MISS FATEMA SHOEB HUSSAIN,,NAGPUR vs. ITO, WARD- 2(4),, NAGPUR

Date of Hearing – 13/08/2024 Date of Order – 02/09/2024

O R D E R PER BENCH

The present appeals have been filed by the assessee challenging the impugned orders of even date 06/11/2014, passed by the learned Commissioner of Income Tax (Appeals)–I, Nagpur, [“learned CIT(A)”], for the assessment year 2004–05, 2005–06, 2006–07, 2007–08, 2008–09 and 2009–10 respectively.

Since all these appeals filed by the assessee pertain to the same 2. assessee involving common issues arising out of identical set of facts and Smt. Fatema Shoeb Hussain A.Y. 2004–05, 2005–06, 2006–07, 2007–08 & 2008–09 circumstances, therefore, as a matter of convenience, these appeals were heard together and are being disposed of by way of this consolidated order.

However, in order to understand the implication, it would be necessary to take note of the facts of one appeal. We are narrating the facts as lead case appearing in the appeal being ITA no.64/Nag./2015, for assessment year 2004–05.

A.Y. ` 4,63,900 Unexplained Credit Relating to Maria Estimated business Construction ` 5,84,075 income ` 10,47,975 2004–05 Relating to travel Unexplained credit ` 10,47,975 business Estimate Business ` 34,740 income ` 11,87,715 ` 11,87,715 Unexplained credit ` 6,13,050 Estimated business ` 4,16,277 Relating to Maria income Construction ` 70,000 Unexplained Profit Investment + ` 7,00,875 2005–06 ` 18,00,202 Unexplained credit ` 3,50,000 Relating to travel Estimated business ` 27,540 income ` 4,27,540 ` 21,72,742 ` 22,26,867 Relating to Maria Unexplained credit ` 17,13,500 Construction Estimated business ` 4,48,200 income 2006–07 Unexplained ` 12,70,000 Investment Unexplained ` 3,00,000 receipt ` 37,31,700

Smt. Fatema Shoeb Hussain A.Y. 2004–05, 2005–06, 2006–07, 2007–08 & 2008–09

Relating to Travel Unexplained credit ` 15,85,682 Commission 36,380 income Income from ticket 4,51,860 booking ` 20,73,922 ` 58,05,622 ` 58,05,622 Unexplained credit ` 12,59,000 2007–08 Tour & Travel Ticket booking ` 6,01,915 business income ` 18,60,915 ` 18,60,915 2008–09 Re: Maria Unexplained credit ` 25,63,755 Construction in Bank Estimated business ` 6,51,850 income Unexplained ` 15,60,000 Investment Unexplained credit in bank a/c ` 33,01,509 ` 33,01,509 (reduced by CIT(A) to ` 3,01,509 Estimated business ` 45,340 income ` 81,22,454 Relating to Travel Income from travel ` 1,02,030 business business Unexplained sale ` 23,23,334 transaction ` 24,25,364 ` 1,05,47,818 ` 1,05,47,818 Unexplained credit ` 39,82,675 in bank Relating to Maria Construction Estimated business ` 4,07,700 income 2009–10 ` 43,90,373 Relating to Travel Unexplained credit ` 3,765 business Commission on ` 90,976 Travel M.B. Travel ` 12,32,787 ` 13,27,528 ` 57,17,903 ` 57,17,903

Smt. Fatema Shoeb Hussain A.Y. 2004–05, 2005–06, 2006–07, 2007–08 & 2008–09 ITA no.64/Nag./2015 Assessee’s Appeal – A.Y. 2004–05

