Shri Kirankumar G. Vohra, Bilimora V. The Income Tax Officer, Ward -2, Navsari

ITA 3692/AHD/2004

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 0433 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 11 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-11-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 13-11-2009
• Assessment Year: 2000-2001
• Appeal Filed On: 17-12-2004
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M C
• Keywords: Salary income; Wrong claim; Revised return; TDS
• Section: 271(1)(c); 143(3); 143(1); 147; 148; 10; 154

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL : C BENCH : AHMEDABAD (BEFORE HONBLE SHRI T.K. SHARMA, J.M. & HONBLE SH RI N.S. SAINI, A.M.) I.T.A. NO. 3692/AHD./2004 ASSESSMENT YEAR : 2000-2001 SHRI KIRANKUMAR G. VOHRA -VS.- INCOME TAX OFFICER, WARD-2, NAVASARI (APPELLANT) (R ESPONDENT) APPELLANT BY : SHRI UMAID SINGH B HATI RESPONDENT BY : SHRI M.C. PANDIT, SR. D.R. & I.T.A. NO. 172/AHD/2007 ASSESSMENT YEAR : 2000-2001 SHRI KIRANKUMAR G. VOHRA -VS.- INCOME TAX OFFICER, WARD-2, NAVASARI (APPELLANT) (R ESPONDENT) APPELLANT BY : N O N E RESPONDENT BY : SHRI M.C. PANDIT, SR. D.R. O R D E R PER SHRI T.K. SHARMA, JUDICIAL MEMBER :- BOTH THESE APPEALS FILED BY THE SAME ASSESSEE WERE HEARD ON THE SAME DATE, I.E. ON 13.11.2009. IN RESP ECT OF I.T.A. NO. 3692/AHD./2004, ON BEHALF OF ASSESSEE SHRI UMAID SINGH BHATI APPEARED. HOWEVER, IN RESPECT OF OTHER APPEAL, LD. COUNSEL OF THE ASSESSEE STATED THAT HE HAS NO POWER OF ATTORNE Y. IN VIEW OF THIS, WE PROCEED TO DECIDE BOTH THESE APPEALS ON THE BASIS OF SUBMISSIONS MADE AND MATERIAL AVAILABLE ON RECORD. 2. BRIEF FACTS ARE THAT THE ASSESSEE IS AN INDIVIDU AL. FOR THE ASSESSMENT YEAR UNDER APPEAL, HE FILED THE ORIGINAL RETURN OF INCOME DECLARING INCOM E OF RS.6,74,180/-. THIS RETURN WAS FILED BY SHRI KIRAN KUMAR VORA AS GUARDIAN OF MINOR VIRAJKUM AR KIRANKUMAR VORA. IN THIS RETURN, THE ASSESSEE HAS SHOWN SALARY INCOME OF RS.20,000/- AND INCOME FROM OTHER SOURCES UNDER THE CAPTION WINNING FROM LOTTERY AT RS.6,54,178/- BUT TAX WAS NOT CALCULATED AS PER THE PROVISIONS OF SECTION 115BB OF THE INCOME TAX ACT. THIS RETURN WAS PROCESSED UNDER SECTION 143(1) OF THE 2 ACT ON 20.08.2001. SUBSEQUENTLY, THE ASSESSEE FILED REVISED RETURN ON 18.09.2000 DECLARING TOTAL INCOME OF RS.4,76,180/-, WHICH WAS FILED IN THE NAM E OF VIRAJKUMAR KIRANKUMAR, MINOR, GUARDIAN SHRI KIRANKUMAR VORA. IN THIS RETURN, SALA RY REMAINED AT RS.20,000/-, BUT THE WINNING FROM LOTTERY WAS REDUCED