2008 (4) TMI 161 - HC - Income Tax

Petitioner won a lottery - prize money was paid to the petitioner in February, 1992 - petitioner in her return for the A.Y. 1992-93 disclosed the receipt of the prize money and also paid the tax due on it - Assessing Officer, on some misconception thought that as the petitioner has won the lottery in January, 1992, the receipt of the prize money would form part of the A.Y. 1991-92 AO is not justified in passing ex parte assessment order for year 1991-92 and raising demand & imposing penalty

Issues:
1. Misconception by Assessing Officer regarding assessment year for lottery prize money.
2. Ex parte assessment and penalty orders for assessment year 1991-92.
3. Dismissal of revisions by Commissioner on the ground of delay.
4. Department's admission of prize money receipt in assessment year 1992-93.
5. Error by assessing authority in ex parte assessment and penalty orders.
6. Dismissal of revisions on the ground of delay.
7. Legality of ex parte assessment and penalty proceedings for assessment year 1991-92.

Issue 1: Misconception by Assessing Officer regarding assessment year for lottery prize money.
The petitioner won a lottery in January 1992, under the Sahara Golden Key scheme, receiving Rs. 2,00,000, paid before March 31, 1992, falling under the financial year 1991-92 and assessment year 1992-93. However, the Assessing Officer mistakenly included the prize money in the assessment year 1991-92, leading to a demand and penalty order under section 271(1)(c) of the Income-tax Act, 1961.

Issue 2: Ex parte assessment and penalty orders for assessment year 1991-92.
The Assessing Officer passed ex parte assessment and penalty orders for the assessment year 1991-92, considering the lottery win date of January 22, 1992, without proper service to the petitioner. The petitioner filed revisions under section 264 of the Act, which were dismissed due to delay, leading to the present writ petition challenging the legality of these orders.

Issue 3: Dismissal of revisions by Commissioner on the ground of delay.
The Commissioner dismissed the revisions due to delay, without considering the petitioner's claim of non-service of assessment and penalty orders. The delay was minimal, and the Commissioner's failure to address the petitioner's contentions led to the court's finding that the dismissal on grounds of delay was erroneous.

Issue 4: Department's admission of prize money receipt in assessment year 1992-93.
The Department admitted that the prize money related to the assessment year 1992-93, as disclosed by the petitioner in her return and paid tax on. This admission highlighted the error in the ex parte assessment and penalty orders for the assessment year 1991-92.

Issue 5: Error by assessing authority in ex parte assessment and penalty orders.
The court found that the assessing authority committed an error in making ex parte assessment and penalty orders for the assessment year 1991-92, as the prize money was received in the assessment year 1992-93 and duly disclosed by the petitioner.

Issue 6: Dismissal of revisions on the ground of delay.
The court concluded that the dismissal of revisions by the Commissioner on grounds of delay was unwarranted, especially considering the minimal delay and the straightforward nature of the case. The court emphasized that no party should gain an advantage from causing delays without any motive or advantage.

Issue 7: Legality of ex parte assessment and penalty proceedings for assessment year 1991-92.
Due to the Department's admission of the prize money receipt in the assessment year 1992-93 and the lack of intention to evade taxes, the court quashed the ex parte assessment and penalty orders for the assessment year 1991-92. The court exercised its writ jurisdiction to correct the apparent illegality on the face of the record, ultimately allowing the writ petition and setting aside the orders.

This detailed analysis of the judgment from the Allahabad High Court in 2008 highlights the misconceptions by the Assessing Officer, dismissals by the Commissioner, errors in assessment orders, and the ultimate quashing of ex parte assessment and penalty orders for the petitioner.

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