Smt. Fatema Shoeb Hussain A.Y. 2004–05, 2005–06, 2006–07, 2007–08 & 2008–09 Construction, and this is taken as one of the circumstances for treating the assessee Smt. Fatema Shoeb, as Proprietor of Maria Construction. It was pointed out that it was merely a typing mistake whereby below the signature of Fatema Shoeb, instead of typing Agent M/s. Maria Construction, it was wrongly typed as Proprietor Maria Construction and in support of this fact the affidavit of the Advocate who had prepared the document was filed. To this, the Assessing Officer merely stated that this was a self–serving document and hence rejected the affidavit. It is submitted that it was an affidavit of an advocate and not the Assessee. It cannot be termed as a self– serving document. An advocate is a responsible person. He is third party and is a person who knew the fact about the typing mistake and he accordingly deposed the said fact on oath. He was never cross examined nor even in any way questioned. Thus, the Assessing Officer cannot reject the affidavit of an advocate as self–serving document and reject the good and clinching evidence into no evidence. With regard to merits of additions made (i) on account alleged unexplained credits (both by cash and by cheque) in bank account of Maria Construction and (ii) on account of estimated business income of Maria Construction, Assessee fully relies on the detailed Written Submission dated 06/01/2014, filed by the Assessee before learned CIT(A) after receipt of remand report dated 22/07/2013, for all the assessment years under appeal viz. for the assessment year 2004-05 to 2009-10 and also Written Submissions dated 05/11/2012, referred to above. However, gist of the submission therein is as under:-

“It is an established and admitted position that the bank account No.040- 415026-001 in the name of Maria Construction - Prop. Shabbir Hussain with Centurion Bank is the business account wherein the sale proceeds on sale of Page | 6

Smt. Fatema Shoeb Hussain A.Y. 2004–05, 2005–06, 2006–07, 2007–08 & 2008–09 flats etc. is deposited. Assessee has also filed confirmation of most of the deposits in the said account. In fact the A.O. himself has treated those deposits for which confirmations are filed as business receipt and has estimated income on these deposits. However in respect of some deposits business receipt the Assessee could not file confirmation and hence the A.O. has treated those deposits as unexplained deposit and has added the same u/s.69 as unexplained deposits.”

Smt. Fatema Shoeb Hussain A.Y. 2004–05, 2005–06, 2006–07, 2007–08 & 2008–09 above, was also called for from the Assessing Officer, which he submitted on 30/08/2013. The assessee filed her reply dated 06/01/2014, to the remand report in her case. The learned CIT(A) relying on the remand report, stated in Para 7.1 that the Assessing Officer has considered all the relevant points raised by learned A.R. at the time of assessment proceedings and it is quite manifest from the material evidence on record that the assessee is a defacto owner of Maria Construction and that the learned A.R. has not brought any additional material to rebut the contention of the Assessing Officer and, therefore, he declined to interfere with the findings of the Assessing Officer that assessee (Smt. Fatema Shoeb) is the defacto owner of Maria Construction. Being dissatisfied with the order of the learned CIT(A), the assessee further filed appeal before the Tribunal on the following grounds:–

“1] Learned A.O. erred in reopening the assessment of the assessee for A.Y.2004-05 by issue of notice U/s.148. The learned C.I.T.(A)-I upheld the action of the A.O. reopen the assessment. The said notice and reassessment proceedings are bad in law. 2] Learned A.O. erred in holding that the assessee was the owner of the Maria Construction. Said Maria Construction was the Proprietory concern of Shri Shabbir Hussain Taherali. The learned C.I.T.(A)-I has not accepted assessee's submission and confirm the finding of the A.O. 3] Learned A.O. erred in adding Cash Deposits of Rs.2,03,900/- and cheque deposits of Rs.2,60,000/-. The learned C.I.T.(A) erred in confirmed the said addition U/s.68 of the I.T.Act. 4] Learned A.O. erred in adding amounting to Rs.5,84,075/- as a estimated gross profit at 10% on assumed construction receipt of Rs.58,40,750/-. The same addition confirm by the C.I.T.(A) without any basis. 5] Learned A.O. erred in adding amounting to Rs.5,000/- out of cash deposit and Rs.1,00,000/- out of cheque deposit as Unexplained Income. Learned C.I.T.(A) has confirm the said addition without any basis. 6] Learned A.O. erred in adding amounting to Rs.34,740/- on estimated income as Commission Income from arranging Haj Tours. Learned C.I.T.(A) confirm the said addition without any basis.

