The writ petitions under Article 226 of the Constitution have been filed challenging the orders dated 25.1.94 and 6.6.94 passed by the Assistant Commissioner of Income Tax, Circle TDS, Panbazar, Guwahati under section 201 (1) of Income Tax Act, 1961 (Annexure XIII to the CR 405 of 1994 and Annexure VI to the CR 2786 of 1994 respectively). By the order dated 25.1.94 the respondent No. 1 asked the petitioner to deposit a sum of Rs.2,80,16,800 within three days from the date of receipt of the said notice of demand as the petitioner failed to deduct tax at source in respect of the lottery draws held during the period from 16.11.93 to 31.12.93. In CR 2786 of 1994 by the impugned order dated 6.6.94 respondent No. l raised a demand of Rs.7,92,06,400 on the petitioner on account of alleged short deduction of tax at source under section 194B of the Income Tax Act in respect of 1404 Nos. of lottery draws held during the period from 6.2.92 to 12.12.92.

2. As the civil rules involve common questions of law and facts, I propose to dispose of these two writ petitions by a common judgment and order.

3. Pursuant to the powers conferred on States under Article 298 of the Constitution of India the State of Assam has been carrying on the business of State organised lottery through its organising agents, after executing agreements between the parties. Lotteries are run under various names. The petitioner appointed M/s MS Associates as an organizing agent. The petitioner is responsible for making payments of the prize money to the prize winners in terms of the agreement made with the organising agent. The liability for deduction of income g tax at source under section 194B of the Income Tax Act, 1961 (for short 'the Act') rests with the petitioner and the petitioner is to deduct tax at source while making payments towards prizes, provided the payments exceeds Rs.5,000. The petitioner is also responsible for making payments to the organising agents in respect of prize winning tickets which either remained unsold or unclaimed.

4. The Income Tax authority (respondent No. 1) found that the petitioner did not deduct tax at source in respect of 1454 draws held from 6.2.92 to 15.12.92, demanded a sum of Rs.7,92,06,400 and a sum of Rs.2,80,16,800 in respect of the draws held during the period 16.11.93 to 31.12.93. According to the petitioner the impugned orders demanding payment of huge amounts are prima facie arbitrary, violative of the mandatory provisions contained under section 194B of the Act. Hence the petitioner has challenged the legality and validity of the orders so passed by the respondent No.1. According to the petitioner unclaimed and/or undisbursed prize money is not winning from lottery and as such, the provisions of section 194B for deduction of income tax at source is not applicable in respect thereof. As such, according to the petitioner the claim of the respondent/authority is not tenable in law and it is violative of. the mandatory provisions contained under section 194B of the Act.

5. Affidavit-in-opposition has been filed by the respondent No.l on behalf of the respondent Nos 1,2 and 3. According to these respondents, the petitioner who is responsible for deduction of tax at source has not deducted tax amount to Rs.7,92,06,400 in 1454 draws held from 6.2.92 to 15.12.92 and Rs.2,80,16,800 in respect of the draws held during the period from 16.11.93 to 31.12.93. It has been alleged that the Central Govt as well as the Govt of Assam have lost a very substantial revenue on the failure of the petitioner to deduct tax at source in earlier occasion also. Moreover, as per the clause 24 of the agreement arrived at between the Govt of Assam and M/s MS Associates, the organising agent (respondent No.5/4) the organising agent is solely responsible for the sale of entire lot of tickets printed for a draw and the petitioner is not liable for any loss caused to the agent on account of the lottery tickets remained unsold. As per clause 10 (a) of the ag

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