9911796707
TMI Blog1995 (3) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... de 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 income of the appellant on that basis. The appeals filed by the appellant against the two assessment orders were disposed of by the Appellate Assistant Commissioner by order dated December 12, 1975, whereby the assessment of Rs. 3,11,831 as income under the head "Other sources" for the assessment year 1971-72 and Rs. 93,500 for the assessment year 1972-73 was confirmed. The appeals filed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 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 Chairman of the Settlement Commission, in his dissenting opinion, has correctly applied the law. Shri Mehta has placed reliance on the decisions of this court in Parimisetti Seetharamamma v. CIT [1965] 57 ITR 532 ; Sreelekha Banerjee v. CIT [1963] 49 ITR 112 (SC) ; and CIT v. Orissa Corporation P. Ltd. [1986] 159 ITR 78. Shri J. Ramamurthy, learned senior counsel appearing for the Revenue, h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsidered 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 including horse races, card games and other games of any sort or from gambling or betting of any form or nature whatsoever. The reason underlying the said amendment was that the exemption from tax that was enjoyed in respect of such winnings had provided scope for conversion of "black" money into "white" income. The said exemption from tax was available in respect of such winnings during the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 of the exceptional luck claimed to have been enjoyed by the appellant, her loss of interest in races from 1972 assumes significance. Winnings in racing became liable to income-tax from April 1, 1972, but one would not give up an activity yielding or likely to yield a large income merely because the income would suffer tax. The position would be different, however, if the claim of winnings in races wa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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