Online gaming winnings addition remanded – Gross receipts taxed without verifying buy-in losses; fresh examination directed – ITAT Chennai

Angappan Rama Shankar Vs ITO (ITAT Chennai)

In Angappan Rama Shankar vs ITO (A.Y. 2022-23), the AO added entire gross winnings of ₹99.25 lakh from an online gaming portal as income, holding that losses cannot be set off against lottery winnings. The CIT(A) confirmed the addition ex-parte.

Before the Tribunal, the assessee contended that only net winnings should be taxed after considering “buy-in” amounts and gaming expenses. The ITAT observed that lower authorities relied solely on the statement received from the gaming company and ignored the loss computation reflected in the account statement  .

Considering principles of natural justice and the need to examine the nature of online gaming transactions, the Tribunal set aside the orders and restored the issue to the AO for fresh verification of actual winnings after providing adequate opportunity to the assessee. The appeal was allowed for statistical purposes.

FULL TEXT OF THE ORDER OF ITAT CHENNAI

This appeal by the assessee is against the order of the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi, (in short “CIT(A)”) passed u/s. 250 of the Income Tax Act, 1961 (in short “the Act”) dated 30.10.2025 for Assessment Year (AY) 2022-23.

2. The assessee is an individual and filed the return of income for AY 2022-23 on 28.07.2022 declaring total income of Rs.9,58,020/-. The case was selected for scrutiny and the statutory notices were duly served on the assessee. The AO noticed that during the year under consideration the assessee had gross winnings of Rs.99,25,011 from the gaming portal run by M/s.Gameskraft Technologies P Ltd. The assessee submitted that he has incurred a loss from gaming and submitted a statement showing the loss as below:

3. Based on the report from investigation on the search operation conducted at M/s.Gameskraft Technologies P Ltd., the AO held that the gross winnings should be brought to tax. The AO further held that no loss shall be allowed against winning from lotteries and accordingly added the entire gross receipts as income of the assessee. Aggrieved, the assessee filed further appeal before the CIT(A). Since the assessee did not appear before the CIT(A), the addition was confirmed by the CIT(A) on merits after considering the materials available on record. The assessee is in appeal before the Tribunal against the order of the CIT(A).

4. We heard the parties and perused the material on record. The primary submission of the Ld. AR is that the AO is not correct in adding the gross winnings without considering the “buy-in” amounts and related expenditure. On perusal of the order of the order of the CIT(A) we notice that the order has been passed exparte though the CIT(A) has considered the materials available on record to dismiss the appeal. It is the plea of the Ld. AR that the lower authorities have merely gone by what is mention in the account statement of the assessee as received from M/s.Gameskraft Technologies P. Ltd without providing an opportunity to the assessee to rebut. It is also submitted that the statement considered contains the assessee loss incurred by the assessee which has been completely ignored and only the gross winning from the statement is taken as the income of the assessee. Considering that the lower authorities has passed the order based on the account statement of the assessee received from M/s.Gameskraft Technologies P. Ltd, without examining any other facts unique to online gaming we are of considered we that the assessee should be given one more opportunity to represent the case properly in the interest of natural justice and fair play. Accordingly we remit the appeal back to the AO for a fresh consideration of the impugned issue by calling for necessary details pertaining to the actual winning earned by the assessee from online gaming and decide the issue in accordance with law. The assessee is directed to file the necessary details without seeking unnecessary adjournments and cooperate with assessment proceedings. It is ordered accordingly.

5. In the result, appeal of the assessee is allowed for statistical purposes

Order pronounced on 11^th day of February, 2026 at Chennai.