SUMATI DAYAL versus COMMISSIONER OF INCOME TAX, BANGALORE

Citation: [1995] 2 S.C.R. 1173 · Decided: 28-03-1995 · Supreme Court of India · Bench: S.C. AGRAWAL · Disposal: Dismissed

Cited by 1 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

i 
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SUMATI DAYAL 
v. 
COMMISSIONER OF INCOME TAX, BANGALORE 
MARCH 28, 1995 
[S.C. AGRA WAL, B.L.. HANSARIA AND 
SUJATA V. MANOHAR JJ.) 
A 
B 
Income Tax Act, 1961 S.68-Receipts claimed to be winnings from 
races-Genuineness <;>/-Claim rejected by Settlement Commissioner as non-
genuine-Held valid. 
C 
The appellant had been carrying on business as a dealer in art 
pieces, antiques and curios at Bangalore. During the assessment years 
1971-72 and 1972-73, the appellant received amounts of Rs. 3,11,831 & 
93,500 by way of race winnings in Jackpots and Treble events in races at D 
Turf Clubs in Bangalore, Madras and Hyderabad. The said amount was 
shown by the appellant in the capital accounts in the books. She filed a 
return declaring an income of Rs. 27,829 & 3,827 and also made a sworn 
statement before Income Tax Officer. Basing on the sworn statement, the 
Income Tax Officer made an assessment order holding that the sum of Rs. 
3,11,831 & 93,500 were not winning, in race and he treated the said receipts E 
as income from undisclosed sources and assessed t~e same as income from 
other sources. Appeals filed against the two orders before Income Tax 
Appellate Tribunal were withdrawn by the appellant. She moved applica· 
tions before the Settlement Commissioner stating that a reasonable addi· 
tion on a reasonable basis should the commission hold that the drawings 
of 1970-71 & 1971-72 were not adequate for purchase of Jackpot tickets, 
other expenses in connection with the races and losses if any estiinated by 
F 
,...-- -the Settlement Commission to have been sustained by her. On the said 
application, the Commissioner of Income Tax submitted his report urging 
that the assessee lacked any knowledge of race techniques and the theory 
of proba~ties precluded any systematic and continuous winnings at G 
races on as many as 16 occasions during a period of less than two years 
and that the books of accounts did not indicate the expenditure on travel 
and other incidental expenses which had been incurred by the appe\lant 
for attending the races at Bangalore and Hyderabad. Further he askecf\for 
reopening of the assessment for the assessment year 1970-71 wher~fn H 
1173 
1174 
SUPREME COURT REPORTS 
(1995] 2 S.C.R. 
A ·appellant had' won a sum of 76,681 and which was not brought to tax by 
the Income Tax Offic:er. 
The Settlement Commission (by majority) upheld the assessment for 
the assessment years 1971-72 and 1972-73, made by the Income Tax Oflicer 
and confirmed by the Appellate Assistant Commissioner of Income Tax but 
B . did not accede to the request of the Commissioner of Income tax that the 
assessment for 1970-71 was not so connected with the case pending before 
them. Upholding the said order and dismissing the appeals this Court. 
HELD: 1. It is no doubt true that in all cases in which a receipt is 
C sought to be taxed as income, the burden lies on the Department to prove 
that it is within the taxing provision and if a receipt is in the nature of 
income, the burden of proving that it is not taxable because it falls within 
the exemption provided by the Income-tax Act, lies upon the assessee. 
[1178-D) 
D 
Parimisetti Seetharamamma v. Commissioner of Income Tax, A.P., 
(1965) 57 ITR 532, relied on. 
2. But, in view of Section 68 of the Act, where any sum is round 
credited in the books or the assessee for any previous year same may be 
charged to income tax as the income or the assessee of that previous year 
E if the explanation olTerred by the assessee about the nature and source 
thereof is, in the opinion or the Assessing Officer, not satisfactory. In such 
a case there is, prima facie, evidence against the assessee viz; the receipt 
of money, and if he fails to rebut, the said evidence being unrebutted, can 
be used against him· by holding that it was a receipt of an income nature. 
F While considering the expla~ation of the assessee the Department cannot, 
G 
however, act unreasonably. [1178-E-F] 
':> . 
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I 
Sreelakha Banerjee&; Ors. v. Commissioner of Income Tax, Bihar & 
Ors., (1963) 49 ITR 112, relied on. 
3. It \vas not disputed the amounts were received by the appellant 
from various race clubs on the basis of winning tickets presented by her; 
The dispute was as to whether they were really the winnings of the appel-
lant from the races. Apparent must be considered as real until it is shown 
that there Jlre reasons to believe that the apparent is not real. The taxing 
H authorities are en

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