TO RS.4,56,178/- AFTER CLA IMING A COMMISSION PAYMENT OF RS.1,98,000/- FROM WINNING FROM LOTTERY AND EXEMPTION UNDER SECTI ON 10 TO THE EXTENT OF RS.6,500/-. THEREAFTER, THE A.O. ISSUED A NOTICE UNDER SECTION 148 ON 27.11.2001 BECAUSE IN THE REVISED RETURN TWO AMOUNTS OF RS.99,000/- TOTALING TO RS.1, 98,000/- WERE STATED TO HAVE BEEN PAID TO VINAY DESAI OF MOTHER ELECTRONICS AND SHRI HEMANT K . BHATAWALA OF HARSH ELECTRONICS. BOTH THESE AMOUNTS WERE SHOWN AS COMMISSION PAID TO THE DEALER/ DISTRIBUTOR BEING COMMISSION PAYABLE ON WINNING FROM LOTTERY, WHICH WAS NOT CLAI MED IN THE ORIGINAL RETURN OF INCOME FILED ON 10.08.2000. IN RESPONSE TO THIS NOTICE, THE ASSESSE E FILED RETURN OF INCOME ON 07.01.2002 DECLARING TOTAL INCOME OF R.4,79,970/-. SINCE INITI ALLY THE NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED TO MINOR, BUT LATER ON THE A.O. REALIZED THA T THE INCOME OF MINOR HAS TO BE INCLUDED IN THE HANDS OF FATHER, THE ORIGINAL NOTICE UNDER SECTION 148 OF THE ACT WAS DROPPED AND A.O. ISSUED FRESH NOTICE UNDER SECTION 148 OF THE ACT TO THE AS SESSEE ON 14.08.2002. 3. ON RECEIPT OF THE REVISED RETURN, THE A.O. WROTE A LETTER TO THE PRESIDENT, GUJARAT GODREJ DEALERS ASSOCIATION FROM WHERE THE PRIZE, I.E. MIT SUBISHI LANCER CAR WAS WON BY THE MINOR. IN THIS LETTER, THE A.O. ENQUIRED WHETHER THERE WAS AN Y PROVISION IN THE SCHEME TO PART WITH ANY AMOUNT WON BY A PARTICULAR PERSON IN THE FORM OF CO MMISSION TO AREA DEALER/ DISTRIBUTOR OF SUCH PRODUCTS. THE GUJARAT GODREJ DEALERS ASSOCIATION IN FORMED VIDE LETTER DATED 28.08.2001 THAT THERE WAS NO PROVISION IN THE SCHEME TO PASS COMMIS SION TO THE DEALERS/ DISTRIBUTORS OF SUCH PRODUCTS THROUGH WHOM THE PURCHASE WAS MADE BY THE WINNER OF THE PRIZE. ACCORDING TO A.O., NOTICE UNDER SECTION 148 WAS ISSUED ON THE BASIS OF THIS INFORMATION AS THE ASSESSEE MADE A WRONG CLAIM OF COMMISSION PAYMENT OF RS.1,98,000/-. THEREAFTER THE A.O. FRAMED THE ASSESSMENT UNDER SECTION 143(3) READ WITH SECTION 1 47 OF THE INCOME TAX ACT ON 28.02.2004, WHEREIN THE A.O. DISALLOWED THE COMMISSION OF RS.1, 98,000/- AND BANK CHARGES OF RS.1,210/- AND CALCULATED THE TAX ON TOTAL INCOME ASSESSED TO RS.6,72,680/- @ 40% AS PROVIDED IN SECTION 115BB OF THE INCOME TAX ACT, 1961. IN THIS ORDER, T HE A.O. ALSO INITIATED PENALTY PROCEEDING UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT. 3 4. IN THE IMPUGNED ORDER, THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) UPHELD THE ACTION OF A.O. TREATING THE AMOUNT OF RS.6,54,178/- AS