RIMJHIM PROPERTIES PVT. LTD.,KOLKATA vs. I.T.O., WARD - 7(1), KOLKATA

Facts

The assessee, Rimjhim Properties Pvt. Ltd., is in appeal against the order of the CIT(A) dated 11.02.2026 for Assessment Year 2011-12. The Revenue is the respondent. The assessee's case was re-opened under Section 147 of the Income-tax Act, 1961, based on information from the DDIT (Inv.) regarding alleged booking of profit and transactions on the National Multi-Commodity Exchange (NMCE) by misuse of the platform. The Assessing Officer (AO) added back a loss on commodity trading of Rs. 3,47,08,982/- to the assessee's income. The re-opening was done after four years from the end of the assessment year, and the approval for re-opening was obtained from the ACIT, Range – 17, Kolkata, instead of the CCIT/Pr. CIT as required by Section 151(1) of the Act for re-opening beyond four years. The assessee also raised an issue regarding the AO making an addition different from the reasons recorded for re-opening and a ground regarding double addition.

Held

The Tribunal held that the re-assessment order was void ab initio. On the first issue, it was found that the re-opening was made after four years from the end of the assessment year, and thus, approval was required from the Principal Commissioner (Pr. CIT) or Commissioner (CIT) as per Section 151(1) of the Act. Since the approval was obtained from the ACIT, Range – 17, Kolkata, it was invalid. Consequently, the notice issued under Section 148 and the consequent assessment order were held to be invalid and bad in law. Ground No. 1 was allowed. Regarding the second issue, the Tribunal observed that the AO made an addition of speculation loss of Rs. 3,47,08,982/-, which was different from the reasons recorded for re-opening concerning NMCE profit. Following the decisions in CIT Vs. M/s. Infinity Infotech Parks Ltd., CIT vs. Jet Airways (I) Ltd., and Ranbaxy Laboratories vs. CIT, the Tribunal held that once no addition is made for the reasons recorded, the AO has no jurisdiction to make any other addition. Therefore, the addition of speculation loss was quashed, and the reopening proceedings and the consequent order were set aside. Ground No. 3 was allowed. On the third issue, the Tribunal noted that the assessee had suo motu added back the loss in commodity trading of Rs. 3,47,08,982/- to its total income and carried forward the said speculation loss. The AO's observation that the assessee had adjusted the loss was incorrect. Therefore, the addition confirmed by the CIT(A) resulted in double taxation. The order of the CIT(A) was set aside, and the AO was directed to delete the addition. Ground No. 7 was allowed. Other grounds were not adjudicated. The appeal was partly allowed.

Key Issues

1. Whether the re-assessment order passed under Section 147/143(3) of the Income-tax Act, 1961, is void ab initio due to invalid prior approval under Section 151(1) of the Act, given that the re-opening was made after four years from the end of the relevant assessment year and approval was obtained from the ACIT instead of the CCIT/Pr. CIT. Assessee's contention: The re-opening is invalid as the approval was not obtained from the prescribed authority (CCIT/Pr. CIT) as required by Section 151(1) for re-opening after four years. Therefore, the re-assessment order is void ab initio. Revenue's contention: Not recorded. 2. Whether the addition made by the Assessing Officer in respect of speculation loss of Rs. 3,47,08,982/- is bad in law, considering that no addition was made in respect of the alleged escaped income for which reasons were originally recorded (NMCE profit of Rs. 2,23,750/-). Assessee's contention: The AO had no jurisdiction to make an addition for speculation loss as it was not part of the reasons recorded for re-opening. The assessee relied on CIT Vs. M/s. Infinity Infotech Parks Ltd. (Cal. HC), CIT vs. Jet Airways (India) Ltd. (Bom. HC), and Ranbaxy Laboratories vs. CIT (Del. HC). Revenue's contention: Not recorded. 3. Whether the addition of Rs. 3,47,08,982/- to the total income and its confirmation by the CIT(A) resulted in double addition, given that the assessee had suo motu added back the loss in commodity trading to the total income and carried forward the said speculation loss. Assessee's contention: The addition confirmed by the CIT(A) resulted in double taxation because the assessee had already suo motu added back the loss and carried it forward. The AO's observation that the assessee adjusted the loss was incorrect. Revenue's contention: Not recorded.