SURESH DHARNIA,JAIPUR V. INCOME TAX OFFICER, JAIPUR

ITA 235/VIZ/2025

AI Insights

The case involves appeals by Suresh Dharnia against the orders of the Additional/JCIT (A)-3, Bengaluru, which disallowed deductions for delayed deposits of employees' contributions to EPF/ESI for the assessment years 2020-21 and 2021-22. The primary legal contention was whether the disallowance under Section 36(1)(va) of the Income Tax Act, harmoniously construed with Section 43B, was justified. The assessee argued that the contributions were made before the due date for filing the return of income under Section 139(1) and that there was no intention to withhold or misuse the funds. However, the tribunal dismissed the appeals due to the inordinate delay in filing, attributing the delay to the assessee's earlier tax consultant's negligence, which was not substantiated with adequate evidence.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 708206 (ITAT-VISAKHAPATNAM)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-07-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Assessment Year: 2020-2021
• Other Referred Cases: Checkmate Services (P) Ltd. vs. CIT
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Section: 43B

Judgement Text

"आयकर अपीलीय अधिकरण, विशाखापटणम पीठ में IN THE INCOME TAX APPELLATE TRIBUNAL Visakhapatnam Bench श्री रवीश सूद, माननीय न्याययक सदस्य एिं श्री एस. बालक ृष्णन, माननीय लेखा सदस्य SHRI RAVISH SOOD, HON’BLE JUDICIAL MEMBER AND SHRI BALAKRISHNAN. S, HON’BLE ACCOUNTANT MEMBER, आयकरअपीलसं./I.T.A.Nos.235 and 236/Viz/2025 (निर्धारण वर्ा/ Assessment Years : 2020-21 and 2021-22) Suresh Dharnia, R/o.Visakhapatnam PAN : AAWPD7103P Vs. The Income Tax Officer, Visakhapatnam (अपीलार्थी/ Appellant) (प्रत्यर्थी/ Respondent) करदाता का प्रतततितित्व/ Assessee Represented by : None. राजस्व का प्रतततितित्व/ Department Represented by : Dr. Aparna Villuri, Sr.AR सुिवाई समाप्त होिे की ततति/ Date of Conclusion of Hearing : 09.07.2025 घोर्णध की तधरीख/ Date of Pronouncement : 18.07.2025 O R D E R प्रनत रवीश सूद, जे.एम./PER RAVISH SOOD, J.M. The captioned appeals filed by the assessee are directed against the respective orders passed by the Additional/JCIT (A)-3, Bengaluru for A.Y 2020-21 and A.Y 2021-22, which in turn arises 2 ITA Nos.235 & 236/Viz/2025 from the respective intimations issued by the Assessing Officer (for short “A.O.”)/Central Processing Centre (for short “CPC”), Bengaluru under Section 143(1) of the Act, dated 15.12.2021 and 26.08.2022, respectively. As common issues are involved in the captioned appeals, therefore, the same are taken up and disposed of by this consolidated order. 2. We shall first take up the appeal filed by the assessee for A.Y. 2021–22 in ITA No. 235/VIZ/2025. The assessee has assailed the impugned order on the following grounds of appeal before us : “1. That the disallowance of amount made under Section 36(1)(va) is erroneous and bad in law. The learned AO and CIT(A) failed to appreciate that the contributions to EPF/ESI were deposited before the due date for filing the return of income under Section 139(1), and there was no intention to withhold or misuse such funds. 2. That the bona fide intent of the appellant and practical difficulties should have been considered. The disallowance of amount made does not align with the principles of equity and justice, as there has been no loss caused to the employees or to the revenue. 3. That the learned authorities have erred in not appreciating that Section 36(1)(va) should be harmoniously construed with Section 43B. The appellant humbly submits that the legislative intent behind Section 43B is to allow genuine claims where payments are made before filing the return of income. 4. That the learned authorities have failed to appreciate the nature and purpose of the amendment introduced by the Finance Act, 2021. The amendment clarifies the treatment of employees' contributions prospectively and does not apply to the appellant's case for the relevant assessment year. 3 ITA Nos.235 & 236/Viz/2025 5. That the disallowance results in undue hardship and a punitive impact. The appellant respectfully submits that such disallowance is disproportionate, especially when there is no malfeasance or misuse of the employees' contributions. 