/- was not disclosed in the books of accounts and therefore such income had escaped assessment. We further note that the Ld. CIT(A) had remanded this issue back to the AO for re- examination and the AO having been convinced after examining the evidences filed by the assessee, did not make any addition in respect of the investment of ₹20,00,000/-, as is seen from the order passed u/s 250/147 of the Act dated 08.09.2025.

ITA No. 678/KOL/2025 Burdwan road Properties Pvt. ltd; A.Y. 200-10 Hence, we find that, there was no addition ultimately made, which was the subject matter of the reasons recorded. The ld. AO however had made separate addition of ₹1,57,00,000/- by way of unexplained cash credit u/s 68 of the Act. We note that this item was not part of the reasons recorded u/s 148(2) of the Act. Therefore, when no addition is made for the escaped income as per the reasons recorded, then the AO has no jurisdiction to make any other addition in respect of item of income which has escaped assessment as discovered by the AO during the assessment. The case of the assessee finds support from the decision of Hon'ble jurisdictional High Court in the case of M/s. Infinity Infotech Parks Ltd. (supra) wherein the Hon'ble Calcutta High Court has held by following the decision of Hon'ble Bombay High Court in the case of CIT Vs. Jet Airways (I) Ltd. (supra) and also Hon'ble Delhi High Court decision in the case of Ranbaxy Laboratories Vs. CIT (supra) that where the income the escapement of which was the foundation for recording of reasons to believe, is not assessed or reassessed in the order u/s. 147, then it is not opened to the AO to independently assess any other income, which comes to his notice subsequently during the course of re-assessment proceedings. The similar ratio has been laid down by the Coordinate Bench in Ganesh Steel & Alloys (supra) following the decision of the Hon'ble Bombay High Court in the case of CIT Vs. Jet Airways (I) Ltd. (supra). Accordingly, we are inclined to allow this legal issue raised by the assessee and thus quash the assessment order of the AO.

ITA No. 678/KOL/2025 Burdwan road Properties Pvt. ltd; A.Y. 200-10 9. Since, we have allowed the appeal on legal issue, other grounds raised on merit are not being adjudicated at this stage and are left open to be decided if need arises for the same in future.

10.

In the result, the appeal of the assessee is allowed.

Order pronounced on 24.08.2026.

Sd/- Sd/- (PRADIP KUMAR CHOUBEY) (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated: 24.08.2026 Sudip Sarkar, Sr.PS Copy of the Order forwarded to: 1. The Appellant 2. The Respondent 3. CIT DR, ITAT, 4. 5. Guard file. BY ORDER, True Copy//

(Manish Bhoi) Dy. Registrar Income Tax Appellate Tribunal, Kolkata

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