Income Tax

Dear client,

In the your case for AY 2022–23, the addition made by the Assessing Officer under the Income Tax Act 1961 by invoking Section 115BB and taxing the gross winnings from online card games without allowing set-off of losses is legally challengeable before the Income Tax Appellate Tribunal on multiple grounds, namely that the specific regime for online gaming taxation was introduced only subsequently (Section 115BBJ), and therefore for the relevant year such income ought to have been computed under normal provisions permitting taxation of real income, i.e., net winnings after adjusting losses; further, the Assessing Officer erred in selectively considering only winnings while ignoring corresponding losses, which is contrary to settled principles of income computation, and the nature of online card games (particularly if skill-based) does not strictly fall within the ambit of Section 115BB as applicable during that period; additionally, the issue being interpretational and debatable, the imposition of penalty is also unsustainable, especially where the assessee has made full disclosure and acted under a bona fide belief, thereby rendering the orders of the Assessing Officer and CIT(A) liable to be set aside.