6. That the order passed by the CIT(A) is contrary to law and facts. The learned CIT(A) failed to apply judicial discretion and to provide relief in light of the practical and bona fide circumstances of the appellant. 7. That the reliance placed on the Supreme Court's decision in Checkmate Services (P) Ltd. vs. CIT is misplaced in the appellant's case. The facts and circumstances of the appellant differ materially, and strict adherence to statutory due dates creates undue hardship on the appellant, who has otherwise acted in good faith.” 3. Succinctly stated, the assessee had filed his return of income for A.Y. 2021–22 on 27.10.2021, declaring an income of ₹19,26,380. The A.O./CPC, Bengaluru, vide his intimation under Section 143(1), dated 15.12.2021, disallowed under Section 36(1)(va) of the Act the assessee's claim for deduction of the delayed deposit of the employee's share of contribution od EPF/ESI amounting to Rs. 62,02,070/-. 4. Aggrieved, the assessee carried the matter in appeal before the CIT(A), but without success on the issue in hand i.e., the sustainability of the disallowance of the assessee’s claim for deduction of the delayed deposit of the employees share of contribution towards ESI/EPF of Rs.61,61,146/- (correct amount that was taken by the CIT(A) against the disallowance made by 4 ITA Nos.235 & 236/Viz/2025 the A.O. at Rs.62,02,070/-). For the sake of clarity, the observations of the CIT(A) are culled out as under: 5 ITA Nos.235 & 236/Viz/2025 6 ITA Nos.235 & 236/Viz/2025 7 ITA Nos.235 & 236/Viz/2025 8 ITA Nos.235 & 236/Viz/2025 9 ITA Nos.235 & 236/Viz/2025 10 ITA Nos.235 & 236/Viz/2025 11 ITA Nos.235 & 236/Viz/2025 5. The assessee, being aggrieved with the order of the CIT(A), has carried the matter in appeal before us. 6. As the assessee, despite having been put to notice, had failed to participate in the proceedings before us, therefore, we are constrained to proceed with and dispose of the appeal after 12 ITA Nos.235 & 236/Viz/2025 hearing the Respondent/Revenue and perusing the orders of the lower authorities. 7. At the threshold of hearing of the appeal, we find that the same involves a delay of 354 days. On a perusal of the record, we find that the assessee has filed an application seeking condonation of the aforesaid delay, vide his letter dated 10.05.2025, supported with an affidavit (undated). 8. On a perusal of the condonation application/affidavit, we find that the delay in filing of the present appeal by the assessee is stated to have crept in because the tax consultant, who was engaged by him for presenting the matter before the CIT(A), had not only failed to respond to the notices issued by the latter’s office, but also had not intimated the assessee about the dismissal of his appeal by the CIT(A), vide order dated 13.02.2024. The assessee had claimed that he had gathered about the CIT(A)’s order only when he had contacted a new tax consultant for filing his return of income for the succeeding year i.e., A.Y. 2025–26. It is stated by him that the new tax consultant had informed him that his appeal had been dismissed by the CIT(A) and further advised him to file an appeal before the 13 ITA Nos.235 & 236/Viz/2025 Tribunal. The assessee states that he had thereafter filed the present appeal before the Tribunal, but the same by the time involved a delay of 354 days. The assessee, based on the aforesaid facts, had submitted that as the delay in filing of the appeal before the Tribunal was unintentional and due to unavoidable circumstances beyond his control, therefore, the same in all fairness, be condoned. 9. Per contra, Dr. Aparna Villuri, the learned Senior Departmental Representative (for short “Ld. DR”) objected to the seeking of condonation of the delay by the assessee. The Ld. DR submitted that as the assessee except for putting the entire blame for the inordinate delay of 354 days involved in filing the present appeal on his earlier counsel, had failed to lead any evidence which could irrefutably support the same, therefore, the said delay, in the absence of any justifiable reason, does not merit to be condoned. 