Smt. Fatema Shoeb Hussain A.Y. 2004–05, 2005–06, 2006–07, 2007–08 & 2008–09 7] Learned A.O. and C.I.T.(A) erred in not consider assessee's submission and various documents filed before him. 8] Assessee crave to urge additional grounds at the time of hearing, if necessary.”

Smt. Fatema Shoeb Hussain A.Y. 2004–05, 2005–06, 2006–07, 2007–08 & 2008–09

“(1) It is seen from the agreement of development dated 16.12.2003 made between Umesh Marketing Pvt. Ltd. and M/s Maria Constructions that the appellant had signed the said agreement as proprietor of M/s Maria Construction and paid Rs. Page | 10

Smt. Fatema Shoeb Hussain A.Y. 2004–05, 2005–06, 2006–07, 2007–08 & 2008–09 10.50 lakhs to the said concern, in lieu of marketing for and development of land situated at Mohan Nagar, Nagpur. (2) The development agreement entered between dated 19.01.2007 the appellant and Mr. Balkrishna Gomase and five others, the AO noticed that the appellant had entered into the development agreement in her individual capacity and not as a Power of Attorney holder of M/s Maria Constructions, by virtue of which, all the rights, title and interest in the. property bearing no. NMC House No. 232, City Survey No. 193, admeasuring 2571 sq.ft. got vested with the appellant. The appellant has paid a total consideration of Rs. 42,42,150/- for the said development agreement. This land was subsequently developed and sold in the name of M/s Maria Constructions in the name of the scheme, Nagpur. Manzil, Lal Imli, Gandhibagh, (3) The appellant, along with three other persons, namely, i) Mufazzal Saifee, ii) Khuzaima. & iii) Kakumuddin Abdul had purchased land at Mouza Wadpakad at City Survey No. 1137 from one Mrs. Prita w/o Jacob Lali, vide sale deed dated 16.01.2001 for Rs. 14.60 lakhs, which has been developed as Raj Complex. The three persons mentioned above have given Power of Attorney to the appellant for construction of flats and shops at Raj Complex at the said land. It is further noticed that the sale deed of Raj Complex have been done in the name of M/s Maria Construction and its agent. The AO, however, noticed that right from purchase of land till the sale of flats and shops, all development and construction activities have been carried out by appellant in her own capacity.

Smt. Fatema Shoeb Hussain A.Y. 2004–05, 2005–06, 2006–07, 2007–08 & 2008–09 The learned A.R. has also filed a submission dated 06/01/2014, as rejoinder to the remand report filed by the Assessing Officer, which have been considered. The contention of the learned A.R. is that Shri Shabbir Hussain Taher Ali, is the real owner of M/s.Maria Constructions; therefore, the additions made in the hands of the assessee Smt. Fatema Shoeb Hussain, ought to have been considered by the Assessing Officer in the hands of said Shri Shabbir Hussain Taher Ali, on merits. Thus, the learned CIT(A), on careful examination of the facts as emanated from the order of the Assessing Officer, the remand report, the submissions of the learned A.R. and the material on record, observed that that the Assessing Officer has considered all the relevant points raised by the learned A.R. of the assessee at the time of assessment proceedings and nothing new facts were uncarted in subsequent proceedings. It is quite manifest from the material evidences on record that the assessee is the de-facto owner of the M/s.Maria Construction, more particularly in the light of material facts brought on record by the Assessing Officer during the assessment and the remand proceedings. The learned A.R. in the course of appellate proceedings has not been able to adduce any additional material in rebuttal of the contentions of the Assessing Officer. Therefore, the learned CIT(A) decline to interfere with the finding of the Assessing Officer that the assessee is the de-facto owner of M/s.Maria Constructions, and the income so embedded in the transactions of M/s. Maria Constructions, should be assessed in the hands of the assessee, as she being the real owner in the absence of any evidence to the contrary on records. The learned CIT(A), therefore, upheld the findings of Smt. Fatema Shoeb Hussain A.Y. 2004–05, 2005–06, 2006–07, 2007–08 & 2008–09 the Assessing Officer. Aggrieved, the assessee is in further appeal before the Tribunal.

