2017 (9) TMI 736 - HC - Income Tax

Unaccounted sales - ITAT allowing relief of ₹ 6,51,08,354/out of ₹ 7,63,83,662/as unaccounted sales on the ground that the same was offered in the hands of MD Anil Gupta - Held that - We direct the Assessing Officer to examine the entire addition of ₹ 7,63,83,662/made allegedly on account of sales outside the books of account. This issue will be examined afresh and a speaking order will be passed by the Assessing Officer after hearing both sides and in accordance with law. While doing so, he shall not be influenced

Summary

Issues:
- Appeal arising from ITAT order for Assessment Year 2007-08
- Questions of law regarding deletion of additions under section 68 and unaccounted sales
- Admissibility of appeal along with companion appeal
- Dispute over addition of sales outside books of account
- Clarification on Anil Gupta's undisclosed income and tax offering

Analysis:
1. The appeal before the Bombay High Court stemmed from an order by the Income Tax Appellate Tribunal (ITAT) concerning the Assessment Year 2007-08.
2. The primary questions of law raised by the Revenue related to the deletion of additions under section 68 of the Income Tax Act. These included the treatment of a substantial amount as bogus credit and unexplained share application money.
3. The Court admitted the appeal alongside a companion appeal, as the issues raised in questions (A) and (B) were common to both.
4. A significant dispute arose regarding the addition of sales outside the books of account amounting to ?7,63,83,662. The respondent contended that the Assessing Officer had made a double addition, as Anil Gupta, the Managing Director, had already offered the entire amount for taxation.
5. The respondent argued that Anil Gupta had disclosed the unaccounted sales and offered the gross profit on them as undisclosed income. However, the Tribunal's understanding that Gupta's explanation related to a larger sum of ?6,51,08,354 was questioned.
6. The Tribunal's order highlighted that a portion of the sales amount had already been offered to tax by Anil Gupta, leading to a case of double addition in the hands of the company.
7. The Court expressed dissatisfaction with the handling of the appeal and directed the Assessing Officer to re-examine the entire addition of ?7,63,83,662 related to sales outside the books of account. The AO was instructed to pass a speaking order after hearing both parties and without being influenced by previous orders or observations.
8. Additionally, the Court directed the Registrar to summon the original record from the Tribunal for inspection and ensured the completion of a comprehensive paperbook for the appeal's admission.

This detailed analysis of the judgment provides a comprehensive overview of the issues involved and the Court's directives regarding the disputed tax matters.