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July 19, 2022

In absence of satisfactory explanation income assessed at 1% on cricket betting

by CA Shivam Jaiswal in Income Tax

In absence of satisfactory explanation income assessed at 1% on cricket betting

Facts and Issues of the case

The assessee, in the present case, is an individual.  The  Vigilance Squad of State Police, Gandhinagar conducted a raid at his residential premises at 13, Vakharia Nagar-II, Kalol, Dist. Gandhinagar.

During the course of the said raid, cash of Rs.43,88,500/- was found and seized besides some incriminating documents and articles such as laptops, mobiles, TV etc.   On the  basis of the information received relating to this raid conducted by the Vigilance Squad of State Police, Gandhinagar and the seizure of cash and incriminating documents and articles, an authorization under Section 132A of the Income-tax Act, 1961 (“the Act” in short) was issued on 30.01.2012. An application was also made before the Additional Chief Judicial Magistrate, Kalol for requisition of assets,  in  response  to which the police authority was directed by the Court vide order dated 15.05.2012 to handover all seized assets which were ultimately requisitioned under Section 132A of the Act on 05.09.2012. Although a different stand was taken by the assessee in respect of cash of Rs.43,88,500/- found during the course of raid, he finally claimed that he was engaged in the business of real estate agency and the said cash represented his commission income earned from the said business.

During the course of assessment proceedings, copies of printouts taken from the seized laptops were provided to the assessee and he was asked to explain the transactions of Rs.33,09,01,900/- and Rs.111,48,49,350/- relating to AYs 2011-12 and 2012-13 respectively as found recorded in his laptop. He was also called upon to produce 11 persons whose names appeared in the entries made in his laptops for verification and examination regarding the relevant transactions. In his letter dated 30.12.2014 filed before the Assessing Officer, it was stated by the assessee that all these names were fake as no persons involved in betting used to give their true names and identity. The Assessing Officer estimated the income of the assessee at Rs.33,09,019/- and Rs.1,11,18,493/- from the business of cricket betting for AYs 2011-12 and 2012-13 respectively being 1% of the total transactions as found recorded in the seized laptops and made addition to that extent to the total income of the assessee in the assessments completed

Aggrieved by the order of the learned CIT(A), the assessee has preferred these appeals before the Tribunal.

Observations by the Court

At the time of hearing fixed in this case no one has appeared on behalf of the assessee. There was a similar non-compliance on the part of the assessee when these appeals were fixed for hearing before the Tribunal  These appeals are accordingly being disposed of ex-parte qua the appellant-assessee after hearing the arguments of the learned DR and perusing the relevant material available on record including the written submission and paper-book filed by the assessee. It is observed that the first main contention raised by the assessee in the written submission is that the cash of Rs.43,88,500/- found and seized in the raid conducted by the Vigilance Squad of State Police, Gandhinagar was stated by the assessee to be relating to his cricket betting business in the first statement and the Assessing Officer was not justified in treating the same as dalali (brokerage) income of the assessee from the real estate agency business on the basis of the statement recorded subsequently. It is submitted that even in the said statement it was stated to be dalali

income of the assessee without any reference to the real estate agency business. We are unable to accept this stand of the assessee. As already noted, different explanation was offered by the assessee in respect of cash found and seized during the raid conducted by the Vigilance Squad of State Police, Gandhinagar, and although it was initially stated to be the income of the assessee relating to his cricket betting business, this stand was subsequently changed by the assessee by stating that the same  was belonging to his brother-in-law Mr. Himanshu and even the affidavit of Mr. Himanshu was also filed owning the said cash. Thereafter, in the statement recorded on 19.10.2012, the assessee again changed this stand by stating that the cash found and seized was his income from dalali.. Keeping  in view all other facts of the case,  we do  not find any infirmity in the orders of the authorities below to treat the cash of Rs.43,88,500/- found and seized during the raid conducted by the Vigilance Squad of State Police, Gandhinagar at the residential premises of  the assessee as his commission/dalali income from real estate agency business.

The second contention raised by the assessee in the written submission filed before the Tribunal is that the addition of 1% of total transactions relating to cricket betting, as made by the Assessing Officer on estimated basis, has been done purely out of whims and fancies without any basis and the learned CIT(A) is not justified in confirming the same. In this regard, it is pertinent to note that the transactions as found recorded in the laptops found from the residence of the assessee were related to the cricket betting as found by the Assessing Officer on the  basis of relevant material and there was nothing brought on record by the assessee to  dispute  or doubt the same. The assessee also never offered  any  satisfactory explanation regarding the nature of the said transactions as well as the income earned by him from the said transactions despite sufficient and specific opportunity afforded by the Assessing Officer in this regard during the course of assessment proceedings.  He  also  did not produce  any books of account or other relevant details to show the exact amount of income earned by him from the said transactions. The Assessing Officer, therefore, was left with no option but to estimate the income of the assessee at 1% of the total transactions for both the years under consideration as found recorded in the laptops found from the possession of the assessee. It is observed that no details whatsoever were furnished by the assessee to show or even suggest the income actually earned by the assessee from the relevant transactions of cricket betting. The only submission made by him in this regard was that he had to pay 100% of the amounts due to bet-winners, whereas the recovery from the bet-losers was only 60-70%. This claim of the assessee, however, was not accepted by the Assessing Officer as well  as by  the  leaned CIT(A) for the cogent and convincing reasons given in their respective orders – the relevant portions of which are already extracted by us in the foregoing portion of this order.  It is also noted that neither before the authorities below nor even before the Tribunal, the assessee has brought anything on record to show that the profit actually earned by him from the transactions of cricket betting was lower than 1% as estimated by the Assessing Officer and confirmed by the learned CIT(A).

Keeping in view all these facts and circumstances of the case, we are of the view that the estimate made by the Assessing Officer of the assessee’s income at 1% of the total transactions of cricket betting as found recorded in the laptops seized from  the possession of the assessee is quite fair and reasonable and the learned CIT(A) was fully justified in confirming the same. In that view of the matter, we find no justifiable reason to interfere with the impugned order of the learned CIT(A) on this issue and upholding the same, we dismiss both the appeals filed by the assessee.

Conclusion

In the result, both the appeals filed by the assesse to not assesses income at 1% cricket betting are dismissed.

Kashyap-Suresh-Brahmbhatt-Vs-DCIT-ITAT-Ahmedabad

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