TMI Blog1995 (3) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... . During the assessment year 1971-72, the appellant received a total amount of Rs. 3,11,831 by way of race winnings in jackpots and treble events in races at Turf Clubs in Bangalore, Madras and Hyderabad. The said amount was shown by the appellant in the capital account in the books. The appellant filed a return on March 27, 1972, declaring an income of Rs. 27,829. The appellant also made a sworn statement on January 6, 1973, before the Income-tax Officer and on the basis of the said statement, the Income-tax Officer made an assessment order dated March 27, 1974, wherein he held that the sum of Rs. 3,11,831 is not winnings in races and he treated the said receipts as income from undisclosed sources and assessed the same as income from other sources. For the assessment year 1972-73, the appellant showed receipts of Rs. 93,500 as race winnings in two jackpots at Bangalore and Madras and the said amount was credited in the capital account in the books. The appellant filed a return declaring an income of Rs. 3,827 on February 3, 1973. In his assessment order dated August 31, 1974, the Income-tax Officer included the amount of Rs. 93,500 as income from other sources and assessed the inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for 1970-71, which was made without bringing to tax the alleged race winnings of Rs. 74,681, may be reopened on the view that the assessment for 1970-71 was not so connected with the case pending before them as to make it necessary to reopen it for the proper disposal of the assessments for 1971-72 and 1972-73. The Chairman of the Settlement Commission, Shri C. C. Ganapathy, has, however, dissented from the said view. Shri B. K. Mehta, learned senior counsel, appearing for the appellant, has submitted that the source of the receipt of the amounts has been established by the appellant by placing on record the certificates from the various race clubs which show that the said amounts were received by way of winnings from races and the burden lay on the Department to show that the said amounts were not winnings from races but was income from other sources. The submission of Shri Mehta is that in the present case, the Department has not adduced any evidence to discharge the said burden which lay on it and the majority view of the Settlement Commission is unsustainable inasmuch as it is based on no evidence and is founded on mere suspicion and surmises. According to Shri Mehta, the Cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion have also taken the same view. There is no dispute that the amounts were received by the appellant from various race clubs on the basis of winning tickets presented by her. What is disputed is that were they really the winnings of the appellant from the races. This raises the question whether the apparent can be considered as the real. As laid down by this court the apparent must be considered the real until it is shown that there are reasons to believe that the apparent is not the real and that the taxing authorities are entitled to look into the surrounding circumstances to find out the reality and the matter has to be considered by applying the test of human probabilities. (See : CIT v. Durga Prasad More [1971] 82 ITR 540 (SC), at pages 545, 547). In this context, it would be relevant to mention that in order to give effect to the recommendations of the Direct Taxes Enquiry Committee (under the Chairmanship of justice K. N. Wanchoo, retired Chief Justice of India) the definition of "income" in section 2(24) of the Act was amended with effect from April 1, 1972, by the Finance Act, 1972, so as to include within its ambit, winnings from lotteries, crossword puzzles, races ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... real and that the appellant's claim about her winning in races is contrived and not genuine for the following reasons : (i) The appellant's knowledge of racing is very meagre. (ii) A jackpot is a stake of five events in a single day and one can believe a regular and experienced punter clearing a jackpot occasionally but the claim of the appellant to have won a number of jackpots in three or four seasons not merely at one place but at three different centres, namely, Madras, Bangalore and Hyderabad appears, prima facie, to be wild and contrary to the statistical theories and experience of the frequencies and probabilities. (iii) The appellant's books do not show any drawings on race days or on the immediately preceding days for the purchase of jackpot combination tickets, which entailed sizable amounts varying generally between Rs. 2,000 and Rs. 3,000. The drawings recorded in the books cannot be co-related to the various racing events at which the appellant made the alleged winnings. (iv) While the appellant's capital account was credited with the gross amounts of race winnings, there were no debits either for expenses and purchase of tickets or for losses. (v) In view o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was available in respect of winnings from lotteries, crossword puzzles, races, etc., was withdrawn. Similarly, the observation by the Chairman that if it is alleged that these tickets were obtained through fraudulent means, it is upon the alleged to prove that it is so, ignores the reality. The transaction about purchase of winning ticket takes place in secret and direct evidence about such purchase would be rarely available. An inference about such a purchase has to be drawn on the basis of the circumstances available on the record. Having regard to the conduct of the appellant as disclosed in her sworn statement as well as other material on the record an inference could reasonably be drawn that the winning tickets were purchased by the appellant after the event. We are, therefore, unable to agree with the view of the Chairman in his dissenting opinion. In our opinion, the majority opinion after considering the surrounding circumstances and applying the test of human probabilities has rightly concluded that the appellant's claim about the amount being her winnings from races is not genuine. It cannot be said that the explanation offered by the appellant in respect of the said amo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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