10. We have thoughtfully considered the contention of the Ld. DR in the backdrop of the material available on record, i.e., the application for condonation and the affidavit filed by the assessee in support thereof. 14 ITA Nos.235 & 236/Viz/2025 11. We find substance in the Ld. DR’s claim that the assessee, based on his unsubstantiated claim, had tried to justify the inordinate delay of 354 days involved in the filing of the present appeal before us. The assessee had placed the entire blame for the delay in filing of the appeal on his earlier tax consultant, but had very casually avoided from even mentioning the details of the said earlier counsel. Also, the assessee had failed to place on record as to on which date, he had gathered knowledge about the dismissal of the appeal by the CIT(A). Apart from that, we are unable to comprehend that though the CIT(A)’s proceedings were spread over a period of one and a half years i.e., from 31.12.2022 (the date of institution of the appeal) up to 13.02.2024 (the date of the learned CIT(A)’s order), but the assessee had gathered about the dismissal of his appeal only at the stage of filing his return for A.Y. 2025–26, i.e., somewhere around in the month of July, 2025 onwards. 12. We are unable to fathom that now when the assessee/his tax consultant, subsequent to 13.02.2024, would have accessed the income tax portal account for filing of the return of income for A.Y. 2024–25, i.e. in July, 2024 onwards, then how the fact of 15 ITA Nos.235 & 236/Viz/2025 dismissal of his appeal by the CIT(A), vide order dated 13.02.2024, had not come to his notice? 13. We are of the firm conviction that the assessee in the present case had come up with a concocted story in his attempt to explain the inordinate delay of 354 days involved in the present appeal filed by him. Also, the casual conduct of the assessee can also be gathered from the fact that he has filed/placed on record an undated affidavit, which is not even found to be notarized. 14. We, thus, considering the totality of the facts involved in the present appeal before us, are of the firm conviction that as the assessee, who despite having been put to notice on three occasions i.e., 06.12.2023, 09.01.2023, and 02.02.2024 failed to participate in the proceedings before the CIT(A), had based on his lackadaisical approach, failed to file the present appeal within the prescribed period, therefore, do not find any substance in his explanation regarding the reasons leading to the delay in filing of the same and thus, decline to condone the same. 15. Resultantly, the appeal filed by the assessee, being barred by limitation, is dismissed on the said count itself. 16 ITA Nos.235 & 236/Viz/2025 ITA No.236/Viz/2025 for A.Y. 2021-22 16. As the facts involved in the present appeal remain the same, except for the fact that the delay in filing of the appeal involved 384 days, which the assessee, based on the same reason as given by him in ITA No. 235/Viz/2025 for A.Y. 2020–21, has sought to explain, therefore, our order passed while disposing of the aforesaid appeal for A.Y. 2020–21 shall apply mutatis mutandis for the purpose of disposing of the present appeal. 17. Resultantly, the appeal filed by the assessee for A.Y. 2021- 22 in ITA No. 236/Viz/2025 is, on the same terms, dismissed. 18. To sum up, both the appeals filed by the assessee are dismissed Order pronounced in the Open Court on 18th July, 2025. Sd/- (एस. बालक ृष्णन) (S. BALAKRISHNAN) लेखा सदस्य/ACCOUNTANT MEMBER Sd/- (रिीश सूद) (RAVISH SOOD) न्याययक सदस्य/JUDICIAL MEMBER Hyderabad, dated 18.07.2025. **#TYNM/sps 17 ITA Nos.235 & 236/Viz/2025 आदेशकी प्रनतनलनप अग्रेनर्त/ Copy of the order forwarded to:- 1. निर्धाररती/The Assessee : Suresh Dharnia, Door No.6-14/1, Shivalayam Street, Vepagunta Ward – 69, Visakhapatnam (Urban) - 530047 2. रधजस्व/ The Revenue : The Income Tax Officer, Visakhapatnam 3. The Principal Commissioner of Income Tax, Visakhapatnam. 4. नवभधगीयप्रनतनिनर्, आयकर अपीलीय अनर्करण / DR, ITAT, Visakhapatnam 5. गधर्ाफ़धईल / Guard file आदेशधिुसधर / BY ORDER Sr. Private Secretary ITAT, Visakhapatnam "