Merely because other clubs follow the very same accounting policy, it cannot be said to be beyond scrutiny or verification as to the correctness and completeness of the accounting practice followed, and there is any deficiency in such accounting practice or policy, it can very well be tinkered with howsoever universally followed such policy is; there is no proposition in law to force the revenue to accept the accounting system, merely because it is followed by other clubs, more so, when it is proved to be not disclosing the true and correct picture of the state of affairs of the assessee so as to enable the Assessing Officer to deduce the correct income of the assessee.
Decided by: ITAT, HYDERABD BENCH `B' HYDERABAD, In The case of: Hyderabad Race Clubv.JCIT, Appeal No. ITA NO. 972 & 973/Hyd./08, Decided on: SEPTEMBER 26, 2008
RELEVENT PARAGRAPH
34. We have considered the rival submissions in the light of the material available on record and plethora of decisions relied upon by both the parties before us. Admitted facts of the case are that the assessee is engaged in the business of conducting horse races for over four decades. On account of inherent nature of its business, it receives amounts from innumerable customers who are public at large by way of bettings in respect of each racing event, and immediately on completion of each event/race, it is required to make winnings payments on the wining tickets. All the transactions, whether receipts in the form of bettings or payments in the form of winnings are by way of cash. Assessee claims to be following from the beginning, a consistent accounting policy, in consonance with such policy by other race clubs all over the country, by which-it credits to the Profit & Loss Account only the net collections and not gross collections, viz. collections exclusive of winnings payments and Betting Tax payable to the State Government, which alone according to it is its income by way of commission. This accounting policy consistently followed by the assessee all along has been accepted by the Revenue in the earlier years. In support of this accounting policy, assessee claims itself to be only an agent whose income is only commission and'not all the receipts. According to the assessee, it is only for the first time that the book results of the assessee have been rejected, and" additions have been made primarily by making an ad-hoc disallowance out of winnings payments of less than. Rs.2,500 each on the ground of unverifiable nature of such expenditure, and disallowance under S.40A(3) in respect of winnings payments exceeding 'Rs.20,000" each". It Is;"""basically these" two disallowances that call for our adjudication in these appeals
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