Speculation is illegal, but there is nothing wrong in adding the proceeds from it to the total business income of an individual for the purpose of income tax, a tribunal has ruled.
“We are of the view that the estimation made by the Assessing Officer of the income of the assessee at 1 per cent of the total cricket betting transactions, as found in the laptop seized from the possession of the assessee, is quite reasonable and proper, the Income Tax Appellate Tribunal ( ITAT), Ahmedabad said in a recent order.
Based on a tip-off about cricket betting, the police raided the house of the assessee. Around ₹43.88 lakh in cash, some incriminating documents, and articles like laptop, mobile, TV were seized. The Income Tax Department conducted investigation and the assessee claimed that the cash was commission income earned from immovable property business.
On being asked about the transactions of more than `33 crore and `111 crore relating to assessment years 2011-12 and 2012-13, which were recorded in his laptop, the assessee admitted in writing that he Betting was involved in the brokerage. It was explained that during a match the customer shares his deals over the phone, which is entered into the computer. The match can be for one day or three days or seven days etc. On the day the match ends, the customer pays for a loss and receives payment when there is a profit. “As per our experience, 100 per cent people take their profit but 75-90 per cent people pay their loss. It is settled immediately in cash, for which no record was kept,” it was said.
However, the Assessing Officer (AO) rejected the explanation. “Keeping in view the fact that the transaction involves profit as well as loss and considering the fact that some customers do not close for payment of their losses, the income is estimated @ 1 of the transaction. Percentage, which is ₹ 33,09,019 for AY 2011-12 and ₹ 1,11,18,493 for AY 2012-13, in respect of business of cricket betting. The same is added to the total income of the assessee. The AO said in its order. This was later confirmed by the first level of appeal and then upheld by the ITAT.
Om Rajpurohit, Director (Corporate and International Tax), AMRG & Associates, says that due to the illegal nature of businesses such as betting or hawala, it is extremely difficult to describe the cash seized or an explanation for such transactions as there is always a shortage. it occurs. Appropriate supporting documents and justification to mark the transaction.”
Notably, even in the Finance Act of 2017, strict measures were introduced to curb black money and cash transactions, including a new section 269ST in the Income Tax Act, which states that any 2 lakh or more Can’t get more cash. In a single transaction in a day (Subject to certain exceptions). Section 271DA was also introduced, which imposes a penalty equal to the cash received, regardless of the nature of the receipt. “As a result, cash transactions of ₹2 lakh or more are no longer allowed, even if your business is legitimate, and heavy fines will be levied despite proper supporting documentation,” he said.
12 July 2022