TAXABLE WINNING FROM LOTTERY AS AGAINST CONTENTION OF ASSESSEE THAT IT IS A PRIZE MONEY, BY OBSERVING AS UNDER :- 3.3. I HAVE CONSIDERED THE SUBMISSION MADE BY THE APPELLANT AND THE OBSERVATION OF THE A.O. FROM THE ABOVE DISCUSSION, IT IS CLEAR THAT THE TWO DECISIONS RELIED ON BY THE APPELLANT IN FACT SU PPORT THE CONTENTION OF THE A.O. THAT NOMENCLATURE CANNOT CHANGE THE CHARAC TER OF THE INCOME. IN THE PRESENT CASE, THE INCOME IS CLEARLY BY WAY OF L OTTERY BECAUSE AS DECIDED BY THE HON'BLE MADRAS HIGH COURT IN THE DEC ISION CITED BY THE ASSESSEE, THE ASSESSEE HAD ENTERED THIS SCHEME BY P URCHASING THE GODREJ PRODUCT AND THEREAFTER THE ASSESSEES NAME WAS SELE CTED BY WAY OF DRAW OF LOTS. FROM THIS, IT IS VERY CLEAR THAT THERE WAS AN ELEMENT OF CHANCE IN THE WINNING OR NOT WINNING OF THE SO-CALLED PRICE. HENCE, THE DECISION OF THE A.O. TO TAX THE WINNING OF THE PRICE AS LOTTERY IS CORRECT. FINALLY, THE LEARNED COMMISSIONER OF INCOME TAX(APP EALS) ALSO UPHELD THE ACTION OF A.O. DISALLOWING COMMISSION PAYMENT OF RS.1,98,000/- AND BANK CHARGES PAYMENT AMOUNTING TO RS.1,210/-. 5. AGGRIEVED BY THE AFORESAID ORDER OF LEARNED COMM ISSIONER OF INCOME TAX (APPEALS) -VI, SURAT FOR THE ASSESSMENT YEAR 2000-01, THE ASSESSEE IS IN APPEAL BEING I.T.A. NO.3692/AHD./2004 BEFORE US ON THE FOLLOWING GROUNDS :- (1) LD. ITO HAS ERRED IN LAW AND ON FACTS TO INITIA TE ACTION U/S. 147 OF THE I.T. ACT, 1961. LD. C.I.T.(A) HAS ALSO ERRED IN CON FIRMING ITOS ACTION. (2) LD. ITO HAS ERRED IN LAW AND ON FACTS TO TREAT AN AMOUNT OF RS.6,60,678/- PRIZE MONEY AS LOTTERY INCOME INSTEAD OF INCOME FROM OTHER SOURCES. LD. C.I.T.(A) HAS ALSO ERRED TO TREA T THIS AMOUNT AS LOTTERY AMOUNT AND NOT PRIZE AMOUNT. (3) LD. ITO HAS ERRED IN LAW AND ON FACTS TO DISALL OW AN AMOUNT OF RS.1,98,000/- RECOVERED BY DISTRIBUTOR OF GODREJ AN D DEALER OF GODREJ BY CHEQUE OF RS.99,000/- EACH FOR FORWARDING PRIZE MONEY CHEQUE OF RS.3,96,406.80 WHICH WAS ACTUALLY HANDED OVER TO PR IZE WINNER IN THE LAST WEEK OF MAY, 2000. 4 (4) CHEQUE OF PRIZE MONEY OF RS.3,96,406.80 BEING R ECEIVED IN A.Y. 2000-2001 BUT A.Y. 2001-2002, THEREFORE, ITO ERRED TO TREAT THIS AMOUNT AS INCOME FOR A.Y. 2000-01 IS NOT CORRECT. (5) AN AMOUNT OF EXPENDITURE CLAIMED UNDER THE HEAD COMMISSION OF RS.1,98,000/- AND BANK COLLECTION CHARGES OF RS.1,2 10/- TOWARDS REALIZATION OF PRIZE CHEQUE IS ALLOWABLE U/S. 57 OF I.T. ACT, LD. ITO ERRED IN NOT ALLOWING THE SAME. LD. C.I.T.