Smt. Fatema Shoeb Hussain A.Y. 2004–05, 2005–06, 2006–07, 2007–08 & 2008–09 Shoeb Hussain, and she was duly empowered to take all the business decisions, negotiation, purchase and sale of property. At this point, the Bench posed a question to the learned A.R. about the status of appeals filed by Shri Shabbir Hussain Taher Ali, wherein the additions were made on protective basis. The learned A.R. informed the Bench that the appeals were allowed by the first appellate authority in view of the fact that the substantive assessment is made in the case of the assessee and therefore, there is no subsisting protective assessment as on the date which is also not challenged by the Revenue before the Tribunal due to low tax effect. Accordingly, if we hold that the assessee is the owner of M/s. Maria Constructions, then the entire transactions will escape from the net of Income–tax, which is not permissible. The scheme adopted by the assessee is only a colourable device to defraud the Revenue in defiance to all legal provisions and we cannot remain a silent spectator to this fiasco. Upon perusal of computation of income of Shri Shabbir Hussail Taher Ali, it is found that though income from business estimated has been returned there is no iota of evidence about the nature and source of any business activity from where the income emanated. The learned A.R. failed to throw any light about how Maria Construction’s income has been considered by Shri Shabbir Hussain Taher Ali, in his taxable income. These returns were filed in course of proceedings under section 148 of the Act as he was too a non–filer. A conscious call was taken by him by ignoring the generation of income from construction activity. It seems that the whole exercise of shifting the ownership is clearly an afterthought when the assessee’s shoulders were back against the wall and no visible and apparent escape route was in sight. Page | 14

Smt. Fatema Shoeb Hussain A.Y. 2004–05, 2005–06, 2006–07, 2007–08 & 2008–09 We strongly feel that it is an open and shut instance of tax evasion which cannot be countenanced. In view of the substantial circumstantial evidences against the assessee a self–serving affidavit will not rescue the assessee. The learned CIT(A) has given numerous opportunities to the assessee to establish her case even at the stage of remand no additional evidence were submitted. The learned A.R. merely reiterated his case before the authorities below without any corroborative evidence. On the other hand, the learned Departmental Representative relied on the orders of the authorities below to hold that the assessment has been correctly made. He rightly pointed out that the assessee failed to rebut conclusively the aberrations in the development agreement and had given a flippant reply. In view of the fact that the assessee failed to discharge her onus that she is not the owner of M/s. Maria Construction, we do not think fit to interfere with the cogent observation of the learned CIT(A). Accordingly, we do not find any infirmity in the order passed by the learned CIT(A) and uphold the same by dismissing the ground no.2, raised by the assessee.

./2015 – A.Y. 2005–06 ITA no.66/Nag./2015 – A.Y. 2006–07 ITA no.67/Nag./2015 – A.Y. 2007–08 ITA no.68/Nag./2015 – A.Y. 2008–09 ITA no.69/Nag./2015 – A.Y. 2009–10

i) Unexplained receipts – A.Y. 2006–07 – M/s. Maria Construction; ii) Commission income and income from ticket booking – A.Y. 2006– 07 – relating to travel; iii) Unexplained credit in bank account of ` 33,01,509 – A.Y. 2008– 09 – M/s. Maria Construction; iv) Income from travel business – A.Y. 2008–09 – relating to travel business;

Smt. Fatema Shoeb Hussain A.Y. 2004–05, 2005–06, 2006–07, 2007–08 & 2008–09 v) Unexplained sale transaction – A.Y. 2008–09 – relating to travel business; vi) Unexplained credit in bank – A.Y. 2009–10 – relating to M/s. Maria Construction; vii) Unexplained credit – M.B. Travel – A.Y. 2009–10 – relating to travel business.