Betting is illegal but there is nothing erroneous in including the earnings from it to the total small business money of an individual for profits tax reason, a tribunal has ruled.
“We are of the perspective that the estimate created by the Assessing Officer of the assessee’s revenue at 1 for every cent of the total transactions of cricket betting, as identified recorded in the laptops seized from the possession of the assessee, is very honest and acceptable,” a bench at the Revenue Tax Appellate Tribunal (ITAT), Ahmedabad, mentioned in a recent get.
Dependent on a idea-off about cricket betting, police had raided the assessee’s residence. Income of about ₹43.88 lakh, some incriminating files, and articles this sort of as laptops, mobiles, Television have been seized. The Money Tax Office investigated and the assessee claimed that the money was fee revenue attained from true estate organization.
Questioned about transactions of around ₹33 crore and ₹111 crore connected to assessment yr 2011-12 and 2012-13, respectively, that had been recorded in his laptop, the assessee admitted in crafting that he was included in cricket betting brokerage. It was explained that throughout a match the shopper shares their discounts above cell phone, which is entered into pcs. The match could be for a single working day or three times or seven times and so on. On the day the match ends, the buyer pays if there is a decline and receives payment if there is a financial gain. “As for each our knowledge, 100 for every cent persons get their profits but 75-90 per cent folks fork out their losses. This is settled in income quickly, for which no data were preserved,” it was claimed.
The examining officer (AO), having said that, rejected the explanation. “Considering the reality that the transactions contain earnings as properly as decline and also looking at the simple fact that some of the shoppers do not turn off for payment of their losses, the profits is approximated @ 1 per cent of the transactions, which performs out to ₹33,09,019 for the AY 2011-12 and .₹1,11,18,493 for the AY 2012-13, in respect of company of cricket betting. The exact is additional to the total cash flow of the assessee,” the AO explained in his order. This was later verified by the 1st level of appeal and then upheld by ITAT.
Om Rajpurohit, Director (Company and Worldwide Tax), AMRG & Associates, says that because of to the illegal character of businesses such as betting or hawala, the explanation for seized income or these transactions is very tricky to describe due to the fact there is constantly a absence of good supporting documents and justification for the transactions path.”
Notably, even in the Finance Act of 2017, stringent actions were launched to curb black dollars and hard cash transactions, together with the addition of a new Portion 269ST to the Cash flow Tax Act, which states that no 1 can receive ₹2 lakh or a lot more in income in a one transaction in a day (subject matter to specified exceptions). Part 271DA was also launched, which imposes a penalty equivalent to the dollars acquired, irrespective of the character of the receipt. “As a outcome, now even if your business is authentic, cash transactions of ₹2 lakh or a lot more are no for a longer time permitted, and will draw in a heavy penalty despite proper supporting documentation,” he claimed.
July 12, 2022