(A) ERRED IN PR ESSING INTO SERVICE OF PROVISIONS OF SEC. 58 OF I.T. ACT, INSTEAD OF SEC. 57 OF I.T. ACT. 6. AT THE TIME OF HEARING, SHRI UMAID SINGH BHATI, LD COUNSEL OF THE ASSESSEE SUBMITTED THAT GROUND NO. 1 CHALLENGING THE RE-OPENING OF ASSESSME NT UNDER SECTION 147 IS NOT PRESSED. IN VIEW OF THIS, THIS GROUND OF APPEAL IS DISMISSED BEING N OT PRESSED. 7. WITH REGARD TO THE REMAINING GROUNDS OF APPEAL, THE LD. COUNSEL OF THE ASSESSEE FILED A PAPER BOOK CONTAINING 36 PAGES, WHICH INTER ALIA IN CLUDE WRITTEN SUBMISSION MADE BEFORE THE AUTHORITIES BELOW, PUBLICATION OF PRIZE SCHEME AT P AGES 33 TO 35 OF THE PAPER BOOK, COPY OF LETTER FROM GUJARAT GODREJ DEALER ASSOCIATION, AHMEDABAD D ATED 10.02.2000 INTIMATING WINNING OF A PRIZE. FURTHER, WITH REGARD TO CONTENTION OF A.O. T HAT AS IT IS WINNING FROM LOTTERY, THEREFORE, TAXABLE AT THE FLAT RATE OF 40%, THE LD. COUNSEL OF THE ASSESSEE POINTED OUT THAT THIS ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE F OLLOWING DECISIONS :- (1) CIT VS.- JHAVERI INDUSTRIES - [2008] 300 ITR 3 00 (GUJARAT HIGH COURT); (2) B.K. SURESH VS.- ITO - [2009] 221 CTR (KAR.)80 (KARNATAKA HIGH COURT); (3) NAND LAL SONI VS.- ITO - [2006] 104 TTJ (JD.) 893(ITAT, SMC BENCH, JODHPUR) (4) ITO VS.- MALAYALA MANORAMA CO. LTD. - [2005] 9 5 TTJ (COCH) 963 (ITAT, COCHIN BENCH) ELABORATING HIS ARGUMENT, THE LD. COUNSEL OF THE AS SESSEE SUBMITTED THAT IN THE CASE OF JHAVERI INDUSTRIES (SUPRA), THE HON'BLE GUJARAT HIGH COURT HELD THAT PRIZE BY DRAW OF LOTS IS INCLUDED IN LOTTERY BY INSERTING EXPLANATION (1) TO SECTION 2(2 4)(IX) OF THE INCOME TAX ACT WITH EFFECT FROM 01.04.2002. THE ASSESSEES CASE FELL IN THE PERIOD PRIOR TO THE AMENDMENT, AND, THEREFORE, THE PROVISIONS OF THE AMENDED SECTION 2(24)(IX) AND CON SEQUENTLY THE PROVISO TO SECTION 194B OF THE 5 INCOME TAX ACT, 1961, WERE NOT APPLICABLE AND THERE FORE, THERE WAS NO LIABILITY ON THE PART OF ASSESSEE TO DEDUCT TAX AT SOURCE. THE LD. COUNSEL O F THE ASSESSEE ACCORDINGLY SUBMITTED THAT THE AMENDMENT TO SECTION 2(24)(IX) OF THE INCOME TAX AC T, 1961 WITH EFFECT FROM 1 ST APRIL, 2002 IS NOT RETROSPECTIVE. IN THE CASE OF REMAINING DECISIO NS, THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT INCENTIVE PRIZE RECEIVED BY THE ASSESSEE ON AC COUNT OF COUPON GIVEN ON THE STRENGTH OF NATIONAL SAVINGS CERTIFICATES, WOULD NOT FALL WITHI N THE DEFINITION OF LOTTERY. IN THESE DECISIONS ALSO, IT WAS HELD THAT AMENDMENT OF SECTION 2(24)(I X) BY THE FINANCE ACT, 2001 W.E.F. 1 ST APRIL, 2002 IS NOT RETROSPECTIVE. THEREFORE, THE AUTHORITI ES BELOW COMMITTED AN ERROR TAXING THE PRIZE MONEY RECEIVED ON ACCOUNT OF COUPON GIVEN AND DRAW THEREOF AS LOTTERY. 