TMI Blog2005 (1) TMI 627X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs.3,51,890. At the bottom of the computation sheet filed with the return of income, the following note was given : The above result does not include the value of motor car (Maruti 1000) won by the assessee as first prize in the lucky draw at Rotary function held on June 24, 1995. Notice under section 143(2) was issued by the Assessing Officer on June 23, 1997, which was served on the assessee on July 7, 1997, which was after the time-limit prescribed in the Income-tax Act. Since there was no valid notice under section 143(2), the proceedings initiated under section 143(2) were dropped by the Assessing Officer. Subsequently, the notice under section 148 was issued on November 25, 1997, and served on the assessee on December 11, 1997. The reasons were duly recorded before issue of the said notice and the assessee filed a letter dated December 12, 1998, wherein it was stated that the return of income originally filed on June 27, 1997, may be considered as the return filed in response to notice under section 148. In these circumstances, the Assessing Officer proceeded to complete the assessment under section 147 read with section 143(3). Learned counsel appearing for the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilar and only because the Assessing Officer was unable to serve the notice under section 143(2) within the prescribed time-limit, he has resorted to the extraordinary provisions of section 147, which cannot be permitted. Learned counsel also invited our attention to the following observations of the Income-tax Appellate Tribunal in the case of Kamaljeet [2004] 1 SOT 310 (Delhi) at page 311 of the Report : First we take up the appeal of the assessee. The main ground of the assessee is that the proceedings under section 147 were illegal and void ab initio. At the outset, it has been pointed out by learned counsel for the assessee, Mr. Manjani that the return of income for the assessment year 1993-94 was filed by the assessee voluntarily on January 28, 1994, under acknowledgment receipt No. 2840. However, without making any assessment on the basis of such return, the Assessing Officer issued notice under section 148 on September 28, 1994. On the basis of these facts, it was strongly contended that during the pendency of the assessment proceedings, it could not be said that the income of the assessee had escaped assessment. To support his contention, he relied on various decisions o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in the definition of income contained under section 2(24). Therefore, by not including the income earned by the assessee from lottery, the assessee understated the income chargeable to tax. The notice under section 143(2) could not be served within the prescribed time limit and therefore no assessment under section 143(3) was made or can be made. The learned Departmental Representative pointed out that in such circumstances, the provisions of section 147 are clearly attracted by virtue of clause (b) of Explanation 2 under section 147, which is reproduced below : Explanation 2.-for the purposes of this section, the following shall also be deemed to be cases where income chargeable to tax has escaped assessment, namely : .. (b) where a return of income has been furnished by the assessee but no assessment has been made and it is noticed by the Assessing Officer that the assessee has understated the income or has claimed excessive loss, deduction, allowance or relief in the return. The learned Departmental Representative argued that in the present case, the return of income was furnished by the assessee, but no assessment was made and it was noticed by the Assessing Office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... where no assessment has been made, for whatever reasons, and it is noticed by the Assessing Officer that the assessee has understated the income in the return of income filed or has claimed excessive loss, deduction, allowance or relief in the return, for the purposes of section 147, it shall be deemed that the income charged to tax has escaped assessment. The note given by the assessee at the end of the computation sheet mentions that the assessee won 1st prize in the lucky draw. Obviously, such prizes in lucky draw may be only in the nature of lottery and therefore the same would clearly fall under the definition of section 2(24)(ix). No details were given in the return of income and even the value of the prize was not disclosed by the assessee. In our view, in these circumstances, the Assessing Officer was fully justified in invoking his jurisdiction under section 147 and accordingly, we confirm the finding of the learned Commissioner of Income-tax (Appeals) on this issue. Ground No. 2 pertains to bringing to the charge of tax the value of motor car as assessee s income. Learned counsel submitted before us that the assessee did not purchase the donation cards of the Rotary Cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... giving prizes to the holders of numbers drawn at random. (2) something whose success is controlled by luck. In the present case, the motor car has been received as first prize in lucky draw at Rotary function and in our view for all practical purposes such prize is clearly in the nature of lottery for the purposes of section 2(24)(ix). We do not find much force in the arguments of learned counsel for the assessee that the assessee did not purchase the donation cards issued by the Rotary Club and the motor car received by the assessee cannot be said to be in the nature of lottery. The donation card was purchased by the assessees father in the assessee s name and at the most it may be said that the assessee s father gifted the donation card to the assessee so that if by chance any prize is won, it would be received by the assessee. The assessee is the beneficiary of the first prize and the character of such receipt would not change. In our view, in the case of the assessee also, the nature would continue to be a lottery. We, therefore, uphold the order of the learned Commissioner of Income-tax (Appeals) on this issue. Ground No. 3 challenges the value of the motor car taken by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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