COMMISSIONER OF INCOME TAX Vs. ABDUL RASHEED

JUDGEMENT

(1.) AS to whether the purchase of lottery tickets jointly by a body of individuals, one of the tickets so purchased being the prize winning ticket resulting in benefit of Rs. 10,00,000 to those persons collectively would require the Income-tax Officer to assess all those persons collectively as a body of individuals, is the question that has been referred to us at the instance of the Revenue.

(2.) ONE Abdul Rasheed and 13 others had purchased 101 lottery tickets of the Pondicherry Raffle Scheme. In the draw held on July 11, 1981, one of the tickets purchased by them won the prize of Rs. 10,00,000. All these individuals separately filed returns of income claiming that there was an agreement between them on July 7, 1981, according to which the prize was to be shared in the prescribed ratio. The Income-tax Officer, however, held that they were to be assessed collectively as a body of individuals as there was unity of interest among them in purchasing the tickets collectively in the hope that one of those tickets would fetch a prize which would be shared by all. That view of the Income-tax Officer was reversed in appeal by the Commissioner of Income-tax (Appeals) who held that it was preposterous to speak of production of windfalls, that winning the prize money in a lottery scheme is merely a windfall which is not produced but just happens and, therefore, there was no activity producing any income. It had also been contended by the assessees that two of the members of the body had been separately assessed to income-tax and, therefore, all of them collectively could not be assessed as a body of individuals.

(3.) THE assessment under the Income-tax Act, 1961, is required to be made on the "right person". THE fact that an assessment has been made on a wrong person would not disentitle the Revenue from proceeding to make an. assessment later on the right person. It was so held by the apex court in the case of ITO v. Ch. Atchaiah [19961 218 ITR 239. It was observed therein as under (headnote) :