8. WITH REGARD TO THE FACTS BEFORE US, THE LD. COUN SEL OF THE ASSESSEE POINTED OUT THAT NO LOTTERY WAS PURCHASED BY THE ASSESSEE. ONLY A FRIDG E WAS PURCHASED. AS PER SCHEME, THE PERSONS, WHO PURCHASED GODREJ REFRIGERATOR OR GODREJ WASHING MACHINE, ONE PRIZE COUPON FREE OF COST WAS SUPPLIED BY GUJARAT GODREJ DEALERS ASSOCIATION AT THE TIME OF CRICKET WORLD CUP OF 1999 HELD FOR WORLD-WIDE CRICKET TEAMS. THE COUPONS OR E NTRY FORM GIVING PARTICULARS SUCH AS GODREJ WORLD CUP VIJEYETA KANTEST WERE FILLED UP AND WERE TO BE LODGED WITH DEALER FROM WHOM SPECIFIED GODREJ PRODUCT WAS PURCHASED. IN THIS SCH EME, ASSESSEE WON THE FIRST PRIZE OF MITSUBISHI LANCER CAR. IN LIEU OF THAT CAR, EX-SH OWROOM PRICE OF THE CAR - RS.6,60,678/- WAS PAID AS PRIZE MONEY IN CASH, WHICH WAS DULY DECLARE D IN THE ORIGINAL RETURN OF INCOME. IN THE INTIMATION ISSUED ON THE BASIS OF ORIGINAL RETURN O F INCOME, TAX WAS CALCULATED ON THE PRIZE MONEY AT NORMAL RATE AS AGAINST FLAT RATE OF 40% PROVIDED IN CASE OF A LOTTERY UNDER SECTION 115BB OF THE INCOME TAX ACT, 1961. THE LD. COUNSEL OF THE ASSESS EE FURTHER SUBMITTED THAT IN THE TDS CERTIFICATE IN FORM NO. 16 ISSUED, THOUGH TAX HAS B EEN DEDUCTED AT FLAT RATE I.E. 40% UNDER SECTION 115BB BUT THAT IS NOT CONCLUSIVE BECAUSE BEFORE THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF JHAVERI INDUSTRIES (SUPRA) ALSO, THE HON'BLE GUJARA T HIGH COURT HELD THAT PRIZE BY DRAW OF LOTS IS INCLUDED IN LOTTERY WITH EFFECT FROM 1.4.2002, THER EFORE, THERE IS NO LIABILITY TO DEDUCT TDS. IN THE INSTANT CASE ALSO, THE PRIZE WAS WON IN LOTTERY BY DRAW OF LOTS IS PRIOR TO 1.4.2002, THEREFORE, BOTH THE AUTHORITIES BELOW CLEARLY ERRED IN HOLDING THAT THE ASSESSEE IS LIABLE TO TAX @ 40% UNDER SECTION 115BB AS AGAINST TAX CALCULATED BY THE ASSE SSEE AT NORMAL RATE IN THE RETURN OF INCOME. 6 9. WITH REGARD TO CLAIM OF COMMISSION, THE LD. COUN SEL OF THE ASSESSEE SUBMITTED THAT THIS WAS PAID. THEREFORE, THE A.O. BE DIRECTED TO ALLOW THE DEDUCTION OF RS.1,98,000/-. IN RESPECT OF BANK CHARGES, THE LD. COUNSEL OF THE ASSESSEE SUBMI TTED THAT THIS AMOUNT IS ACTUALLY CHARGED BY THE BANK IN REALIZING THE PRIZE MONEY, THEREFORE, A .O. BE DIRECTED TO ALLOW THE SAME. 10. THE LD. COUNSEL OF THE ASSESSEE BEFORE US ALSO TOOK ONE MORE PLEA THAT THE ENTIRE AMOUNT IS NOT TAXABLE IN THE PREVIOUS YEAR RELEVANT TO THE AS SESSMENT YEAR UNDER APPEAL BECAUSE NO AMOUNT IS ACTUALLY RECEIVED IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER APPEAL. TO A QUERY FROM THE BENCH TO PRODUCE THE TDS CERTIFICATE, THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT THE SAME IS NOT AVAILABLE. 