1991 (8) TMI 137 - AT - Income Tax

Summary

Issues Involved:

1. Genuineness of the assessee's claim of winning the lottery.
2. Validity of the evidence presented by both parties.
3. Determination of the amount to be added to the assessee's income from undisclosed sources.
4. Applicability of Section 80TT and Section 69 of the Income-tax Act, 1961.

Issue-wise Detailed Analysis:

1. Genuineness of the Assessee's Claim of Winning the Lottery:

The Income-tax Officer (ITO) questioned the genuineness of the assessee's claim of winning Rs. 12,00,000 from a lottery. The ITO conducted comprehensive enquiries and concluded that the prize-winning ticket was not available for sale in Delhi by 15-9-1983, as it was under dispatch from Bombay to Nasik. The ITO recorded statements from the assessee, Milkhi Ram, and Ravi Goel, and concluded that the assessee had not purchased the prize-winning ticket in Delhi by normal channels. Instead, the ITO held that the assessee bought the ticket on premium from the original holder using unaccounted cash.

2. Validity of the Evidence Presented by Both Parties:

The assessee contended that the ITO's case was built on photocopies with little evidentiary value and that the prize-winning ticket was sold in Delhi. The CIT (Appeals) agreed with the ITO, concluding that the assessee and Milkhi Ram's claims were not corroborated by documentary evidence. The CIT (Appeals) confirmed the ITO's finding that the ticket was purchased from the original holder against consideration but disagreed with the ITO's estimate that Rs. 13,00,000 was paid for the ticket. The Tribunal noted discrepancies in the evidence, such as the absence of original documents and the failure to examine key witnesses. Despite these discrepancies, the Tribunal found that the evidence supported the ITO's conclusion that the ticket was not purchased in Delhi.

3. Determination of the Amount to be Added to the Assessee's Income from Undisclosed Sources:

The ITO added Rs. 13,00,000 to the assessee's income, estimating a premium of Rs. 1,00,000 paid for the ticket. The CIT (Appeals) reduced this to Rs. 10,80,000, the amount disclosed by the assessee. The Tribunal further reduced the addition to Rs. 9,71,940, the net amount received by the assessee after deductions. The Tribunal held that the ITO failed to provide evidence that the ticket was purchased on premium and concluded that the amount of Rs. 9,71,940 represented the investment from undisclosed sources.

4. Applicability of Section 80TT and Section 69 of the Income-tax Act, 1961:

The CIT (Appeals) held that the addition should be made under Section 68, but the Tribunal corrected this, stating that the addition should be made under Section 69 for unexplained investment. The Tribunal also held that since the amount of Rs. 9,71,940 was added as income from undisclosed sources, the question of giving relief under Section 80TT did not arise. The assessee's claim for credit of tax deducted by the Sikkim State was also denied.

Conclusion:

The Tribunal concluded that the assessee did not purchase the prize-winning ticket in the normal course and that the ticket was acquired using income from undisclosed sources. The addition was restricted to Rs. 9,71,940 under Section 69. The departmental appeal was dismissed, and the assessee's appeal was partly allowed to the extent indicated.