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TMI Blog2004 (8) TMI 633X X X X Extracts X X X X X X X X Extracts X X X X ..... is an individual. For the assessment year under appeal, the Assessing Officer issued a notice under section 148 of the Income-tax Act on the basis of information received from D.D.I. (Inv.), Unit-IV regarding assessee s purchase and sale of a bungalow at Chembur, Mumbai. The assessee filed return of income, wherein, he has shown income from brokerage and commission of Rs. 19,960 and short term capital gain of Rs. 60,000 on sale of bungalow No. 9, Trishul Complex, Sindhi Society, Chembur. 3. The Assessing Officer in the assessment order stated that assessee was a drug smuggler. During the course of investigation by the Narcotics Cell of the Police Department about his activities, it was gathered that he had purchased a bungalow No. 9, Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sum of Rs. 12 lakhs. Please explain the source of investment in the purchase of this bungalow and also explain why the capital gain is not taxed for the above transaction. ( b )Please produce a copy of agreement for the purchase and sale of the above bungalow. ( c )What is the nature of business that you are doing now and why the return of income is not filed for all these years ? 6. The assessee s representative vide letter dated 8-12-1998 stated that the bungalow was purchased for Rs. 6 lakhs in the financial year 1991-92 and the same was sold in the financial year 1992-93 for Rs. 7 lakhs. The Assessing Officer vide letter dated 10-12-1998 asked the assessee to explain as under : "Now I have received your returns of income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erm capital gains of Rs. 5,79,960. 8. The assessee carried the matter in appeal and the ld. CIT(A), in the impugned order upheld the action of the Assessing Officer on the ground that the assessee twice made the statement before the Narcotics Cell, therefore, it cannot be reasonably claim that these statements were made under duress or threat. In the impugned order, the CIT(A) also held that the Assessing Officer had reasonable material to add the "on-money" received on sale of bungalow and that the assessee had not rebutted the case of the Assessing Officer. Aggrieved by this order of the CIT(A), the assessee is in appeal before us. 9. At the time of hearing, on behalf of the assessee, Sh. B.V. Jhaveri appeared, filed a paper book ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome-tax Act. 11. In the rejoinder, the ld. counsel for the assessee drew our attention to the judgment dated 30-1-1995 of the Special Designated Judge (NDPS) for Greater Bombay vide N.D.P.S. Special case No. 147 of 1992, whereby, the assessee who was prosecuted for the possessing and transporting heroin by Narcotics Cell, weighing 1 kg. each in a motor car in contravention of provisions of section 8( c ) of the N.D.P.S. Act, 1985 was acquitted. The ld. counsel submitted that this clearly indicate that the assessee was innocent and no assets disproportionate to his income were found and the addition has been made on doubts and suspicion. Therefore, the same deserves to be deleted. 12. Having heard both the sides, we have carefully ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the subject matter of the appeal but extend to the subject matter of the assessment. In the case before us, we found that neither the Assessing Officer nor the CIT(A) made an attempt to find out the statement of affairs of the assessee as on 1-4-1992 ( i.e., before the date of sale of the bungalow) and as on 31-3-1993 ( i.e., at the end of the year in which the assessee sold the bungalow). It is also not known, whether either Narcotics Cell or Income-tax Department, in the statement recorded, put any question regarding investment made by the assessee of Rs. 5 lakhs as "on-money" alleged to be received by the assessee on sale of bungalow in question. In our opinion, merely on the basis of admission made before the Narcotics Cell, the addit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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