11. ON THE OTHER HAND, SHRI M.C. PANDIT, LD. DEPAR TMENTAL REPRESENTATIVE SUPPORTED THE ORDER OF AUTHORITIES BELOW. THE LD. D.R. SUBMITTED THAT AMENDMENT MADE FROM 1.4.2002 IS ONLY CLARIFICATORY, THEREFORE, WHATEVER AMOUNT IS WON BY THE ASSESSEE BY DRAW OF LOTS IS LOTTERY, TAXABLE AT FLAT RATE OF 40% UNDER SECTION 115BB. NO COMMISSION WAS PAYABLE TO DEALER, ETC. AS INFORMED BY THE GUJARAT GODREJ DEALERS ASSOCIATION TO THE A.O., THEREFORE, DISALLOWANCE OF COMMISSION WAS RIGHTLY MADE. WITH REGARD TO METHOD OF ACCOUNTING, THE LD. D.R. POINTED OUT THAT IN THE ASSESSMENT ORDER, THE A.O. HAS MENTIONED THA T METHOD OF ACCOUNTING OF THE ASSESSEE IS MERCANTILE. APART FROM THIS, HE SUBMITTED THAT TAX IS DEDUCTED IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER APPEAL. THEREFORE, IT CANNOT BE SAID THAT PRIZE MONEY WAS NOT PAID TO THE ASSESSEE. IN VIEW OF THIS, PRIZE MONEY WAS RIGHTLY TAXED BY THE A.O. IN THE ASSESSMENT YEAR UNDER APPEAL. 12. HAVING HEARD BOTH THE SIDES, WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF AUTHORITIES BELOW AND PERUSED THE MATERIAL PLACED BEFORE US. IT IS PERTINENT TO NOTE THAT AS PER SCHEME, PRIZE WAS NOT GIVEN ENTIRELY AS PER DRAW OF LOTS BUT WHEN ENTRY FORM WAS FILLED UP TALLIED WITH THE FINAL CORRECT RESULT. TO FORECAST WHICH COUNTRYS TEAM WI LL ACHIEVE WORLD CUP IS BY NO MEANS LOTTERY BUT REQUIRES CLOSE WATCH ON EACH TEAM AND EACH FINA LIST TEAM. IT IS THUS MATTER OF SKILL KNOWLEDGE AND KEEN INTEREST IN THE GAME OF CRICKET AND THE PR IZE CAME IN THE HANDS OF ASSESSEE BY DRAW. IT IS TRUE THAT WHILE DEDUCTING THE TAX AT SOURCE, GUJARA T GODREJ DEALERS ASSOCIATION DEDUCTING THE SUM BY TREATING THE SAME AS LOTTERY BUT IN OUR OPIN ION, THAT IS NOT CONCLUSIVE KEEPING IN VIEW THE 7 FACTS OF THE CASE AND THE DECISION OF THE HON'BLE G UJARAT HIGH COURT IN THE CASE OF JHAVERY INDUSTRIES (SUPRA) RELIED UP BY THE LD. COUNSEL OF THE ASSESSEE. AS PER TDS CERTIFICATE, IT APPEARS THAT TAX WAS DEDUCTED IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER APPEAL, THEREFORE, IT CANNOT BE SAID THAT INCOME IS NOT ACC RUED/ RECEIVED BY THE ASSESSEE IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER APPEAL. AT ANY RATE, NOW THIS PLEA CANNOT BE TAKEN BECAUSE IN THE RETURN OF INCOME, THE ASSESSEE HAS H IMSELF DECLARED THIS RECEIPT AS INCOME OF THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER APPEAL. NO COMMISSION WHATSOEVER IS PAYABLE ON THE PRIZE WON, WHICH IS EVIDENT FROM THE LETTER RECEIVED FROM GUJARAT GODREJ DEALERS ASSOCIATION AND RELIED BY THE A.O. IN THE ASSESSMEN T ORDER. WHATEVER BANK CHARGES IS INCURRED IN REALIZING THE PRIZE MONEY IS ALLOWABLE AS A DEDUCTI ON. WE, THEREFORE, DIRECT THE A.O. (I) TO TAX THE PRIZE MONEY AT NORMAL RATE AS AGAINST AT FLAT RATE OF 40% TAX BY HIM IN THE ASSESSMENT ORDER. (II) COMMISSION AMOUNTING TO RS.1,98,000/- CLAIMED BY TH E ASSESSEE WAS RIGHTLY DISALLOWED BY THE A.O. (III) BANK CHARGES OF RS.1,210/- WERE ACTUALLY INCURRED IN REALIZING THE PRIZE MONEY, THEREFORE, THE A.O. IS DIRECTED TO ALLOW THE SAME. 13. THE A.O. IS DIRECTED TO RE-COMPUTE THE INCOME O F THE ASSESSEE ACCORDINGLY. RESULTANTLY, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 14. IN I.T.A. NO. 172/AHD./2007, THE ONLY GROUND IS AGAINST CONFIRMING THE PENALTY OF RS.1,47,000/- LEVIED BY THE A.O. UNDER SECTION 271( 1)(C) OF THE INCOME TAX ACT, 1961. 15. IN RESPECT OF THIS APPEAL, NO ONE APPEARED ON B EHALF OF THE ASSESSEE. SHRI M.C. PANDIT APPEARED FOR THE REVENUE, RELYING ON THE ORDERS OF AUTHORITIES BELOW CONTENDED THAT PENALTY OF RS.1,47,000/- WAS RIGHTLY LEVIED AND UPHELD, THEREF ORE, THE VIEW TAKEN BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) BE UPHELD. 16. HAVING HEARD THE LD. DEPARTMENTAL REPRESENTATIV E, WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE PENALTY OF RS.1,47 ,000/- LEVIED BY THE A.O. ON ACCOUNT OF (I) IN THE RETURN OF INCOME TAX ON PRIZE MONEY WAS CALCULA TED AT NORMAL RATE AS AGAINST 40% APPLICABLE TO WINNING FROM LOTTERY, (II) FOR CLAIMING EXPENDIT URE OF RS.1,98,000/- IN THE REVISED RETURN AS PAYMENT MADE TO DEALER/ DISTRIBUTOR, WHICH WAS NOT CLAIMED IN THE ORIGINAL RETURN OF INCOME. ON 8 APPEAL, IN THE IMPUGNED ORDER, THE LEARNED COMMISSI ONER OF INCOME TAX(APPEALS) CONFIRMED THE PENALTY. IT IS PERTINENT TO NOTE THAT IN THE OR IGINAL RETURN OF INCOME, THE ASSESSEE HAS NOT CONCEALED THE PARTICULARS OF INCOME OR FURNISHED IN ACCURATE PARTICULARS OF INCOME BECAUSE HE HAS DECLARED THE ENTIRE PRIZE MONEY OF RS.6,60,678/- UN DER THE HEAD INCOME FROM OTHER SOURCES. IN THIS RETURN, THERE IS NO CONCEALMENT WITHIN THE MEA NING OF SECTION 271(1)(C) OF THE ACT. AT WHAT RATE THE PRIZE MONEY WAS TAXABLE WAS DEBATABLE ISSU E AND THE MERE FACT THAT THE ASSESSEE HAS CALCULATED THE TAX IN THE ORIGINAL RETURN OF INCOME AT NORMAL RATE, DOES NOT AMOUNT TO CONCEALMENT OF INCOME WITHIN THE MEANING OF SECTION 271(1)(C) OF I.T. ACT, 1961. 