JM FINANCIAL LIMITED,MUMBAI vs. DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 4(3)(1), MUMBAI, MUMBAI

Being aggrieved by the ex-parte order, dated 27/09/2023, passed by the CIT(A) the Appellant has preferred the present appeal before the Tribunal on the grounds reproduced in paragraph 2 above.

When the appeal was taken up for hearing, the Ld. Senior Counsel appearing for the Appellant pressed into service Ground No. A-1 & A-2 challenging the passing of ex-parte order without giving reasonable opportunity of being heard to the Appellant. It was contended that the order passed by the CIT(A) was bad in law and was, therefore, liable to be set aside. The Learned Senior Counsel submitted that the CIT(A) had dismissed the appeal vide order dated, 27/09/2023, without taking into consideration the request for adjournment made by the Appellant on 25/09/2023. Inviting our attention to application for admission of additional evidence filed along with the present appeal, the Learned Senior Counsel submitted that the Appellant wanted to place reliance on additional evidence. However, since the CIT(A) dismissed the appeal without considering the request for adjournment, the Appellant was prevented from filing the additional evidence before the CIT(A). Therefore, the additional evidence was being filed before the Tribunal. Taking us through the additional evidence sought to be brought on record, the Learned Senior Counsel further submitted that the additional 4 evidence now been filed by the Appellant were relevant for the adjudication of the issues before the Tribunal and the same be admitted in the interests of justice.

Per contra, the Ld. Departmental Representative opposed the application for admission of additional evidence and submitted that sufficient opportunity was granted to the Appellant by the CIT(A) and the Assessing Officer to file relevant documents and details in support of its claim. The Ld. Departmental Representative further submitted that the CIT(A) had issued notices of hearing which were served on the Appellant. However, the Appellant kept taking adjournments. It was also pointed out that the Appellant had failed to provide any cogent reasons to show why the Appellant was not in a position to file the additional evidence before the Assessing Officer which is now sought to be filed before the Tribunal.

In rejoinder, the Learned Senior Counsel appearing on behalf of the Appellant submitted that during the assessment proceedings the Appellant was never confronted with the issues on which the additions/disallowances have been made by the Assessing Officer in the assessment order, and therefore, during the assessment proceedings the Appellant had no occasion to file the documents/details now being filed as additional evidence before the Tribunal.

We have considered the rival submissions and perused the material on record including the order passed by the authorities below and the additional evidence. It emerges that the Assessing Officer has (a) made addition of INR 10,51,79,000/- in respect of share premium credited to Reserve & Surplus Account under Section 68 of the Act, (b) disallowed rental 5 expenses of INR 52,71,000/- and (c) made addition/disallowance of INR 9,76,74,570/- under Section 14A of the Act. We note that the amount credited to the share premium account was added to the income of the Appellant by invoking provision of Section 68 of the Act on the ground that neither any evidences nor any supporting documentary evidences were filed by the Appellant during the assessment proceedings. It is the case of the Appellant that the aforesaid share premium has been received from employees of the Appellant-company on the issue of share under ESOP Scheme. Additional evidence is now being filed to substantiate the aforesaid contention. Further, a part of deduction claimed for rental expenses was disallowed, inter alia, on the ground that the Appellant had failed to establish that the Appellant was using the premise since 01/04/2016 (till the date of agreement). The case of the Appellant is that the Appellant was also in occupation of the said property continuously since the immediately preceding financial year and the Appellant was now placing on record the earlier rental agreement in support of the aforesaid claim. Similarly, addition/disallowance under Section 14A was made by application of Rule 8D of the Income Tax Rules, 1962 without taking into consideration the actual monthly balances of investment since the same were not filed by the Appellant during the assessment proceedings. We note that in the Assessment Order, the Assessing Officer has noted that as and when the details of investments are filed the computation of addition/disallowance shall be rectified. The Appellant is now filing the details of investment as additional evidence. Thus, the Appellant has moved application for admission of the following additional evidence: i. Copy of Employees' Stock Option Scheme along with Addendum thereto (placed at page 194 to 206 of the paper-book)

We note that the Appellant had sought adjournments before the CIT(A) and failed to file relevant documents/details/submission despite issuance of various notices. Therefore, the Appellant was proceeded ex-parte. However, we find that the last three notices sent on 10/08/2023, 17/08/2023 and 25/08/2023 were issued to the Appellant within a period of 15 days. Therefore, in the interest of justice, we are inclined to grant the Appellant another opportunity to the Appellant. Therefore, subject to deposit of cost of INR 10,000/- with Prime Minister National Relief Fund within a period of 15 days from the date of this order, we set- aside the ex-parte order dated 27/09/2023, passed by the CIT(A) and remand all the three issues raised in the present appeal back to the file of the Assessing Officer for denovo adjudication after taking into consideration the additional evidence furnished by the Appellant is allowed. Accordingly, Ground No. A-1 & A-2 raised by the Appellant are allowed while all the other grounds raised by the Appellant are disposed off as being infructuous.