17. IT IS WELL SETTLED LAW THAT UNDER SECTION 271(1 )(C) THE FIRST RETURN HAS TO BE TAKEN INTO CONSIDERATION FOR FINDING OUT THE CONDUCT OF AN ASS ESSEE AND CONCEALMENT MADE BY HIM. IN SUPPORT OF THIS, RELIANCE CAN BE PLACED ON THE JUDG MENT OF THE HON'BLE PUNJAB & HARIYANA HIGH COURT IN THE CASE OF CIT VS.- DR. SAJJAN SINGH MAL IK REPORTED IN (1989) 178 ITR 643(P&H). IT IS PERTINENT TO NOTE THAT IN THE ORIGINAL RETURN OF INCOME FILED ON 18.08.2000, THERE WAS NO CONCEALMENT OF INCOME. THIS RETURN OF INCOME WAS PR OCESSED UNDER SECTION 143(1) ON 20.08.2001, WHEREIN THE RETURN OF INCOME AS WELL AS CALCULATION OF TAX WAS ACCEPTED. SUBSEQUENTLY, A NOTICE UNDER SECTION 154 WAS ALSO I SSUED, WHEREBY THE A.O. WANTED TO RECTIFY THE MISTAKE IN CALCULATION OF TAX. SUBSEQUENTLY, NOTICE UNDER SECTION 148 WAS ISSUED WHEREIN THE ASSESSEE DECLARED LESSER INCOME THAN IT WAS SHOWN E ARLIER IN THE NAME OF HIS MINOR SON, NAMELY VIRAJ KIRANKUMAR VORA. THESE PROCEEDINGS WERE DROPP ED BY THE A.O. HIMSELF, THEREAFTER A FRESH NOTICE UNDER SECTION 148 WAS ISSUED, BUT NO RETURN WAS FURNISHED BY THE ASSESSEE. IN THESE CIRCUMSTANCES, IT CANNOT BE SAID THAT IN THE ORIGIN AL RETURN, THE ASSESSEE HAS NOT DECLARED THE CORRECT INCOME. IN THE ORIGINAL RETURN, THE CORRECT PRIZE MONEY OF RS.6,60,678/- WAS DECLARED, WHICH IS ALSO MENTIONED IN THE TDS CERTIFICATE. 18. NOW COMING TO CHARGE OF CONCEALMENT OF INCOME, IN THE ORIGINAL RETURN IN CALCULATION OF TAX, IN ASSESSEES APPEAL IN I.T.A. NO. 3692/AHD/20 04 (SUPRA), WE HAVE HELD THAT TAX IS LEVIABLE AT NORMAL RATE AND NOT 40% UNDER SECTION 115BB OF T HE INCOME TAX ACT, 1961. THUS ON THIS ACCOUNT ALSO, THERE IS NO CONCEALMENT OF INCOME WIT HIN THE MEANING OF SECTION 271(1)(C) OF THE ACT. 9 19. IN VIEW OF THE FOREGOING, IN OUR OPINION, IT IS A FIT CASE TO LEVY THE PENALTY UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT. THE PENALTY OF RS. 1,47,000/- LEVIED BY THE A.O. IS ACCORDINGLY CANCELLED. 20. IN THE RESULT, THE APPEAL BEING I.T.A. NO. 3692 /AHD/2004 IS PARTLY ALLOWED AND THE APPEAL BEING I.T.A. NO. 172/AHD/2007 IS ALLOWED. THE ORDER PRONOUNCED IN THE COURT ON 20.11.2009 SD/- SD/- (N.S. SAINI) (T.K. SHARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 20 / 11 / 2009 COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE (2) THE DEPARTMENT 3) CIT(A) CONCERNED; (4) CIT CONCERNED, (5) D.R., ITAT, AHMEDABAD. TRUE COPY BY ORDER DEPUTY REGISTRAR, ITAT, AHMEDABAD LAHA/SR.P.S.